Before you hit the highway, here are the ins and outs of road trip insurance

The seemingly endless nationwide pandemic lockdown has resulted in a lot of pent-up travel demand.

As the second major long holiday weekend of summer gets underway, people looking to celebrate Independence Day are getting in their cars and campers for road trips — deemed by many a safer bet than air or cruise travel. 

“After weeks of being home, many Americans want a change of scenery,” said Giorgos Zacharia, chief technology officer of travel site Kayak.com. “But, with international travel restrictions still in place and safety top of mind, road trips are most enticing to U.S. travelers right now.” Kayak found that car rental searches for the July 4 weekend were up 20% compared to last year.

Brittney Castro, in-house certified financial planner for personal financial management site Mint.com, said most people have not spent much money on travel so far this year.

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“Most do have some sort of monthly travel budget and I think now they are reassessing their travel goals and savings and saying let’s now use this money for a road trip,” she said.

While AAA did not release projections for July 4 travel, it did say Americans will take a collective 700 million trips this summer, and 97% of them will be driving. (Just 15 million people will fly, meanwhile, vs. 58 million a year ago.) The American Hotel & Lodging Association, for its part, found that 72% of people planning a trip will take an overnight vacation via car over the next five months. Of those, 75% expect to drive two or more hours.

All those hours on the road can mean a lot of wear and tear — on vehicles, timetables and traveler tempers — and insurance firms are taking note, rolling out new travel plans aimed specifically at road trippers or reminding RV and auto owners of the practicalities and perils of vehicle insurance policies. Here’s a look at what’s on offer.

Domestic trips now comprise the majority of all insured travel at online trip insurance marketplace Squaremouth.com, up from just 12.3% in 2019, according to spokesperson Kasara Barto. “As more people start traveling domestically, road trips may become a more popular trip type,” she said. “We’re definitely seeing a spike.”

Customers visiting the site, which offers policies from 31 travel insurance providers, have increasingly inquired about road trip coverage. Historically, motor holidays — unlike air-based trips or cruises — were not insured, said Barto.

Competing site InsureMyTrip.com also predicts more travel insurance providers will be offering some type of road trip coverage, “as the industry adjusts to travel restrictions and health considerations due to the pandemic,” according to spokesperson Julie Loffredi.

Two travel insurers recently debuted plans tailored to road trippers. Indianapolis-based Seven Corners rolled out ARMOR, good for road trips of up to 30 days more than 100 miles from a policyholder’s home within the U.S., Canada and Mexico.

The plan provides for emergency medical evacuation from remote destinations such as national parks. Its other major benefit is the return home of passengers, pets and/or vehicles in the event of driver injury. An online quote search for an August trip within the U.S. by a single driver aged 45 revealed a $50 premium.

Berkshire Hathaway Travel Protection, meanwhile, introduced its first domestic-only coverage plan, ExactCare Lite, designed for road trips of at least 100 miles from policyholders’ homes and available in 40 states.

“We anticipate domestic-only coverage plans to trend this summer and fall as travelers start exploring the open road again,” said Dean Sivley, president of Stevens Point, Wisconsin-based BHTP. “While travelers remain cautious, BHTP’s new road trip product, ExactCare Lite, provides peace of mind for non-refundable deposits such as hotels and tickets to attractions, as well as emergency medical expenses and more.”

An online quote search for an August trip within the U.S. by a single driver aged 45 returned a $19 premium. ExactCare Lite coverage includes:

• Trip cancellation, including for job-related reasons, up to $500 per person;
• Trip interruption, including for a traffic accident, up to $750 per person;
• Up to $100,000 in medical evacuation coverage;
• Up to $10,000 in both emergency travel medical expense coverage and accidental death & dismemberment;
• 24/7 phone or email travel assistance worldwide for travel and medical emergencies; and
• Coverage for one child age 17 or less per insured adult.

Road trippers should carefully weigh the pros and cons before buying, cautioned Meghan Walch, product manager at InsureMyTrip.com. “While an inexpensive travel insurance plan geared specifically for a domestic road trip is an attractive option, we always encourage travelers to understand what exactly the policy does cover — and what it doesn’t — before making a purchase,” she said. 

If a trip is very expensive, entails harsh cancellation penalties or travelers have fears about Covid-19 or weather events, they might want to consider a traditional “cancel for any reason” plan instead, Walch added.

Barto at Squaremouth.com also cautions that people piling into an RV or luxury car — rented or owned —  for their road trip should double-check the fine print on their new road trip policy, too. 

“A lot of times liability coverage is not included in a travel insurance policy and most travel insurance policies exclude RVs or exotic cars like Lamborghinis,” she said.

Camper and RV sales are skyrocketing, according Paul Bender, CEO of American Adventure Insurance in Thousand Oaks, California. “It’s hard to keep inventory on the lot,” he said. “I think people are thinking ‘I can social distance in my RV, or my motorcycle or my boat, as long as I’m careful.’ It’s a big deal.”

Mint.com’s Castro, who’s based in Los Angeles, said she’s noted an uptick in RV rentals among clients and acquaintances. “I’ve not encountered anyone who wants to buy an RV yet,” she said. “But I know people who are actually renting an RV and doing the Pacific Coastal Highway trip.”

Bender stresses that it’s important RV owners buy the right type of insurance. Simply tacking an RV rider onto a regular auto policy, while perhaps cheap, is inadvisable. A good RV-specific policy from a provider such as Progressive Corp. or Foremost Insurance Group will include total loss replacement, unlimited towing and so-called full timer’s coverage, which “is actually homeowner’s coverage that travels with you,” he said, and covers liability for guest and passenger injuries.

Policies purchased through American Adventure Insurance also offer many of the same benefits as the new road trip plans from travel insurers. These include emergency expense coverage, pet injury coverage and campsite liability. 

“I’m not an expert in these other [road trip] policies, but if they’re charging a premium for specialized coverage on a 12- or 30-day trip and your RV or trailer is only insured under your [auto] policy, go ahead and pay that premium,” said Bender. “But you can move your RV policy over to a Progressive or Foremost and pay a lot less all year long and just have that same coverage all the time, whenever you head out.”

Whatever coverage you buy, keep your eyes on the road and watch that speedometer while vacationing, said Nicole Beck, a licensed insurance agent and director of communications at insurance comparison website TheZebra.com.

One in 12 U.S. drivers commits a traffic violation each year and half of them get tickets. Violators can then see their car insurance rates rise from 4.4% to 78.3% (or $68 to $1,212) annually on average — usually for up to three years but sometimes for as long as a decade. You could return home from vacation to face higher auto premiums.

“In this time of penny-pinching, when you want to be more conservative with your spending, it’s just not worth it to get a ticket,” Beck said. “The first solution is to just drive safely, obviously.”

A common misstep by road trippers is the cellphone violation. “That’s probably a big one, if you don’t know where you’re going,” she noted. “You’re fiddling with your smartphone GPS.” That could cause a 23% bump in your insurance premium, The Zebra found.

If a cop notices your seatbelt was unbuckled, too? “If you don’t wear your seatbelt, you’re going to pay around $138 a year more,” Beck said.