Why we're biking around the world without insurance

Surviving the hairpin descent of Morocco's Atlas Mountains without incident or injury.

Surviving the hairpin descent of Morocco's Atlas Mountains without incident or injury.

A whole lot can go wrong when biking tens of thousands of kilometers across dozens of countries. Bones can break, tendons can tear, and microscopic bacteria can do some pretty hefty damage to one's innards. And so when planning for a 'round-the-world bike tour, insurance seems a responsible, reasonable, risk-averse purchase.

But (according to Friedel and Andrew over at Travelling Two), a third of long-haul bike tourers travel with no insurance, and we're leaning toward becoming a part of that third. Here's why. (Note that I'm mostly talking about health insurance, but the rationale extends to general travel insurance, covering bikes, gear, flights, etc., in most cases).

[1] The rational argument: We're unlikely to benefit from it.

Insurance companies, at least the ones that stay in business, do so by spending less than they bring in. If an insurance company pays out more in claims than it takes in through premiums, it's probably not going to be an insurance company for long. By rational extension, those paying premiums are statistically unlikely to be reimbursed more than they paid in, either because they never need to file a claim, because the claims they file get denied (more on that below), or because the insurance company only reimburses over a certain deductible. 

Of course, insurance is really good for the fraction of holders who do use it. It's just important to remember that the fraction who benefit from it are—and economically must be—a minority, and any individual (assuming they're of good health and all) is statistically less likely to be in the minority than the majority. Insurance pools risk; it doesn't mitigate it (and, if anything, coverage creates a moral hazard that actually increases risk).

[2] The technical argument: We're unlikely to actually be covered.

Hey now, you might say, it's better to pay a little and be eligible to get a lot than pay nothing and be eligible to get nothing. And regardless of whether that's true, even if we were to pay a little, chances are we wouldn't be eligible to get a lot. Insurance policies can hide a whole lot of coverage exclusions, and traveling for a year, traveling by bike as a primary means of transport, and traveling through countries where travel warnings have been issued are three common ways to breach a policy (particularly for American insurers). Currently, our overly-fearful Department of State has travel warnings recently posted for Ethiopia, Iran, Kenya, Mexico, and Turkey—all countries we could reasonably see ourselves biking through—and dozens of others that may or may not find their way onto our route. And if those warnings are posted because these countries are the least safe, then they're actually the places we'd benefit from coverage most.

But wait, you might say, I'm from Such-and-such-land and I've gotten coverage from an insurance company that'll cover me for my two-year cycling adventure around the foothills of Afghanistan, so you should do the same. And that's really great, but chances are we couldn't do the same, because most insurance companies only sell insurance to folks from the country the insurer is based in: UK insurers cover Brits, US insurers cover Americans, etc. Bike touring just isn't that big of a market in America, and so the pickings for cycling-specific insurance of this magnitude are slim at best.

[3] The economic argument: Healthcare isn't that expensive (in many places).

Healthcare in America is more expensive than anywhere else in the world, so we're used to thinking of it as this scary, bankrupting thing. And certainly, it's not exactly cheap anywhere. But we're unlikely to be biking much in the States, at least for this trip, nor do we expect to find ourselves in Switzerland, Norway, the Netherlands, Sweden, Germany, Denmark, Austria, Luxembourg, or Canada (the nine most expensive countries for healthcare) for very much time.

I once got a bad case of E. coli in India and found myself stuck in the hospital for about four days. I was put in a private room with 'round-the-clock attention and probably charged more than I should have been, but I was restored to perfect health for the cost of $750USD. Not exactly cheap, but manageable for most with enough money to bike around the world. I should note that I did have health insurance at the time, and the insurance covered $500 of it, but I'd used that insurance rarely enough (and paid enough for it) that it would have made more economic sense to go without insurance, have pocketed the premiums, and then paid out of pocket for the whole thing. And, to be quite honest, if I knew I was paying out-of-pocket, I probably would have demanded prices upfront and dragged myself out of the hospital a day or two earlier (that's the moral hazard I mentioned earlier).

