What is travel insurance?

Travel insurance protects the financial investment you make in a trip. If something goes wrong before or during your travels, it reimburses prepaid, nonrefundable costs, covers emergency medical treatment, pays for lost luggage, and helps with unexpected delays. The coverage you need depends on your destination, total trip cost, and what protection you already have through credit cards or health insurance. 

 Coverage varies from policy to policy, but often includes things such as:

  • Reimbursement for a lost or damaged suitcase
  • Paying for care during a medical emergency
  • Making you whole after a trip cancellation.

There are many other types of coverage available. For example, the Insurance Information Institute notes that you can purchase coverage that will reimburse you for lost travel loyalty plan points.

For this reason, it’s important to shop around to make sure you get the coverage you need at the best price.

How much does travel insurance cost?

The cost of travel insurance varies from provider to provider. The nature of your trip and the types of coverage you need will impact how much you will pay for travel insurance. Other factors will include your age, the number of people traveling with you, and the number of days you expect to be away. 

Travel insurance costs about 5% to 10% of your total trip cost, though your actual price will vary depending on risk factors and coverage choices 

For example, a $5,000 trip may cost roughly $250 to $350 to insure. 

You may have free coverage available through your credit card, but read the fine print. This type of coverage usually isn’t as comprehensive as what you would get from purchasing a separate travel insurance policy.

What does travel insurance cover?

Travel insurance covers specific financial losses such as trip cancellation, emergency medical treatment, medical evacuation, travel delays, and lost or damaged baggage, but only when the cause of the loss is covered by your policy. 

A few of the most common policies include:

  • Cancel for any reason (CFAR)
  • Trip interruption
  • Trip cancellation
  • Medical
  • Baggage
  • Trip delay

CFAR coverage is the most comprehensive type of travel insurance. You may purchase this as an add-on benefit for your policy.

In most cases with CFAR coverage, as long as you cancel within a specified period before your trip, you will recoup most of the money you paid to that point.

For example, Progressive notes that those with CFAR coverage must cancel with their travel supplier within 48 to 72 hours before their trip, depending on the policy they purchase.

What doesn’t travel insurance cover?

Travel insurance does not cover every possible disruption, such as changing your mind (unless you buy cancel for any reason coverage, known or foreseeable events, pre-existing conditions unless waived, high-risk activities, or losses that fall outside the policy’s covered reasons, limits, or requirements. 

Some things your travel insurance policy might not cover include:

  • Reckless behavior or intentionally engaging in dangerous behavior, such as skydiving.
  • Filing a medical coverage claim but having a pre-existing condition associated with the claim.
  • Claims linked to foreseen events, such as a hurricane.
  • Trip cancellations tied to being detained by customs or related to work obligations.
  • Simply changing your mind about going on the trip.
  • Canceling your trip due to bad weather.
  • Epidemics and pandemics.

Types of travel insurance

There are multiple types of travel insurance, including trip cancellation and interruption coverage, travel medical insurance, emergency medical evacuation, baggage and personal belongings coverage, travel delay coverage, and accidental death and dismemberment coverage. The type you need depends on your travel plans and how much you are willing to risk. Many plans combine several of these coverage options.

Trip cancellation and interruption insurance

Trip cancellation coverage will typically reimburse you for canceling a trip as long as you do so before leaving on vacation and the reason for your cancellation is covered by the policy.

Trip interruption coverage is similar, but this coverage kicks in the day you leave on vacation and reimburses you if the trip is cut short for a reason covered under your policy. Typically, you would be reimbursed for any prepaid or nonrefundable expenses associated with the trip. 

Travel medical insurance

Travel medical insurance covers emergency medical treatment if you become sick or injured while traveling. This type of coverage is especially valuable if you travel overseas; U.S. health insurance policies provide very little coverage outside the country.

The U.S. State Department strongly recommends travel medical coverage for international trips when existing insurance is insufficient. 

Baggage and personal belongings coverage

Baggage coverage reimburses you for lost, stolen or damaged personal items during your trip. It may also cover essential items if your luggage is delayed, but limits often apply to each item and category. 

However, there may be a ceiling on how much coverage you receive, including a per-item limit that might not fully cover items such as costly jewelry. You might get better coverage by purchasing a floater or endorsementAn endorsement is a supplement or change to an insurance policy. It amends the original policy and can increase or decrease coverage, change names or update addresses. to cover the item as part of your homeowners' insurance policy.

For airline-caused lost, delayed, or damaged checked baggage, DOT (U.S. Department of Transportation) rules require airlines to compensate passengers within applicable limits. Travelers should file a claimAn insurance claim is a request you make to your insurance company for coverage after your car is damaged or you have an accident. You can file a claim online, by phone, or in writing. with the airline first, then use travel insurance for any eligible remaining losses, depending on the policy. 

Emergency assistance, medical evacuation and repatriation

Medical evacuation coverage helps reimburse expenses you incur when you need to be transported to a medical facility after a medical emergency.

Repatriation coverage helps reimburse the costs of transporting a traveler’s remains back home if the traveler dies while on vacation.

