Edited by Lee Huffman
Going on vacation helps you relax, reconnect with family and friends, and explore new destinations. While we always hope for the best when booking our trips, what happens when plans get interrupted? We’ve all heard at least one horror story about someone who lost a lot of money because the unexpected occurred and they didn’t have travel insurance to reimburse their expenses.
Most travelers still don’t fully understand the importance of travel insurance or what it covers. While you might think it’s just to cover financial losses if your trip gets canceled. However, travel insurance is so much more.
While no one wants to think about missing out on a well-planned vacation, travel insurance policies help to take the worry out of travel planning.
Let’s explore all aspects of travel insurance.
What is Travel Insurance?
Travel insurance, also referred to as trip insurance, is a type of insurance that covers a pre-planned trip and reimburses the policyholder should certain unforeseen circumstances happen. Most travel insurance policies cover the traveler before and during travel. Travel insurance policies cover a variety of travel costs, such as canceled flights, flight delays, car rental damages, lost luggage, medical expenses, and other unexpected costs.
When it comes to prices, a typical travel insurance policy costs between 3% and 8% of the trip expense. That fact typically causes travelers to consider whether or not it’s worth the money. However, you can keep your costs down since travel insurance only applies to non-refundable travel expenses. Understanding how travel insurance works and the plans available is essential when trip planning.
You can purchase travel insurance from:
:: Travel insurance companies
:: Travel agencies
:: Online marketplaces
:: Airlines
:: Cruise lines
:: Credit card companies
:: Membership groups like AAA and Costco
Read on to learn what travel insurance covers, when it’s worth it, and when you should skip it.
What Does Travel Insurance Cover?
Many travelers assume that travel insurance is for unexpected cancellations due to weather, but what’s eligible for reimbursement has expanded throughout the years. In fact, today’s travel insurance plans typically include coverage for delays, cancellations, lost or delayed luggage, medical expenses, and more.
Just the mere fact that travel insurance usually includes trip cancellation coverage, travelers can rest assured that it will cover the cost of missed flights, canceled reservations, and miscellaneous expenses associated with a trip cancellation. However, all policies, coverage limits, and exclusions are different, so you must read the fine print regarding coverage.
Many travel insurance policies offer medical expense coverage. This pays for the costs of treatment and hospitalization where a traveler’s normal health insurance policy won’t kick in. This coverage can offer significant value should a hospital or medical facility not accept the patient’s private medical insurance, especially in a foreign country or aboard a cruise ship. Imagine the cost of an emergency flight to a medical facility near your home from a destination outside the United States. Travel insurance with medical expense coverage may cover those extra costs.
In addition to adding medical to your travel insurance policy, travelers can choose from a variety of benefit levels and other travel insurance add-ons. Common add-ons include coverage for baggage loss and rental car liability. Coverage varies by provider and plan, and most companies can bundle several types of travel coverage features into a comprehensive single policy that is often cheaper than if you bought those coverages separately.
Types of Travel Insurance
When researching travel insurance, you’ll quickly notice that each policy is different. Most plans offer coverage for a variety of situations you may face while traveling. Here are a few of the most common types of travel insurance:
Trip cancellation – Get reimbursed for any non-refundable or pre-paid travel expenses if you’re unable to travel for covered reasons noted in the policy, such as illness, injury, flight delays, and more.
Travel delay – Covers the associated costs due to flight delays from airplane mechanical issues, storms, or other flight-related issues. Costs may include expenses for meals, hotels, local transportation and parking.
Trip interruption – Allows reimbursement for non-refundable trip costs because you returned home early for a covered reason noted in your policy. Flights, lodging, and tours may be covered.
Missed connection – Get reimbursed for the additional costs you incurred to catch up to your trip if you missed the departure for a reason covered by your policy. This may include the cancellation or delay of flights due to weather or delays caused by the airline.
“Cancel For Any Reason” (CFAR) Insurance – Standard trip cancellation insurance ONLY allows you to file a claim should the policy cover the cancellation reason. The CFAR policy allows you to cancel your trip for ANY reason. However, most travel insurance policies reimburse just 50% to 80% of covered trip cost when filing this claim (subject to maximum claim amounts).
Travel medical care – Covers your medical care costs in the event of unexpected injury or illness during your trip as outlined in your policy. This coverage is a must for international travel since U.S. health plans typically offer no or limited coverage abroad.
Medical evacuation – This coverage assists with the moving expenses associated with evacuating or transferring you to a location for treatment via medical airlift or other transportation. Medical evacuation travel insurance is important as it pays up to your policy limits for transportation to the nearest medical facility.
Baggage delay or loss – Get reimbursed for lost baggage and personal items, so you can purchase essential items in the event of a baggage delay or loss after the specified amount of time listed in your policy. Claims are typically limited to a maximum daily amount per person or a total claim amount for your entire travel party. Refer to specific exclusions and limits on certain items.
Accidental death and dismemberment – This coverage is for accidental death during a flight, on public transport, or for the entire duration of the trip.
How Much Does Travel Insurance Cost?
Travel insurance companies can protect policyholders from almost any cost directly associated with a trip, but the cost of a travel insurance policy depends on many variables. Be sure to comparison shop so you can select the travel insurance provider and policies that meet your needs. Travel insurance generally costs 3% to 8% of your trip cost. With that in mind, consider that a trip valued at $2,000 might cost approximately $60 to $160 to insure.
