6 common myths about travel insurance and what it covers

In most cases, travel insurance does not equate to automatic refunds. There are usually oodles of paperwork to file to prove your case, plus strict deadlines to adhere to. And common trip road bumps (like a flight delay), not to mention entire roadblocks — like a flare-up of an illness you've already been diagnosed with — aren't usually covered.

Here are six common travel insurance myths that come up frequently and the truths behind them.

Myth 1: Travel insurance is just medical insurance

Far from it. Most forms of trip cancellation or interruption insurance only cover medical emergencies. This is helpful if you break your leg during a ski trip in the Alps, but it won't cover routine medical coverage.

Perhaps you use a catheter that needs to be replaced by a doctor every two weeks, but you're taking a two-month trip. Many health insurance policies, including Medicare and Medicaid, explicitly do not cover most medical costs overseas. And most travel medical insurance only provides reimbursement for emergency medical expenses.

If you want to ensure coverage for nonemergency medical expenses while abroad, you have two options:

1. Augment your existing health insurance with add-on coverage for international travel. The extra cost can be worthwhile if you frequently travel and/or anticipate seeking international medical treatment (even for a mundane teeth cleaning).

2. Purchase international health insurance. Many major insurance companies offer health insurance that can cover treatment both in your home country and worldwide for both emergencies and more predictable treatment, like maternity, dental and wellness checkups. Whether you've decided to work remotely abroad, or you frequently travel abroad, it might make sense to ensure you can see a doctor anywhere.

Myth 2: Travel insurance is most useful for trips involving extreme sports

In fact, it's quite the opposite. Many forms of travel insurance explicitly won't cover certain high-risk activities like skydiving, scuba diving or bungee jumping. If your trip involves adventure sports, you might need to purchase a separate policy that specifically covers your activity.

Look for air activity coverage, which typically covers activities from zip lining and hot air ballooning to more thrilling endeavors like skydiving, hang gliding, and bungee jumping. A specific water sport policy will usually cover watercrafting, scuba diving and deep-sea fishing. And snow sports coverage can insure activities like snowboarding, skiing, heli-skiing and ice windsurfing.

Squaremouth, which is a travel insurance comparison tool, recommends at least $50,000 in emergency medical coverage and $100,000 in medical evacuation coverage when purchasing these policies.

Myth 3: 'Cancel For Any Reason' can get all of your money back

Travel insurance can sometimes be limited in terms of what scenarios actually enable it to kick in. While it will typically cover events like accidental injuries or severe weather, it likely won't cover many other reasons, such as COVID-19 risks or suddenly skipping your trip because your work or personal life got busy.

For those scenarios, you might consider "Cancel For Any Reason" coverage, which can get you money back no matter why you need to cancel. But it won't get all your money back. Exact amounts vary by policy, but policyholders can expect to be refunded for about 50% to 75% of upfront payments, according to the National Association of Insurance Commissioners.

And even still, there are limitations. For example, most CFAR policies require you to cancel your trip more than 48 hours prior to your scheduled departure.

Myth 4: Full-time travelers can best maximize travel insurance

While frequent travelers will certainly get more value from an annual travel insurance policy or their credit card's travel insurance benefit than someone who only travels a few times a year, someone who travels full-time — like an expat or digital nomad — might be out of luck.

Check with your own insurance provider, but most trip insurance companies do not cover trips that exceed 60 days. If your employer lets you work remotely and you've chosen to become a full-time traveler, don't count on your travel insurance policy to help.

For trips longer than 60 days, you may want a travel insurance option specifically designed for digital nomads.

Myth 5: Travel insurance is best for people with medical issues

If you have a pre-existing condition, don't count on travel insurance if that condition interferes with your trip. Most policies explicitly do not cover pre-existing conditions or travel that is done against the advice of a physician.

Understand that the definition of a pre-existing condition can be pretty broad. For instance, if you have a mild heart attack while climbing the steps of the Eiffel Tower but you were previously diagnosed with hypertension, your claim might be denied.

To ensure coverage, consider a more comprehensive policy that includes a pre-existing condition waiver.

Myth 6: You can wait until you get home to file a claim

Depending on the length of your trip, don't wait to contact your insurance provider. If canceling your trip before departure, some policies require you to notify your trip insurance company within 48 hours of your physician advising you against travel.

Most policies require that you file a written claim within 20 days after the occurrence. From there, supporting documentation (like medical records, a death certificate or notice of jury duty) must typically be submitted within 90 days.

The bottom line

Travel insurance can be enormously helpful in many scenarios. It can reimburse you to buy new toiletries and clothes if your luggage is lost. It can cover an extra hotel night stay or meals for eligible flight delays. And it can refund nonrefundable reservations should you need to cancel or cut short a trip due to most medical emergencies or severe weather.

But there are a lot of circumstances that aren't covered — or might only be covered by certain policies and with the right paperwork. Understand what your policy actually covers before counting on travel insurance to come to your rescue.