The Economics of Travel Insurance - General News
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The Economics of Travel Insurance


When you are planning a holiday trip, you have a lot of expenses that you need to balance. The expenses fall into two different categories: predictable and unpredictable. The predictable expenses are easy to cost. They are sometimes difficult to afford, but they are simple to anticipate. Predictable expenses are things such as your airfare, hotel fees, and restaurant costs. The amount of money you need for food is slightly unpredictable, because you cannot pin the total down to an exact number.

However, you do know that you will need money for food. So, in that sense, money for food is predictable. Therefore, you need money for a lot of different things that fall into the predictable category. Alternately, a few situations are going to be unpredictable. The unpredictable things are things that happen with little or no warning.

Unpredictable Expenses

Unpredictable expenses run the gamut of potential problems. For example, if you have an allergic reaction to a certain type of food while you are on holiday, you may have to invest in over the counter medication, or you may need to visit a hospital. You probably did not predict having an allergic reaction, so it falls into the category of unpredictable expenses.

Unpredictable expenses are unexpected costs that can break the bank. They can make your holiday trip very expensive. If they get expensive enough, your entire holiday can be derailed. For example, you may have to cut your holiday short or reduce your planned number of holiday activities.

Other unpredictable expenses are things such as your ski bindings breaking or the airline losing your luggage. If you are on a skiing or snowboarding holiday, you have a lot of gear to take with you. Losing your gear or having it break can significantly reduce your ability to enjoy the holiday trip. Obviously, you cannot go snowboarding if the airline loses your snowboard or if your bindings break. Instead, you are forced to spend more money to get your luggage back.

More Unpredictable Holiday Expenses

If you buy your gear from the resort’s ski shop, you will pay a lot more than you would have paid back home. The ski shop’s owner and employees know that the people browsing their store are on holiday, which makes them more likely to spend a lot of money. Also, they know that the people in their shop are a captive customer base.

If you are already at the mountain resort, and you are looking for supplies, you have nowhere else to go. Knowing that their customers have few options, the shop owners often charge more than a competitive shop.

These unpredictable expenses and the holiday charges associated with them are commonplace. The example above is a ski shop, but the same is true of an airport’s car rental agency, a cruise ship’s medical bay, or anywhere else customers have few options.

Choice and competition keeps prices low, reducing the availability of things makes prices rise. Since you have few options, you should find a way to make the trip more affordable. Therefore, you should invite travel insurance into the picture.

What is Travel Insurance?

Travel insurance policies resemble other kinds of insurance. For example, you pay a regular premium and when you need to make a claim, your insurance company helps you cover the costs. The coverage is important, because it gives you the assurance that you can easily cover any expense that may arise. Therefore, you have enough money to make difficult financial decisions. Furthermore, insurance such as Now Travel Insurance allows you to transform unpredictable expenses into predictable expenses.

You cannot accurately guess whether or not an accident will occur. However, you can budget for your specific insurance premiums. You do not know how much it will cost you to deal with a problem that might arise but your insurance premiums remain the same; that turns your expense into a predictable expense that you can add into the budget.

Types of Insurance

There are many different types of travel insurance. The most common types of travel insurance are medical insurance and active holiday insurance. Medical insurance is designed to cover any type of expenses you may incur from medical needs while you are on holiday. There are different subsets and different aspects to medical insurance.

For example, cruise insurance is a specific type of medical insurance. Cruise insurance is often more expensive than other kinds of insurance due to the unique demands of a cruise. If you are on a cruise and you have a medical emergency, the medical bay on the ship will probably not be sufficient to cover your needs. As a result, you will need to be flown by helicopter to the nearest hospital or you will need to be driven by boat.

These transportation options require you to pay a pilot and hire out an entire travel company. Helicopter and boat services are big expenses. Therefore, travel insurance for cruises is slightly more expensive than other types of insurance. Also, travel insurance for those with pre-existing conditions is usually somewhat expensive.

A pre-existing condition is any type of recurring medical condition that you have had since before you bought insurance. The specific type of pre-existing condition determines the insurance policy you need and how much money you will have to pay for it. Therefore, a few travel companies have much better and affordable offerings for travel insurance.

Finding Insurance

Lastly, you need to find insurance that fits your needs. Therefore, you need to look for a reputable insurance supplier who has a good website, a good reputation, and a good customer service history. When you buy insurance, you are buying an assurance from a company that promises to cover your expenses for you. Not only are you giving them money, but you are also expecting something in return. However, you do not immediately see how much coverage you are going to receive when you pay them. You are paying them and granting them your trust.