Labor Day 2024
Whether it’s planes, trains, automobiles or boats, Labor Day travel beckons. And with travelers heading out to soak in the last rays of summer, there are several ways travelers can insure and protect their trips, and their families, so fun in the sun doesn’t become a financial crisis.
From health insurance to trip insurance, and even auto insurance, there are several policies that protect vacationers. This Labor Day weekend, as people are ready to head out for one more long weekend trip of the summer, it is worth it to check to make sure those trips are properly protected.
Whatever is motivating the travel, according to AAA, Labor Day travel is on track to be up from last year, with initial bookings already up 9% year over year. The good news is that according to that same AAA data, cost to travel domestically is down 2% compared with last year.
Topping those savings is gasoline, which is down about $0.30 per gallon on average nationally compared with last year.
Hitting the Road
If Labor Day means the open road, then auto insurance is one of the most important places to begin looking for coverage.
For drivers heading to another state, they can rest assured that their home policy will carry over coverage as they cross the border. A portion of the policy called the broadening clause makes it so a driver’s current policy will cover them at least up to the state minimums wherever they drive in the United States, regardless of what their home state laws are.
So, if a home state’s minimum liability limit is lower than the place they are visiting, their auto policy will automatically adjust up to the higher limit while they are driving there. The same goes for at-fault rules that might differ from state to state.
Going abroad, it depends on the policy, but most policies will cover a driver in Canada. Anywhere else, it would be good to make a call to an agent to let them know where the destination is so the agent can make sure the policy offers proper coverage. Just because a driver has full coverage in California doesn’t mean they will also be covered in Italy, or even Mexico.
When it comes to rental car insurance, there are some nuances worth paying attention to.
For some people, it can make sense to bypass the rental car insurance in some cases. If the driver has auto insurance already, that same policy will generally transfer to their rental car. But questions arise regarding whether the driver would want to make a claim against their main policy if something were to happen.
Rental car companies can be quick to file claims against a driver’s insurance for seemingly minor issues, such as a chipped windshield or a dinged door. That seemingly small claim could then translate to higher premiums for years to come.
So, in cases like this, even though their auto policy protects them, some people opt for the damage loss waiver at the rental counter to prevent those claims from raising their main insurance premium.
Renters who only carry liability insurance would also have to upgrade at the counter to ensure they have the minimum coverage required to rent the vehicle.
Another time when bypassing the rental insurance makes sense is if they are renting the vehicle with a premium credit card. Some cards offer complementary insurance if they rent the car with that card. Pay attention to the fine print, though. Some cards offer that coverage as secondary coverage – others are primary. Primary coverage is better because the rental car company now won’t file a claim against the driver’s auto insurance in case of an accident – the card’s included policy covers it all. Secondary coverage covers whatever is left after the driver’s insurance company pays the main part of the claim. This is useful if the claim was particularly bad, but it doesn’t prevent their premiums from going up if there was a minor claim.
Adventure Time
If someone were to get sick or injured while on vacation, their health insurance policy would step in to offer care, especially if it was an emergency. Nearly every Affordable Care Act compliant policy would cover a broken leg three states away just like it would cover it if the break were to happen at home.
Less extreme examples are less clear cut, though. For non-emergency care, such as if someone were to catch the flu or maybe a stomach bug, the insurers may treat that coverage as out-of-network, triggering higher co-pays, deductibles, and co-insurance.
International travel often has even less coverage, with some policies limiting their coverage to the United States. That is certainly the case with Medicare and Medicaid, which never covers international travel.
One solution for that is to buy travel insurance. The health portion of a travel policy would step in to pick up the difference between what the traveler would have paid at home versus the out of state extras. In the case of international travel, the travel insurance policy would step in as the primary insurer.
Emergency evacuation is another thing to consider. This is when the traveler has to be flown or driven by ambulance to a larger city for treatment because there aren’t sufficient resources nearby. Health insurance policies will cover that, but it tends to be exorbitantly expensive – often many tens of thousands of dollars in deductibles and co-insurance. Travel policies often protect against this and cover medical evacuations as a part of the primary coverage.
There is some fine print to pay attention to in the world of adventure travel.
Many travel policies specifically exclude injuries due to risky behavior, making things like rock climbing, parasailing, or scuba diving particularly perilous — and uncovered.
This is where travel policies specializing in so-called adventure travel come in. In addition to allowing for coverage of these risky endeavors, these policies can also offer little extras that a vanilla travel policy might not, such as coverage for equipment that is lost or delayed.
Supplementary accident polices, such as those offered by Aflac, can also be useful when it comes to injuries while on vacation. They pay a cash supplement to help offset out-of-pocket expenses if a covered accident happens.
Airfare Protection
When the airline industry grinds to a halt, it always gets big headlines, such as when the CrowdStrike software failure grounded thousands of travelers earlier this year.
To start, new federal rules are in place to ensure travelers whose plans get interrupted also get reimbursed.
But a travel insurance policy, or even just an airfare insurance policy might offer a little more protection.
Travel insurance covers missed flights for a covered reason. So, if the Uber breaks down on the way to the airport, or if the traveler falls ill and can’t make the trip, travel insurance can help cover the cost of redirecting the flight or reimbursing the traveler for the non-refundable prepaid portions of the missed trip.
Travel insurance can also protect against interrupted travel – such as if a connecting flight leaves them stranded. The interruption portion can also step in if a covered emergency at home requires a traveler to cut their trip short and fly home early.
In the case of thousands of stranded travelers struggling with a software outage, travel insurance may pay for a hotel during the interrupted trip, and it can cover the costs involved in rerouting if plans go awry.
Travel insurance also covers lost, stolen or damaged luggage.
Some premium credit cards also offer this protection at no additional cost if the traveler pays for the airfare with that card.
Travel insurance is priced according to the cost of the entire trip, as well as the perceived risks of the destination. Trips to well-developed countries with strong infrastructure tend to be less expensive to insure than an adventure deep into the Amazon.
For a lower premium, coverage for just the airfare is also available.
Hit the road
While Labor Day travel can be relaxing, it can also involve risks both big and small. But there are plenty of options for protecting a Labor Day excursion, regardless of where the trip will be headed. But before heading out, travelers should always read the fine print and consult with agents to make sure the policies they are relying on will actually covers the risks they think it covers.
Michael Giusti, MBA, is senior writer and analyst at InsuranceQuotes.com
