While the cost of travel can vary based on your choice of hotels and resorts, your mode of transportation, and other factors, adding a travel insurance plan makes your trip cost an average of 4% to 12% more. This may leave you wondering if travel insurance is truly worth the cost, or if you should take on the risk of going without it.
The first detail to note about travel insurance is the fact that plans vary dramatically by provider, and that you may not actually need this coverage for every trip you take. The key to knowing whether you need travel insurance is figuring out your specific risks for any given vacation, then deciding if you can buy coverage that adequately protects you from common financial losses and pitfalls that might occur.
What does travel insurance cover?
Travel insurance covers a range of travel-related risks, and you’ll quickly notice that each insurance policy is different. Most travel insurance plans offer coverage for trip cancellations and interruptions, lost or delayed baggage, medical emergencies, and other common perils; some let you add optional insurance for rental cars or sporting equipment. Some travel insurance plans can also be customized further with options like “cancel for any reason” (CFAR) travel insurance or “interruption for any reason” (IFAR) coverage, both of which let you cancel your trip or cut your travel plans short when you need to.
As you compare travel insurance policies, you’ll notice that limits vary for specific coverages, and that you’ll get a more robust level of protection if you’re willing to invest in a premium plan.
To give you an overview of the way different travel insurance policies work, the chart below shows the included benefits in several plans from a travel insurance company called Travelex:
|Travel Basic||Travel Select||Travel America|
|Trip cancellation||100% of insured trip cost||100% of trip cost||100% of trip cost up to $750|
|Trip interruption||100% of trip cost||150% of trip cost||150% of trip cost up to $1,125|
|Trip delays||$500 ($250 per day)||$2,000 ($250 per day)||$2,000|
|Emergency medical and dental expenses||$15,000||$50,000||$50,000|
|Emergency medical evacuation and repatriation||$100,000||$500,000||$100,000|
|Baggage and personal effects||$500||$1,000||$250,000|
|Sporting equipment delays||Not included||$200||$2,000|
|Accidental death and dismemberment (AD&D)||$10,000||$25,000||$25,000|
|Kids included in pricing||Not included||Included||All coverages and limits shared with up to seven travelers|
What does travel insurance not cover?
While the coverages above can help protect you from situations like flight cancellations, COVID-related travel interruptions and the mounting costs that can result from a medical emergency, it’s important to note that travel insurance policies cannot possibly cover every unexpected bill you encounter before, during or after a trip. That’s because travel insurance is not meant to be used like other types of insurance, including traditional medical coverage you have for routine health care expenses.
According to Allianz Travel Insurance, travel insurance “does not cover losses that arise from expected or reasonably foreseeable events or problems.” Here are some of the most common exclusions found in travel insurance policies:
- Civil unrest
- Epidemics (except COVID-19)
- Extreme, high-risk sports
- Government-issued travel bulletins or warnings
- Natural disasters
- Nuclear reaction, radiation or radioactive contamination
- Preexisting conditions (unless specifically covered by your plan)
- Pregnancy-related medical expenses that aren’t an emergency (including regular labor and delivery)
- Terrorist events
- Travel to participate or train for a sporting event
With these common exclusions in mind, remember that travel insurance companies may exclude or include different travel-related perils for coverage within their policies. This means you need to read over the fine print from your travel insurance provider to know exactly how your policy works.
When is travel insurance worth it?
Travel insurance can be well worth the cost in several situations, including instances where you want to protect the cost of your trip. If you spent thousands of dollars on a vacation and you want the chance to get reimbursed for nonrefundable travel expenses if something goes wrong before or after you depart, for example, travel insurance can be a good investment.
That said, many consumers opt to purchase travel insurance for the medical insurance aspect alone. After all, the health insurance policy you use in your home country is unlikely to apply overseas, and that’s just as true if you’re using government-sponsored plans like Medicare or Medicaid.
While you won’t know whether the cost for travel insurance is worth it if you never have to use your coverage, there are some instances where travel insurance can be well worth it.
