What is business travel insurance and why is it important?

Although the COVID example highlights the importance of business travel insurance, this type of coverage would certainly increase the cost of each business trip. Although this is an inconvenience, its purpose is to protect businesses from major financial loss in the event of an unexpected problem.

In this part of our customer education information series, Insurance Business explains the importance of having this form of protection, what these policies cover and how businesses can find the right coverage for their travel needs. We encourage insurance brokers and agents to share this article with their clients to help them decide if business travel insurance is a worthwhile investment.

Business travel insurance – sometimes referred to as corporate travel policies – works like personal travel insurance, protecting the policyholder against certain financial risks and losses they may encounter while traveling. The main difference is that corporate travel insurance primarily covers business-related events.

Here are some basic points to consider:

  • Policies designed for domestic and overseas travel are available.
  • For businesses that require less business travel throughout the year, purchasing single trip travel insurance each time may suffice. As the name suggests, this covers incidents that occur during the duration of a business trip.
  • For businesses that require frequent travel, purchasing a multi-trip travel insurance policy, also known as annual travel insurance, may be more cost effective. This type of policy provides coverage for multiple destinations throughout the year. Maximum travel duration limits vary, generally ranging from 15 to 90 days.

Policies typically protect against a wide range of losses, ranging from those resulting from minor incidents, such as delayed luggage or flights, to major events, including last-minute trip cancellations and medical emergencies.

With business travel resuming, here are the key coverages often included in the best business travel insurance plans:

Coverage of medical expenses

This helps cover the cost of emergency medical expenses while traveling. Many policies follow a reimbursement-based model and pay up to plan limits. Coverage varies from insurer to insurer, but generally includes:

  • Medical Expenses: Most policies cover all medical and hospital expenses related to illness or injury sustained while on a business trip.
  • Emergency dental expenses: Visits to the dentist and other dental procedures may also be covered, subject to certain limits. Some policies classify these expenses as part of the overall medical cost.
  • Medical Evacuation: Usually the most expensive bill, this covers the cost of transporting a patient to a medical facility. The evacuation must however be ordered by a doctor to be covered by the insurance.
  • Accidental Death or Dismemberment: These policies cover repatriation costs and may include funeral and burial costs.

Trip cancellation and interruption insurance

Trip cancellation and trip interruption insurance are similar types of insurance. The main difference is that the cancellation cover applies before the trip, while the interruption cover comes into play once the travelers have already left for their destination.

These policies cover the non-refundable prepaid expenses of a business trip if it is canceled or interrupted for reasons beyond the control of the traveler, provided that these events are listed in the policy document. The death of a loved one and extreme weather conditions are examples.

Some policies also allow business travelers to cancel or shorten their trip if they have to deal with business-related issues, such as bankruptcy, product recall, default proceedings, mergers and acquisitions, or if the business becomes inoperative due to a man-made accident. or natural disaster.

But not all business-related events are covered. If a client that the company was supposed to meet cancels, the company will not be able to claim the travel expenses. For added flexibility, companies are recommended to purchase cancellation for any reason (CFAR) coverage, which allows travelers to obtain reimbursement for canceled trips, regardless of the cause. This type of protection, however, can increase premiums between 40% and 60% and has strict eligibility requirements.

Trip delay coverage

Travel delay insurance reimburses the business traveler for essential purchases such as meals and accommodation if they are stranded in a place of transit because their connecting flights are delayed or cancelled. Most policies have specified waiting periods before coverage begins, as well as a daily and aggregate benefit limit per person.

Baggage cover

This type of coverage reimburses the cost of replacing delayed or lost baggage and its contents. Policies have caps per person and per item and often reimburse the depreciated value of items. These also have specified waiting periods, usually ranging from six to 12 hours.

Baggage insurance may also cover items not included in baggage, such as cell phones. Professional equipment, meanwhile, is generally excluded from coverage, although travelers can purchase additional endorsements to gain protection.

The good news for business travelers is that unlike at the start of the pandemic when COVID-19 coverage was scarce, travel insurance companies have since stepped up their game and started offering protection against coronavirus-related disruptions. . These include:

  • Emergency medical expenses, including intensive care, medical tests and medications
  • Quarantine-related expenses, including meals and accommodation
  • Ambulance transportation costs
  • Medical evacuation costs, which may also cover dependents and traveling companions
  • Repatriation costs

Business travel insurance premiums are influenced by a range of factors, including:

  • Group Size: This is the number of employees covered by the travel policy. Some insurers impose minimum limits, while others offer discounts for groups exceeding a certain number of travellers.
  • Coverage Locations: Destinations with high medical costs require higher coverage. The same goes for places prone to natural disasters.
  • Period of coverage: Business travel insurance covers the entire duration of the trip. Depending on the policy, coverage can last up to one year. The longer the coverage period, the higher the premiums.
  • Level of coverage: Single trip plans offer shorter coverage than multi-trip or annual insurance, making premiums cheaper.
  • Additional benefits: Optional extras such as professional equipment coverage may result in higher insurance rates.

Depending on these factors, business travel insurance premiums can cost around 6% of the total trip cost. Business trips worth $3,500, for example, can cost around $210 to insure.

Just like personal travel policies, business travel insurance provides financial protection should something go wrong while travelling. Coverage details vary from policy to policy and for this reason it is important that business travelers review the fine print carefully before purchasing a plan. Here are some practical tips companies can use to find the best possible business travel coverage.

  • Compare travel insurance quotes: Speak to a variety of insurance providers, great examples can be found in our annual Best of Insurance awards.
  • Get out the right kind of coverage: Although more expensive, it is better for business travelers to purchase comprehensive travel insurance policies as these often have higher coverage limits and offer broader protection.
  • Get travel insurance as soon as possible: Purchasing travel insurance immediately after booking the trip provides business travelers with longer coverage. Policyholders often only have a certain period before their trip to purchase certain protections, including trip cancellation and interruption coverage, and waivers of pre-existing conditions, so the sooner they purchase coverage, the more benefits they can access.
  • Be honest about the information provided: Insurers expect travelers to provide accurate information when purchasing coverage. This includes disclosing any pre-existing conditions and past claims. Failure to do so may result in the rejection of a claim.
  • Keep an eye out for discounts: Travel insurers offer discounts that can help travelers save their hard-earned money. These include group discounts for a travel group exceeding a certain number of members.
  • Don’t settle for the cheapest policy: Cheaper premiums don’t always mean better coverage. Business travelers should always check the limits of their policies and understand what is excluded, so they don’t feel aggrieved if they file a claim.

Do you have a business trip planned? Do you think business travel insurance is worth considering? Share your thoughts in the comments section below.

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