- Travel insurance may cover the costs of canceling a trip, lost or damaged luggage, and emergency medical expenses.
- It can be valuable when the upfront costs of your trip are nonrefundable.
- A policy may be especially useful overseas, especially if your health insurance does not fully cover medical treatments or the costs of being evacuated.
- A comprehensive policy typically costs between 5% and 10% of the total price of the trip.
Is travel insurance worth the cost? In many cases, the answer is yes. At other times, travelers can skip this coverage and put that money toward enjoying their vacation.
Of course, there is no shortage of potential travel annoyances lurking out there. Your flight could get canceled, you may get sick or your luggage may get lost, just to name a few.
You can get insurance to cover these situations, but where travel insurance can really pay off is when you’ve made a big investment in your trip in advance—a prepaid, nonrefundable stay at an all-inclusive resort, a packaged tour or a cruise, for example—or are heading overseas, where the risks of incurring substantial costs if you get sick or injured are higher.
“Travel insurance protects you from a range of risks and unexpected costs that you might encounter when you travel abroad,” says Alex Tiffany, founder of the U.K.-based travel blog Just Go Exploring.
Before you buy insurance for your next trip, though, learn more about what the policies cover and the pros and cons of purchasing this coverage.
Inside this article
What travel insurance covers
Some common scenarios that a travel insurance policy may cover are:
Medical expenses that your own health insurance plan doesn’t cover if you are sick or injured on your trip, including evacuation and repatriation—that is, bringing you back home safely in the event of a serious medical event.
The loss, damage or theft of luggage and other personal belongings. (Airlines are required to reimburse travelers for lost luggage, but restrictions apply.)
The costs of canceling your trip at the last minute.
The expenses you incur due to delays and missed connections.[1, 2]
Trip cancellation may be one of the trickier items to get reimbursement for. To get coverage for the cost of canceling your trip, you must have a covered reason, which typically includes illness, injury or death (of the traveler or a close family member), a natural disaster, being laid off from your job or the tour operator going out of business.
Since the onset of the coronavirus pandemic, insurers have added coverage for cancellations due to contracting COVID-19 or having to quarantine due to contact.
When to buy travel insurance
For some vacations, you don’t need travel insurance. At other times, it’s critical to have coverage, especially if you’re making a substantial upfront investment in your vacation.
“Travel insurance will likely reimburse you for a percentage of your losses if your trip is canceled, you get rained out, you miss your flight or your luggage goes missing,” says Melanie Musson, a travel insurance expert with Clearsurance, an online insurance comparison platform. “If you’re traveling domestically, especially if you’re taking a road trip, you probably don’t need travel insurance.”
Megan Moncrief, chief marketing officer at Squaremouth, a St. Petersburg, Florida-based online insurance site recommends that trip-takers buy a policy in the following circumstances:
When you have prepaid a substantial amount for your trip, and the costs are nonrefundable. A policy with trip cancellation can insure 100% of those expenses if you are unable to take the trip for a covered reason.
If your health insurance policy does not extend coverage to your destination or imposes limits. A comprehensive travel policy will include medical benefits that can cover you in the event of an emergency.
You have a concern that may lead you to cancel or delay your trip or return early, such as a sick or elderly family member, or you are traveling during the stormy season to a destination prone to hurricanes.
The country you are traveling to requires travel insurance for all foreign travelers, either because of COVID-19 or other potential medical expenses. (A simple Google search will let you know if your target country requires travel insurance.)
Melissa Middlestadt, a frequent traveler and founder of the travel blog My Beautiful Passport, was glad she had travel insurance when she went on a trip to Japan and missed a flight due to a late train. “I got to the airport after the cutoff check-in time and couldn’t board the flight,” she says. “The airline canceled all remaining flights, and I was stranded.”
Middlestadt had trip cancellation and interruption coverage, so she was able to submit a claim for the cost of rebooking her flight and staying in a hotel.
Of course, the chance of something going wrong probably isn’t very high. So you’re likely paying for something you won’t need. “As is the case with all lines of insurance, odds are you won’t make a claim, so you’ll pay premiums with no reward,” Musson says. “But, if you do make a claim, you’ll undoubtedly be glad you decided to purchase the coverage.”
When to skip travel insurance
You don’t always need travel insurance for your vacation. Moncrief cites common examples of when you can skip coverage:
Trip cancellation coverage may be unnecessary if you’re not on the hook for nonrefundable expenses, or if your credit card provides cancellation benefits as a perk.
Emergency medical coverage is not always necessary if your health insurance covers you while you’re away from home.
Also, review your airline’s travel cancellation policies to see what you might pay to change or cancel your flight. Rules vary by airline.
“For the most part, travelers should purchase insurance for their peace of mind,” says Naveen Dittakavi, founder and CEO at Next Vacay, an airfare search platform. “However, if you understand your rights as a passenger, it’s often not necessary to purchase expensive insurance, such as for trip cancellations.”
Without insurance, you may still be entitled to rebooking a seat on another flight or compensation. “Checking out cancellation policies of airlines is, therefore, a better step to protect your plans against travel cancellations as some are more flexible than others,” Dittakavi says.
How to shop for travel insurance
To get the coverage you need at the best price, zero in on the details of the policy to ensure it meets your needs, and compare quotes from multiple insurers. “We always advise against simply ‘opting in’ to travel insurance when it’s offered through a travel booking,” says Moncrief.
Travel insurance policies typically offer similar benefits, so Moncrief recommends comparing options and then getting the least expensive policy that has the coverage you need. “This can include comparing policies from an aggregator, directly from a provider, or through other sources like the airline or cruise line.”
“Comprehensive policies typically cost between 5% to 10% of the total trip cost,” Moncrief says. “However, this price can vary depending on age, trip cost and the length of their trip.”
In addition to the age of the traveler (those over 65 pay more), trip length and cost, and the number of covered travelers, the scope of coverage will also affect the premium.
Adding optional features like the ability to cancel for any reason or coverage for your rental car will raise the price compared to a no-frills policy. If you have a preexisting health condition, check that your policy offers a preexisting condition waiver.
You should always read the entire policy to make sure you understand the benefits and restrictions. “Travel insurance policies typically include a 10- to 14-day money-back guarantee period,” Moncrief says. “If a traveler reviews their policy within that time period and determines it isn’t a fit for them, they can cancel their policy for a full refund.”
How to manage a claim
Before you travel, give a trusted family member, friend or financial professional familiar with travel insurance a copy of your policy.
“It’s best to share the purchase data with someone who is not traveling with you so that if you are in need they have the policy details to provide to local officials for transfer to another facility, repatriation or other assistance,” says Andrew Jernigan, chief executive of Insured Nomads, an online insurance services platform.
Always report any claimable event—a canceled trip, a medical emergency, the theft or loss of property, delays and cancellations—to your insurance company as soon as possible, ideally within 24 hours.
“In the case of theft, you also need to obtain a report from the local police, ideally on the day that the theft occurred, or as soon as possible thereafter,” says Tiffany. “Without a police report, some insurance providers will refuse to pay out for any items that were stolen.”