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By Paul Reynolds
June 29, 2020
Getty Images

Vacation setbacks can not only squelch the fun of your getaway, but also hurt you financially. Fortunately, some insurance you already have, and certain credit-card perks, may offer a surprising amount of protection.

If you’re like many Americans, your summer vacation this year will be a road trip, and the protections you need may be different than on your usual trip. According to AAA estimates, a staggering 97% of vacations in summer 2020 will be by car — up from an average of 87% over the last five years. Other modes of vacation travel will plummet in popularity, the association predicts: air travel by about 74%, and rail and cruise ship vacations by 86%.

The rage for road trips will mitigate some of the financial risks associated with traveling. Less flying and a drop in cruises means less need to insure plane tickets or cabin reservations against cancellation. And you won’t need to worry about international health insurance, since the Canadian and Mexican borders are closed indefinitely to non-essential travel.

But even a road trip close to home comes with risks — like that of your car being broken into when fully loaded with vacation gear. Protecting yourself against the worst could require additional spending, like buying a travel insurance policy, including some that are geared to road trips. However, coverage you already have through your home insurance may be all you need, perhaps supplemented by using the right credit card to pay for purchases before and during the trip.

Read on for a rundown of the calamities that can cost you on vacation, and the best ways you can protect yourself.

If stuff is stolen…

A break-in to a hotel room or rental home is a major trip trauma, and a potentially expensive one if items are stolen. But your homeowners or renters insurance should relieve the financial sting of such a robbery, or of one from your car. (Auto insurance generally protects only your vehicle, not its contents.)

Some caveats do apply to protection under your home insurance. For starters, the same deductible — likely of $500 or more — applies as for any other claim under your policy. That means you’ll get little or nothing back unless the value of what’s stolen is substantial.

Also, you’ll need to weigh what you’d get from making a claim against the possibility that it will trigger a future increase in your premium. According to online insurance broker Policygenius, claims for property theft are among those that are likely to cause the insurer to increase your premium, because they’re more likely than other claims to recur.

If premiums do rise, you’re likely looking at a 7% to 10% increase on average for a first claim, according to Fabio Faschi, Property and Casualty Lead at Policygenius. One rule of thumb, Policygenius advises: Avoid making claims in which your net benefit will be less than double the amount of your deductible. So if your policy’s deductible is $500, and items worth $1,700 are stolen from your car or hotel room, the claim might be worthwhile; your premium might rise but you’d net $1,200, or about two-and-a-half times the amount of your deductible.

Also, you might face limits on the coverage of valuable items such as jewelry under your home policy. While these maximums should cover standard items (for example, jewelry items worth up to $1,500, according to the Insurance Information Institute), you might consider getting extra-cost policy “floaters” or “endorsements” for those items, the Institute advises. That coverage will then apply wherever the items should be, not just on vacation.

You can also protect yourself by buying a stand-alone travel-insurance policy, which will cover theft of your belongings. A policy typically costs 5 to 12% of the trip’s cost, according to travel expert Rick Steves. He recommends considering if you really require coverage and, if so, making sure that the policy you buy covers your most valuable possessions. Note that travel insurance rarely covers certain items, such as musical instruments, at all.

Among your travel-insurance choices are some policies that specifically tailored to road trips, launched this month. Offered by companies including RoamRight, one of Money’s top picks in travel insurance, and Berkshire Hathaway Travel Protection, these policies strip away air-trip focused features like baggage protection in favor of giving driver features like 24/7 roadside assistance when driving their vehicle.

Finally, there’s another option to protect against items you bought recently or plan to buy before your trip from theft — and it’s free. Many credit cards have what are known as purchase-protection programs. American Express offers the most widespread of these. Items bought with almost all Amex cards can be replaced at no charge should they be stolen within 90 days of their purchase. Visa Signature cards also come with 90-day protection. Purchase protection with Mastercard is limited to its World and World Elite credit cards, but provides the longest period of protection: Up to 180 days after purchase on some cards. For all programs, there’s a limit of $1,000 per claim.

If you lose or damage pricey possessions…

Not every item that comes to grief on a vacation is stolen, of course. A camera could tumble into the water on a rafting trip or a laptop be ruined by a fall to the floor in your hotel room.

Here, alas, your home insurance will be of little help. Accidental loss isn’t among the 16 perils typically covered under a home insurance policy, as listed by Policygenius. That’s because damage to a laptop, camera, or anything else is usually considered to be negligence on the owner’s part, according to Lemonade, another online insurer.

A travel-insurance policy could be an option for loss and damage protection, although many of the same caveats apply as when these cover theft. Those include a maximum claim value that’s likely to be lower than the replacement cost of a laptop or high-end camera.

Some credit card purchase-protection programs will also cover damage. As with the theft coverage, you can be reimbursed for accidental damage to an item you bought within the time limit with your American Express card or select Mastercards and Visas. You may, however, be out of luck with these programs if you simply lose the item. As Visa puts it, you’re not covered for items that are “lost or mysteriously disappear.”

If you need to cancel a hotel or rental home…

This year’s coronavirus pandemic has prompted a general relaxation of cancellation policies by hotel chains and rental-home platforms, such as Airbnb. While many of those formal policies expired in June, it’s worth asking for a break if you need to cancel and might not get back the full amount you paid under the regular cancellation policy. The same applies if you need to interrupt your trip due to sudden illness or another emergency.

If that appeal fails, you may again be able qualify for reimbursement under the trip-cancellation and trip-interruption benefit of a credit card. This is not a widespread card perk, and the best coverage is generally offered on premium cards with hefty annual fees, such as the Chase Sapphire Reserve, Money’s top choice in travel-rewards card. But if your card offers this, you should be reimbursed for the cost of canceling due to illness, severe weather, or jury duty, among other reasons.

If you don’t own a credit card with this coverage, you can also buy a travel-insurance policy to receive it. The coverage in most policies is similar to that provided with a credit card.

Don’t expect to be covered for any and all reasons related to the pandemic. For example, under many card programs and insurance policies, falling victim to the coronavirus qualifies as a “foreseeable event,” with its consequences not eligible for reimbursement. However, some of our best travel insurance companies are waiving that technicality, to allow claims if policyholders have to cancel or cut short a trip because they actually catch the virus. (Many insurers’ websites declare their coronavirus policies, but ask as needed and consider requesting that coverage be confirmed in writing in the policy.) No policy, though, covers you for canceling because you merely feared getting the virus at your destination, or because the lockdown requirements there will crimp your plans.

More from Money:

The New Rules for Travel Insurance During the Summer of Coronavirus

The Best Credit Cards of 2020

Travel Deals Are Everywhere. Is It Worth the Risk?

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