The concept of travel insurance is very simple. The insured pays a premium (this is the amount you pay to the travel insurance company), the company in turn pays any costs involved in case of accidents or other types of eventualities. In case there is no eventuality the travel insurance company keeps the premium.
Travel insurance covers lots of risks like:
Trip cancellation: There are lots of chances, due to unforeseen circumstances, you may need to cancel your ticket. If you cancel your ticket at the last moment, almost always you will not get any refund from the airline or you may get a meager amount. Travel insurance provides coverage for this kind of loss. The travel insurance company has to provide the cost of cancellation of ticket. However the cancellation has to be done in circumstances which are covered by the travel insurance policy.
Baggage loss: if your baggage is lost, then the cost of the baggage is paid by the insurance company, but is again governed by the rules of the insurance contract.
Medical cost: if you fall sick during travel and the costs incurred by you are paid by the travel insurance. However if you have bought a health insurance which covers overseas cost then there is no need to separately buy a travel health insurance.
Others: Other things that are generally covered by travel insurance are medical evacuation, accidental death, repatriation of remains etc.
The golden rule in all
insurances is to read the fine print carefully. You won't have time to read it during emergencies.
