It is essential to calculate trip costs correctly to choose the best travel insurance plan. Your final trip price will play a role in determining the price of your project. Sometimes, travelers get confused when they hear trip costs since they assume that includes all of their expenses. Nevertheless, “insurable” trip costs are not the same as “total” costs.
Insurable Trip Cost: What Does It Mean?
The only expenses you can add to a travel insurance policy are prepaid non-refundable ones. Therefore, you can only have insurance coverage for the unrefunded prepaid costs in the event of a cancellation. These expenses include airfare, cruises, hotels, tours, and prepaid excursions. Most insurance plans usually include tickets to events or theme park admissions. Tuition, class fees, and general expenses for business trips are also insured, but only through specific companies. As an example, here’s what I mean.
- Dave plans to visit Bermuda. Here are his expenses:
- RM800 for air travel
- He must pay RM2,000 for the hotel (RM200 refundable in case he needs to cancel)
- The cost of excursions is RM500
The total cost of Dave’s expenses is RM3,300. Dave’s insurable trip cost, however, is RM3,100. In this calculation, the RM200 refundable amount for the hotel is from the total fee (RM3,300). Therefore, there is no need to buy trip protection for refundable expenses.
How Do I Calculate Trip Cost?
The process of calculating travel costs may not be as straightforward as we might expect. For instance, you can have insurance for expenses you do not have to pay before traveling but will have to pay if you cancel. When you insure your trip, you will be protecting against any monetary loss you would face if you have to cancel before departure. If you book your flight with frequent flyer miles, keep in mind that the cost of your travel insurance plan cannot apply to your miles. There may be insurance coverage for government taxes and fees associated with the frequent flyer miles, but not for the actual miles/points. The credit card company or airline will reimburse the points or miles. Trip costs determine the cost of travel insurance plans and the benefit eligibility. You must insure 100 percent of your non-refundable prepaid expenses to be eligible for certain benefits. Remember that you can add trip costs after purchasing the plan. For example, you must purchase a travel insurance plan once you’ve paid your first payment or booked your flights. As your departure date approaches, you can add these costs to your insured trip costs, but be aware that some benefit levels may increase due to those additions.
Is Trip Cost Calculated Per Person?
Buying the correct trip insurance depends on calculating how much each person paid for the trip. The insurance plan covers travelers for unused, non-refundable trip costs up to the lesser of their insurable trip costs. I’ll give you another example.
Nancy and Bob are taking a trip and buying a travel protection plan. Bob pays RM1,000, and Nancy pays RM2,000. Possibly Nancy will be traveling alone without Bob. Having purchased trip insurance, they can report their separate, insurable trip costs. Nancy should provide RM2,000 as her insurable trip cost, and Bob should provide RM1,000.
How Do You Calculate a Trip Cost For Groups?
It’s possible to share reservations when traveling as a couple or group. Sharing a room at a hotel or a rental house is an example of a shared booking. To pay for the shared reservation, the travelers must decide how they will split the cost. Each individual in the group should determine their share of the cost of their insurable trip if the group pays equally for the booking.
Do You Have a Question About How To Calculate Your Trip Cost?
It’s essential to calculate your insurable trip cost correctly. Please get in touch with us at Fincrew with any questions. We will help you sort through your expenses and determine the appropriate amount to purchase.