- Trip cancellation and medical care are the two most common travel insurance coverage areas.
- According to the latest research, the average cost of trip insurance was $111 in 2020.
- As with any insurance policy, the restrictions and rules for coverage can be complicated, so always ask to have the fine print spelled out for you.
- Cancel-for-any-reason travel insurance, or CFAR, only pays out a portion of your trip’s costs.
At last, it seems that travel is back. According to a Berkshire Hathaway Travel Protection survey, travel activity is near its highest level since the pandemic started in early 2020.
And with that, more people are buying travel insurance. In fact, 29% of respondents to the Berkshire Hathaway survey purchased travel insurance most of the time when they traveled in 2021, compared to only 7% who purchased it for most of their travel the previous year.
“Travel insurance is coverage that you can purchase that protects you from certain financial losses or extenuating circumstances you might face while traveling,” says David Angotti, chief executive officer of HawaiianIslands.com, an online travel platform.
“It’s usually not a requirement to purchase, but many consumers may want it if they are traveling abroad or are bringing expensive items with them,” says Angotti. “You can expect to pay between 5% to 10% of your total trip cost on travel insurance.”
If you’re thinking about taking a trip of your own, getting travel insurance may be a smart move. Here are the details on what travel insurance covers and doesn’t cover. For more on travel, see our advice on travel insurance and travel budgeting.
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What travel insurance covers
Once you know what is and isn’t typically covered by a travel insurance, you can tailor your policy to meet your specific trip insurance needs.
“The biggest mistake travelers make with travel insurance is assuming that a travel insurance policy covers everything,” says Nick Schrader, an insurance agent at Texas General Insurance in Houston. “What travel insurance does cover is a specific list of scenarios, spelled out by the insurance company.”
To help you plan, here are the common types of coverage you’ll find:
If you end up having to cancel your trip, trip cancellation can cover any prepaid, nonrefundable deposits you’ve made.
Generally, allowable reasons for canceling a trip are:
A death in the family
Serious illness or injury of the policyholder, family members or close friends
If your cancellation is approved, you’ll generally get reimbursed for:
Hotel and resort accommodations
Tour group trips
Trip delay travel insurance comes in handy if your trip is significantly delayed and you have to pay for a hotel room, additional transportation and meals as a result.
Be aware that the parameters for coverage are pretty specific. Daily limits, for example, are written into trip delay policy contracts. By and large, trip delay insurance pays out for delays of three to 12 hours.
Allowable reasons for trip delays include:
Geopolitical events (like war breaking out or acts of terrorism)
Problems with a transport vehicle (like an airplane that’s not fit to fly until repairs are made)
Payouts range from between $150 to $250 per traveler, but trip delay policies usually max out at $2,000.
If you think there’s a chance your vacation may be cut short, like if there’s an ongoing family emergency you might have to leave for, or if you’d like to be covered in case you get injured or ill during a trip and have to go home, interrupted trip insurance is the way to go.
In this scenario, nonrefundable costs may be reimbursed. Sample cost reimbursements include airline tickets home and any nonrefundable costs for expenses related to events that are forfeited when a trip is cut short.
This covers trips outside the U.S. (any medical costs incurred while traveling inside the U.S. are handled by your health care plan).
While medical costs for an illness or injury are covered, look for a policy that also offers 24/7 customer assistance and coverage for emergency medical transport to hospitals or clinics. The policy should also cover the cost of a trip home to the U.S.
Travel insurance also covers lost, stolen, delayed or damaged luggage. Policy costs and reimbursements vary from carrier to carrier, but many policies offer between $1,000 and $2,000 for lost luggage and between $300 and $600 for delayed luggage.
What travel insurance doesn’t cover
As you might imagine, there are any number of scenarios that travel insurance companies won’t cover. Here are some common ones:
Standard travel insurance policies often don’t cover hazardous activities such as horse-riding or scuba diving unless you pay extra.
Insurance companies also typically won’t offer medical travel insurance for pre-existing conditions. Check your standard health insurance policy for coverage.
Unless you purchase cancel-for-any-reason travel insurance (see below), you’re stuck if you simply decide not to take the trip or realize the trip is unaffordable, and want to cancel the trip before it begins.
So-called “medical tourism,” like plastic surgery or elective surgery (which can cost less overseas) isn’t covered by travel insurance.
Any travel cancellations due to military conflict (like the Russian invasion of Ukraine) aren’t typically covered by travel insurance unless you specifically get trip delay or cancel-for-any-reason coverage that includes it.
Any scenario where you suffer losses while under the influence of narcotics or while illegally inebriated won’t be covered.
An increasingly popular trip cancellation benefit, which can be an add-on to trip cancellation policies, is cancel-for-any-reason insurance.
Also known as CFAR insurance, cancel-for-any-reason allows for more trip cancellation reasons that are not otherwise covered in a traditional travel insurance policy. That includes scenarios such as if you simply decide you don’t want to go on the trip or if there is suddenly a military conflict at your destination. You have to officially cancel your trip at least 48 hours before the trip begins.
Expect to add about 40% to your trip cancellation policy costs if you get CFAR. Also, don’t count on getting 100% cost reimbursement. Typically, CFAR insurance pays out between 50% and 75% of your insured, prepaid, nonrefundable travel costs. You must purchase it within 21 days of making your initial trip payment.
Besides making sure to shop around to find the best policy for you, Candice Criscione, founder of Mom In Italy, a vacation planning company specializing in trips to Italy, recommends giving insurance companies you’re considering a call before you commit.
“If you’re not able to get through now, it’s likely you’ll have issues when you’re trying to contact customer service regarding reimbursements or help with billing,” says Criscione.
Another lesson Criscione learned: Find out if the insurer will pay the hospital and doctor bills directly.
“If so, it’s a huge help because you won’t need to make calls to a foreign country or try to communicate with someone in another language,” she says. “And you won’t need to spend any time working on it.”