Price of travel policies may be based on the following:
:: Domestic or international destination
:: Duration of trip, number of days, weeks, or longer
:: Overall cost of trip
:: Number of travelers to be covered by the policy
:: Age of travelers
:: Basic travel coverage selection
:: Add-on supplemental policies to cover travel issues like rental cars and more
Remember, the amount of insurance you need will depend on the travel issues that you want to cover. A basic policy may only cover flights, hotels, or a cruise for weather-related cancellations, while other policies for international travel may include an add-on for medical coverage.
Keep travel insurance costs low by only covering non-refundable reservations. Refundable travel and reservations booked with airline miles or hotel points typically are not eligible for reimbursement, so do not include those totals in your coverage amount.
What Does Travel Insurance Not Cover?
While it’s true that having travel insurance is beneficial to cover canceled flights and other travel issues, not all travel policies cover all travel scenarios before, during, or after a trip. In other words, you must have a legitimate reason that falls under the policy guidelines, otherwise your claim for reimbursement will get denied. Before purchasing a travel insurance, read the fine print to ensure you’re getting the coverage you need.
For example, you may take out a policy that covers medical emergencies while traveling, but the policy may exclude pre-existing medical conditions. Your insurance may cover lost luggage, but the policy requires that it be lost for a minimum time period before you can be reimbursed for the loss. Traveling in a tour group? If so, make sure any policy covers that. Travel insurance companies will deny your claim should the reason be in your control, like missing a flight because you overslept or got caught in traffic.
Common travel insurance exclusions:
:: Government-issued travel warnings
:: Natural disasters
:: Terrorist events/Civil unrest/War
:: Epidemics
:: Preexisting medical conditions (unless noted in plan coverage)
:: Non-emergency medical treatment
:: Adventure sports and high-risk activities during travel
:: Mobile devices, computers, eyeglasses and other non-baggage items
When is Trip Insurance Worth It?
Knowing the traveling risks you might face and what’s covered in a travel policy will help you decide whether travel insurance is worth it for your trip. Most travelers appreciate standard benefits that cover trip delay, cancellation, or interruption, medical emergencies, and luggage protection, especially when traveling internationally.
Elderly travelers may want to get travel insurance that cover trip cancellation should an unexpected health issue arise before or during the trip. That protection allows you to rest assured that your trip is protected from a wide variety of unforeseen circumstances.
While you may think that domestic travel doesn’t need trip insurance, but it could be worthwhile in certain situations, especially when you’ve had to pay large, non-refundable deposits or were required to prepay your reservations..
Shipboard medical facilities and medical treatments outside the U.S. are often not covered by your private medical plan. Even if your travel costs are minimal or you’re traveling using airline miles, travel insurance with a medical add-on can be a smart investment.
If you’re traveling during hurricane or blizzard seasons, a policy is a good idea if you fear a last-minute trip cancellation. Consider baggage insurance when multiple flights from destination to destination, as your bags could be missing when you arrive at your final destination.
Keep in mind that many travel insurance companies will reimburse travelers for some expenses while waiting to rebook a canceled flight or locating lost luggage. Eligible reimbursements may include meals, hotels, clothing, toiletries, and necessary medications. That makes travel insurance a worthwhile investment in the long run.
When to Skip Travel Insurance?
While the cost of a trip insurance policy can be well worth it for some travel circumstances, short road trips within the United States may not be necessary. Your health coverage should still apply if you get sick or injured, so you wouldn’t require additional insurance for medical expenses.
If you buy insurance from your travel provider like an airline or cruise line, you won’t need to purchase an additional policy. Also, some credit cards offer travel insurance that may be sufficient insurance to cover your travel plans. Review the coverage types, claim limits, and exclusions in these policies because there may be gaping holes in what they cover, and you don’t want a nasty surprise when submitting a claim.
While you may question paying extra for coverage, travel insurance is worth it if losing your trip investment due to an unexpected cancellation will cause financial hardship. Consider if it’s worth it to pay 3% to 8% of your trip cost for travel insurance to avoid losing 100% of your trip cost? While it’s hard to predict unforeseen circumstances, travel disruptions and cancellations happen more often than you think.
Is Travel Insurance Right For You?
If you planned a trip, whether for business or pleasure, and a cancellation with a potential loss of non-refundable money would hurt, consider purchasing travel insurance. Keep in mind that travel insurance is a small expense compared to the non-refundable travel costs that you might lose because of unexpected circumstances.
The expression “better safe than sorry” is a good rule of thumb, especially if planning international travel or a once-in-a-lifetime trip with a hefty price tag. There are many good reasons to purchase travel insurance. Do your homework to compare insurance providers to find a comprehensive travel insurance policy with terms and conditions that meet your travel needs and budget. Keep travel insurance costs low by only insuring non-refundable reservations and avoiding add-ons that don’t apply to your travel plans. Factor in other coverages you may have, like credit card travel insurance, that protect your trip so you don’t pay for duplicative coverages. While you can’t control unforeseen travel circumstances, the right coverage can give you peace of mind when traveling.
FAQ
What does travel insurance cover?
Trip insurance typically includes coverage for delays, cancellations, missing luggage, medical expenses, and more. Policies typically do not cover reimbursement for award travel or refundable reservations.
How much does travel insurance cost?
Most insurance premiums are usually 3% to 8% of your non-refundable trip cost. Consider the value of your trip vs. the cost of the insurance to decide whether it’s worth it.
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The information provided on this website is for general informational and educational purposes only and should not be considered legal, financial, or insurance advice. While we strive to keep content accurate and up to date, insurance laws, policies, and regulations can vary by state and may change over time.
Nothing on this site constitutes professional advice or a recommendation of any specific insurance product, provider, or strategy. You should consult with a licensed insurance agent, financial advisor, or legal professional regarding your individual situation before making any decisions.