You want reimbursement for out-of-pocket expenses that result from trip delays and baggage issues
Most travel insurance plans will reimburse you for incidental expenses that occur while you wait for your flight to depart or for your bags to arrive. Examples include meals and hotel stays if your flight is delayed overnight, or clothing and toiletries you have to buy while you wait for your bags to show up at your destination.
Limits apply to this coverage, but it can still pay off if you have to use it.
You want the option to cancel your trip and stay home for any reason
Some travel insurance plans give you the choice to add optional cancel for any reason or CFAR coverage that lets you cancel your trip for a reason not covered within a typical trip cancellation benefit. If you need to use this benefit, you’ll typically get 50% to 80% of your prepaid travel expenses refunded back to you if you decide to stay home.
The exorbitant costs of medical evacuation keep you up at night
According to Allianz Travel Insurance, the average costs of international medical evacuation can range from as low as $15,000 in Mexico all the way up to $220,000 in Asia, Australia and the Middle East.
Fortunately, many travel insurance policies offer up to $500,000 in medical evacuation coverage or potentially more.
You want protection from travel-related issues caused by COVID-19
Most travel insurance plans cover coronavirus as if it were any other illness, meaning you can use your trip cancellation or trip interruption benefits if you get sick before or during your trip. Some travel insurance plans also cover COVID-related quarantine in destinations abroad as long as it is required by a country or directed by a physician.
When should you skip travel insurance?
While the cost of a travel insurance policy can be worth it in the end, there are plenty of travel scenarios where you may not need to purchase a plan. Consider the following situations where buying insurance may not be worth the trouble:
You’re planning a short road trip within the U.S.
If you’re planning a short road trip within the U.S. where your own health insurance coverage will apply, you may not need travel insurance that covers medical expenses. The fact that you’re not flying also means you don’t have to worry about flight cancellations, and that your luggage will likely remain in your possession the entire trip.
All your travel plans let you cancel without penalty
If your hotel stay, airline tickets and other travel plans are all fully refundable, you may not need to invest in travel insurance. This is especially true if your trip is taking place in the United States where your own health plan will apply.
You plan to use the insurance cover offered through your credit card
There may be instances where credit card travel insurance coverage is sufficient for your plans, although only you can make this decision.
For example, the popular Chase Sapphire Reserve card comes with trip cancellation and interruption coverage worth up to $10,000 per person and $20,000 per trip; primary rental car coverage for damage or theft worth up to $75,000; lost luggage reimbursement worth up to $3,000 per passenger; emergency evacuation and transportation coverage worth up to $100,000; and more.
You bought insurance coverage directly from your travel provider
There may be instances where the travel insurance coverage from your airline or cruise line is good enough. If you’re flying within the U.S. to see a family member and staying in their home for free, for example, you may only want protection against flight cancellations, eligible trip delays, and lost or delayed baggage.
Many cruise line travel insurance policies offered when you book a cruise can also be good enough for some trips. For example, some cruise travel insurance policies include coverage for trip cancellations and interruptions, travel delays, emergency medical and dental expenses, emergency medical evacuation and transportation, lost or delayed baggage, and more.
The bottom line
Travel insurance may or may not be worth it for you. This determination usually depends on the type of trip you’re taking and how much it costs. While securing coverage almost always makes sense for international trips to destinations where your domestic health insurance doesn’t apply, you may feel comfortable skipping a plan for affordable trips you plan to take closer to home.
In instances where you do decide travel insurance is worth the cost, you should always shop around among providers to compare them based on included coverages, policy limits and costs most of all. If you’re a frequent traveler who always seems to be jetting off somewhere new, you can also consider purchasing a multitrip plan or an annual travel insurance plan. Be sure to peruse U.S. News’ picks for the best travel insurance companies and the cheapest travel insurance options.
Why Trust U.S. News Travel
Holly Johnson is an award-winning writer who has extensive experience when it comes to researching and buying travel insurance for her own trips to more than 50 countries around the world. Johnson has interviewed top executives from many of the best travel insurance companies and has successfully filed several travel insurance claims for trip delays and trip cancellations over the years. Johnson also works alongside her husband, Greg, who has been licensed to sell travel insurance in 50 states, in their family media business.
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