- July 10, 2018
- Posted by: Team InsureBC
- Category: Travel
In a 2013 Princeton Travel Study, a shocking discovery was made that only 1 in 5 respondents purchase travel insurance. Even more surprising was that only 7% of these respondents purchase it regularly with a whopping 78% of people answering that they never purchase travel insurance. That’s a lot of people tempting fate, and taking significant risks when traveling either alone or with family.
The obvious question that comes to mind, of course, is ‘why’. Do people simply believe they don’t need it? Do they believe it to be too expensive? Do they forget about it until they have arrived at their destination? Or perhaps they simply don’t understand what they are covered for and therefore avoid the topic altogether?
Let’s have a closer look at this more closely.
49% of people are not aware of what is included in the coverage.
In the same study, it was found that about half of the respondents said they had a relatively good understanding of what their travel insurance covered while 49% admitted to being unsure of what was included in their travel insurance policy. That means that only 51% bought insurance where they actually understood what they were buying.
These people didn’t know whether their travel insurance policy included dental coverage, what pre-existing medical conditions affect their ability to obtain insurance or whether their travel insurance covers trip cancellation. These findings are quite astonishing given the importance of what people are buying and the potential financial impact it could have.
Trip cancellation being the main reason for purchasing the travel insurance
The surprising results further apparent when having a closer look at the respondents who do purchase travel insurance, either as a one-off trip or for the year as an annual travel policy. According to the study, the main reason respondents buy travel medical insurance when going on airline trips or cruises was trip cancellation with 52% picking it as their main reason. In particular, when embarking on international flights, most travel insurance policies are purchased in prior to departing from the place of origin.
Not surprising, the second most important reason for purchasing trip insurance coverage was the medical element included in the policy. Approximately 27% of respondents outlined the medical portion as being the purpose of safeguarding themselves during their vacation. One of the items included in a travel medical policy is evacuation insurance or travel insurance evacuation cover. This would cover a return to your destination if you had to be air evacuated to your home province for care.
Who buys travel insurance?
According to a different study from the US Travel Insurance Association, those who buy travel insurance tend to be more well-educated, travel more frequently and have higher household incomes than those who don’t.
Furthermore, this particular study showed that travelers are more likely to purchase insurance when confronted with more factors that are out of their control. This is evidenced by consumers traveling overseas being 3x more likely to buy insurance than those traveling within North America.
Other differences between those who purchase travel insurance and those who don’t include the purpose of travel, where buyers of travel insurance are more likely to have a destination or activity as part of their trip rather than visiting friends and relatives.
Finally, the sources of information played an important part in differentiating buyers from non-buyers. The study determined that buyers of travel insurance use more sources of information to plan their trip, while those who do not buy travel insurance typically rely on friends and family as resources.
As an interesting aside, it was found that 77% of people using a travel agent to book their vacation purchased travel insurance.
So why do people buy travel insurance?
When asked why they buy travel insurance, the top three reasons were:
1. Peace of mind
2. Protection against the unexpected
3. Concern over losing the financial investment in a trip.
Within each of the above-mentioned categories, those who responded cited these motivating factors:
- My trip was expensive.
- I wanted protection from unforeseen events.
- I want the peace of mind that travel insurance offers.
- I want to get money back if I had to change my trip.
- I had to pre-pay for my trip.
Conclusion: Be the person who knows
A final stat to share as part of these two studies we reviewed is that only 37% of people surveyed said they felt that travel insurance was worth the cost. Almost have (47%) said travel insurance wasn’t worth the cost. Clearly, an opportunity for us to educate our clients on the true benefits of having travel insurance. The main conclusion we were able to draw from these studies was that even people who purchase travel insurance don’t know exactly what they are buying and what it will cover.
Cue the involvement of an insurance broker to help explain.