Higher coverage limits are especially important for:

  • Remote destinations
  • Adventure travel
  • Cruises
  • Regions with limited medical infrastructure

Accidental death and dismemberment

Accidental death and dismemberment (AD&D) provides a benefit in the event of serious injury or accidental death during travel. Payments are made to the insured or their beneficiary in accordance with the policy terms. 

For example, if you lose a limb or vision, this coverage can provide financial support.

If you die due to an accident, your benefit is paid to a beneficiary who can use the money for things such as funeral costs or medical expenses related to the accident. You might not need this coverage if you have a life insurance policy.

Rental car coverage

Rental car coverage pays for damage to a vehicle you rent during the trip. 

Your auto insurance policy covers you in the U.S. and Canada, but not in other countries.

Some credit cards also offer rental car coverage when you use the card to rent the vehicle. Make sure to check what your credit card covers.

Other travel insurance coverage

Some travel insurance plans are designed for specific types of trips—such as cruises, flights, or international travel—and bundle multiple protections into a single package, though the exact benefits and structure can vary significantly from one provider to another. 

Other types of travel insurance coverage include:

  • Flight insurance -- Some companies offer flight insurance, which provides accidental death and dismemberment insurance for injuries suffered during a flight. Flight insurance won’t help if your flight gets canceled or an airline loses your luggage. You’ll find that in a general travel insurance policy.
  • Cruise insurance -- This coverage helps you with cruise cancellations or if you miss the ship before it leaves. Cruise insurance can also assist if you become ill on a cruise.
  • International insurance -- Traveling internationally can be exciting, but you also lose some insurance protections from home. International insurance covers people who travel outside of the country. This insurance can include trip cancellation, medical emergencies and lost and damaged property coverage, among other things. International insurance can be especially vital to people who plan to spend months in another country.

Travel insurance plans

Travel insurance plans are generally offered in two main types: single-trip and annual (multi-trip). Single-trip covers one journey from start to finish, while annual coverage protects multiple trips within a year and is better for frequent travelers. 

Options may include:

  • Single-trip travel insurance. This policy will cover you throughout a single trip, even if it involves visiting multiple places.
  • Multi-trip travel insurance. For this policy, you make a single purchase that provides coverage throughout the year. This type of policy can be a good option for those who make multiple trips in a year.

How to get travel insurance

Travel insurance can be purchased directly from insurers, comparison websites, travel agents or during the booking process. Some credit cards and employers also provide limited travel benefits, but these should be reviewed carefully. 

Many companies specialize in selling travel insurance. Some examples include:

  • Allianz Travel Insurance 
  • Berkshire Hathaway Travel Protection
  • Travelex Insurance Services
  • Seven Corners
  • AXA Assistance USA
  • Generali Global Assistance
  • IMG (International Medical Group) 

It is also possible to buy travel insurance through major insurance providers such as Progressive, John Hancock and AAA.

Some credit card companies might offer travel insurance to cardholders, although the coverage is unlikely to be as robust as what you would get through a separate travel insurance policy.

Finally, some businesses offer travel insurance coverage to employees when they travel as part of their job. This coverage might reimburse you for lost or stolen belongings, for example.

Is travel insurance worth it?

Travel insurance is worth considering when the financial risk of your trip is significant or when medical costs abroad could be difficult to manage. It is especially valuable for international travel, cruises, and expensive prepaid vacations. 

 Here are some factors to weigh when deciding whether or not to purchase this coverage.

What are the reasons you might need coverage? Think about what your risks might be when traveling. For example, would you be covered if you needed medical coverage when traveling internationally? Could you afford to take the financial loss if your trip were suddenly canceled? Will you take valuable items with you when traveling?

Do you already have coverage from other providers? Some credit cards might offer a comprehensive travel protection plan. Or perhaps your current health insurance plan will cover you for treatment while you are traveling. Maybe you are traveling for work, and your employer will provide insurance protection.

Other insurance policies you currently carry – such as homeowners insurance, health insurance or life insurance – might provide the coverage you need without adding a separate travel insurance policy.

All of these types of coverage can save you money on travel insurance. You might not need additional coverage at all, or you might be able to purchase a plan with reduced coverage at a lower price.

How often do you travel? If you are a homebody who rarely travels – and only drives to a neighboring state to see family when you do – you might not need travel insurance.

However, true road warriors may find a travel insurance policy a worthwhile investment.

Sources:

FAQ: Travel insurance 

Does travel insurance cover trip cancellation?

Yes, travel insurance reimburses prepaid, nonrefundable expenses when you cancel for a reason covered by your policy, up to the policy limits. Covered reasons may include an unexpected illness, injury or certain natural disasters. Changing your mind is not covered by standard trip cancellation insurance, but you can purchase cancel-for-any-reason coverage for broader protection.

Yes, you can buy travel insurance after booking your trip, but buying early gives you access to more options. Benefits such as cancel for any reason (CFAR) and some pre-existing condition waivers have strict purchase deadlines tied to your first trip payment, so waiting too long can limit your coverage choices.

No, not all adventure sports are covered. Standard travel insurance excludes high-risk activities such as skydiving, mountaineering and certain forms of scuba diving. Some insurers sell adventure or sports coverage that expands protection for these activities. Check the excluded-activities list before buying if adventure sports are part of your trip.

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