Is Travel Insurance Worth It? Here’s How to Decide
Travel planning is complicated.
Between finding flight or train routes, arranging accommodations, locating someone to watch your pets and water your plants and the 10,000 other details that go into traveling, it’s a wonder anyone goes anywhere at all.
And considering the frequent threat of canceled flights and lost luggage, your trip might end before it ever begins.
One question that pops up a lot during trip planning is whether or not to purchase travel insurance.
The answer depends, in part, on whether your trip is refundable, where you’re going and whether you’ll have health coverage at your destination.
What Is Travel Insurance and How Does It Work?
Travel insurance is a type of policy that protects you against certain financial risks while traveling. This can include anything from lost luggage to a last-minute trip cancellation or a medical emergency.
You can purchase policies from several different travel insurance companies. You’ll need to file a claim with the company to receive compensation. This usually involves submitting documentation so the insurer can verify what happened and reimburse you for your covered losses.
Most companies let you file a claim online or over the phone.
Trip insurance doesn’t cover everything, though. Most policies only cover the specific situations, events and losses spelled out in your policy — and only under certain circumstances.
Types of Travel Insurance
Travel insurance covers a number of risks. Some you may have thought of, such as canceled flights and lost bags. But it can also cover less-obvious scenarios, such as medical bills and evacuation expenses.
Before we dive into cost, let’s take a look at the most common travel insurance policy types.
Delayed or Lost Baggage
Luggage insurance won’t get your bags back any faster, but it will reimburse you for the money you spend buying replacement clothing, toiletries and medication.
Trip Cancellation or Interruption
Trip cancellation insurance, also known as trip interruption insurance, typically reimburses you the cost of your travel expenses if your trip is canceled, or the cost of return tickets home if your trip is interrupted. Some policies also cover circumstances that cause you to have to cancel your trip.
Emergency Medical Coverage
If you get sick or injured while traveling outside the U.S., your health insurance, including Medicare, may not cover any treatment or medication you receive.
Emergency medical insurance provides a safety net to help you pay for unplanned medical expenses.
Some emergency medical insurance policies include coverage for pre-existing medical conditions — but the benefit is generally time-sensitive.
To be eligible for pre-existing condition medical coverage, you must purchase the policy within 14 to 21 days of your initial booking date.
Some policies can also provide this coverage as long as the policy is purchased before your final trip payment.
If you experience a medical emergency in a foreign country, you can contact the local embassy to locate appropriate medical services, but the State Department will not help pay your medical bills.
Accidental death insurance is similar to a life insurance policy and pays out benefits to a traveler’s designated beneficiary in the event the traveler dies on the trip.
Cancel For Any Reason (CFAR)
A Cancel For Any Reason (CFAR) policy upgrade will generally reimburse up to 75% of your trip cost if you cancel for any reason not otherwise covered by your policy — usually up until two to three days before your departure.
You typically need to purchase CFAR as add-on coverage within a certain time after your first trip payment — usually 14 days.
Cancel For Any Reason add-ons are pricey: It typically adds 50% to the cost of your trip insurance.
Does Travel Insurance Cover Coronavirus?
Prior to 2020, you’d be hard pressed to find a travel insurance company that provided pandemic coverage.
COVID-19 changed that.
Most travel insurance providers have waived their pandemic exclusions and are providing certain COVID-19-related benefits, according to Megan Moncrief, chief marketing officer at online travel insurance marketplace Squaremouth.com.
Benefits can include coverage for canceling your trip after contracting coronavirus or needing medical care while on your trip.
“Most travel insurance policies cover contracting COVID-19, as long as the policy is purchased prior to their diagnosis,” Moncrief told The Penny Hoarder.
If you contract COVID-19 prior to your trip, you might qualify for trip cancellation benefits, which can reimburse your prepaid expenses.
Or, if you test positive on your trip, emergency medical care and medical evacuation benefits would be available, Moncrief said. You could also qualify for travel delay and interruption coverage if you were quarantined in a foreign country and unable to return home.
In general, it doesn’t cost more to purchase a travel insurance plan with COVID-19 related benefits, Moncrief said.
However, if you want to add Cancel for Any Reason coverage (which can help ensure against things like border closures) expect to pay at least 50% more for the policy.
Some Exclusions May Apply
You may need to jump through some hoops to get your money’s worth from COVID-19 travel insurance benefits.
If you get diagnosed with COVID-19 on your trip, your test must be accepted by the travel insurance provider.
In other words: “At-home tests may not suffice,” Moncrief said.
Another caveat to look out for on international trips: Border closures — which become common when case numbers rise — aren’t usually covered by travel insurance policies.
“In order to cancel a trip due to travel restrictions, the traveler would need the Cancel For Any Reason upgrade,” Moncrief said.
Even if you spend on travel insurance, there are still lots of ways to save on international travel.
How Much Does Travel Insurance Cost?
The average cost of travel insurance is typically between 5% and 10% of the total cost of your trip.
TravelInsurance.com estimates basic policies average $103 and comprehensive policies average $162.
A comprehensive policy would include financial protection for cancellations, medical emergencies, travel delays and luggage. A basic policy isn’t likely to include cancellation coverage.
Like all insurance, the exact cost can vary depending on multiple factors, like the coverage amount and type of policy.
Is Travel Insurance Worth It?
On the one hand, it’s difficult to put a price tag on peace of mind.
On the other hand, travel insurance does come with an actual price tag — and an expensive one at that.
So is travel insurance a must-have or is it worth the risk to pass up?
Here’s how to tell whether it’s worth the additional cost to buy travel insurance for your next trip.
3 Times It Makes Sense to Buy Travel Insurance
There are some instances where buying trip insurance is definitely worth it.