On that same trip to India (the very next week, in fact), I treated myself to a much-needed laser eye surgery. It was more complicated than it should have been (no fault of the ophthalmologist, but rather my poor treatment of my corneas for years), and involved my corneas being scraped off twice, five nights of recovery in a nearby hotel, and lasers burning layers off my lenses (I want to restate that the procedure would have been exactly the same in the United States—nothing went wrong). At home, this procedure would have cost upwards of $4,000; in Delhi, it cost about $600 including food and lodging for the week. 

There's a widespread belief (at least amongst those who gasped at my tales of Indian healthcare when I got back to the States) that medicine in the non-western world is inferior, and sometimes that's true but often it feels the product of the pervasive sentiment that brown-skinned people can't provide the same level of healthcare as light-skinned people, and that is anything but true. I digress, of course: my point is simply that if something goes wrong somewhere in the world, there's a pretty good chance someone will be able to fix it, and the amount we would have paid in just-in-case insurance will probably be enough to buy pretty good care out-of-pocket (unless the country has fully socialized healthcare to begin with, in which case the cost, even for a non-citizen, may very well be $0), or to get stabilized and fly somewhere with good, cheap care.

(As a final frame of reference, a visit to a physician in Iceland—one of the most expensive countries in the world—cost Lauren under $100.)

The sole upside of getting E. Coli in Agra, india: a really pretty view of the Taj Mahal from the hospital window.

The sole upside of getting E. Coli in Agra, india: a really pretty view of the Taj Mahal from the hospital window.

[4] The practical argument: We can insure ourselves.

We're fortunate to have saved enough (we hope) to travel frugally for a few years, and (we hope) come back home with enough money for food and whatever we end up doing next. Our joint budget is about $7,000 per year, but we're allocating another $3,000 for the annual oops fund. 

The oops fund is for when things go wrong. Not, like, it's raining and we're soaking wet, so oops, we have to stay in a guesthouse—that's built into the $7,000 per year—but, like, oops, we need stitches (or an emergency flight, or a new tent, or whatever). And though that might not cover much in some places (like the ten countries listed above—though it's worth noting that I've traveled to every one of those countries but Luxembourg without ever having an issue), $3,000 is enough for each of us to get E. Coli twice in India in the same year and spend eight days in the hospital recovering from it (which would be a miserable time indeed).

If you spend $3,000 on a year of travel insurance (which could very well be the least we would pay for it) and don't use it, it goes away and you never see that money again. If you budget $3,000 for an oops fund and don't use it, you can certainly splurge and have a wild night on the town, or you can more responsibly just roll that money over to the next year, and find yourself with $6,000 in an oops fund, enough for a hospital stay even in the failed state of American healthcare.

Of course, sometimes big catastrophes happen—airlift, heart surgery—that the oops fund might not cover. And for that, I guess, we have the rest of our world tour budget. If we find ourselves with over $3,000 of healthcare expenses in our first year, things have probably gone pretty awry, and there's a pretty good chance we won't actually want to keep going, in which case there's the following year's oops fund, and also the $7,000 or so we've budgeted for travel that year. 

So it's not that we're not planning on traveling with insurance; it's just that we're leaning towards traveling with insurance of our own making. This is a privilege we can afford and one others—like those looking to get around the world on $1,000—may not (but then again, can those looking to get around the world on $1,000 really afford travel insurance? Depends where they're from, I guess).

A very important caveat:

If not already made abundantly clear, this is our current plan for a trip we have yet to take. I've traveled to thirty-plus countries on four continents towing the line of what some might call risky behavior, and the only ill that's ever befallen me in doing so has been that one bad meal in India that gave me E. Coli, and so I can say the money I spent on insurance for all that time (well over $10,000 for one $500 claim) was a pretty poor economic choice. That said, I've had good luck, and this trip will certainly be the hardest (and quite possibly, most hazardous) yet, and so we may update this post eighteen months from now celebrating our decision to travel with insurance, or perhaps bemoaning and begrudging ourselves for it. If you're considering whether to insure yourself for a trip of your own, that's a personal decision specific to your personal finances and personal tolerance for risk.

But we'd totally love to hear what you think. Horror story to share to scare us into getting insurance? Counterpoints to persuade us? Fervent agreement? Or perhaps a really inexpensive policy you're aware of that might just make economic sense after all? Let us know!

If you find our rationale dubious, Friedel and Andrew have a helpful (if a bit old and mostly European-focused) guide on finding travel insurance for long-term bike tours. They also have much more experience with what they're writing about than we do..