1. If your itinerary involves a lot of flights and stopovers, each one is a potential fail point.
A nonstop flight to an all-inclusive Caribbean resort in the springtime is less of an insurance risk than a month-long tour of Europe with 12 destinations during the height of blizzard season.
2. If you’re headed someplace where there is civil or political unrest, travel insurance is a good idea.
If you’re traveling to potentially risky foreign countries, your accommodation reservations might be canceled or travel to the area could be restricted before you leave.
In a worst-case scenario, you may need a non-medical emergency evacuation to take you to safety.
If you’re buying travel insurance under this scenario, be sure to read the fine print to make sure your policy specifically covers war and civil disorder, and check whether it covers evacuation expenses. Some don’t.
3. Sometimes the best reason to buy travel insurance is if you won’t be able to relax on your trip without it.
If worrying about something going wrong will overshadow your entire trip and keep you from enjoying yourself, spring for the coverage to ease your mind. In other words, if you’re going to spend much of your trip wishing you’d purchased travel insurance, go ahead and buy it.
3 Times It Makes Sense to Skip Travel Insurance
Buying travel insurance isn’t always necessary. Here are three times you don’t need it.
1. If you have travel insurance through a credit card, you can skip coverage.
Call your credit card company to see if travel insurance is available to you.
And check out our list of the four best credit cards with travel protection perks below.
- Chase Sapphire Preferred
- Capital One Venture X
- Marriott Bonvoy Brilliant American Express
- Bank of America Premium Rewards
2. You may not find the type of coverage you want or need.
Not all travel insurance plans are created equal. For instance, a policy that only covers lost luggage isn’t worth it if you only travel with carry-on bags.
3. You’re taking short, inexpensive domestic trips.
Consider your trip costs. If you snagged a cheap flight to visit friends for a weekend, you can probably forego insurance.
One exception is if you’re traveling to a location that could be affected by a hurricane or other predictable event of nature (like an active volcano) in the timeframe you plan to visit. Just make sure your policy covers natural disasters.
Many hotels, airlines and rental car companies honor military service. If you served, check this huge list of military discounts before planning a trip.
Where to Buy Travel Insurance
Many tour and cruise companies, travel agents and travel booking websites offer trip protection to their customers.
Some companies specialize in independent travel insurance. There’s also several mainstream insurance companies that offer travel insurance policies.
Here are a few places you can compare and/or purchase travel insurance:
A few tips if you decide to buy travel insurance:
- Buying insurance from travel companies means you’re asking the companies to reimburse you if things go wrong, which leaves it up to their discretion. It’s not in the financial interests of the airlines, cruise lines and tour operators to give you your money back, but it is in their interest to get you to hand over more money. Skip this one.
- Travel agents receive a commission for selling you insurance. If you prefer the convenience of one-stop shopping, know what type of coverage you want before you call to ensure you’re getting the coverage you need instead of the coverage they want to sell you.
- Rather than buying from the people selling you the trips, try comparison shopping on third-party insurance sites like SquareMouth or InsureMyTrip.
Explore Your Options Before Buying Travel Insurance
Can’t afford travel insurance? Well, it’s not the only way to protect against travel mishaps and headaches.
You may be able to get a refund or other compensation from certain reward credit cards — or even the airline company itself.
Refunds From Airline Companies
Under federal law, if your airline cancels or “significantly changes” your flight and you opt not to travel, the company must issue you a refund in your original form of payment.
According to the U.S. Department of Transportation, “A passenger is entitled to a refund if the airline canceled a flight, regardless of the reason, and the passenger chooses not to travel.”
You’re also entitled to a refund for any bag fee that you paid and any add-ons like seat upgrades or in-flight Wi-Fi.
If you still want to travel after your flight is canceled, most airlines will rebook you for free on their next flight to your destination (assuming seats are available).
But what if your flight was delayed, can you get your money back from the airline?
The DOT doesn’t define what makes a delay significant: It could be 30 minutes or four hours. Each airline determines whether you’re entitled to a refund on a case by case basis and time limits in policies may vary.
Experts say you may be able to move your travel date or get travel vouchers if you need to change plans due to COVID-19.
Make sure to check with your airline carrier to see if they offer any forgiveness policies before purchasing additional travel insurance.
Travel Reward Credit Cards
Several travel reward credit cards now offer attractive travel insurance perks.
Credit cards with the best coverage often come with high annual fees. But the yearly cost may be worth it if the perks are valuable and you no longer need to purchase a separate travel insurance policy for each trip.
Certain travel credit card insurance will cover trip cancellation, trip interruption, lost or delayed baggage and car rental damage when you use your card to pay for flights, cruises, rental cars and other travel expenses.
Here are a few credit cards with notable travel protection benefits.
4 Reward Credit Cards with Travel Protection Perks
|Credit card||Annual fee||What's covered||Coverage amount|
|Chase Sapphire Preferred||$95||Cancellations, interruptions, delays||$500-$20,000||SEE DETAILS|
|Capital One Venture X||$395||Cancellations, interruptions, delays, lost bags||$500-$3,000||SEE DETAILS|
|Marriott Bonvoy Brilliant American Express||$450||Cancellations, interruptions, delays||$500-$10,000||SEE DETAILS|
|Bank of America Premium Rewards||$95||Cancellations, interruptions, delays, lost bags||$100-$2,500||SEE DETAILS|
Chase Sapphire Preferred
Annual Fee: $95
What’s Covered: Travel cancellation insurance for accidental bodily injury, loss of life, or sickness experienced by the cardholder, a traveling companion or an immediate family member of the cardholder or their traveling companion.
It also covers trip interruptions due to severe weather, terrorist action and jury duty. Trip delay reimbursement is also included.
Up to $10,000 per covered trip with a maximum limit of $20,000 for prepaid, non-refundable travel expenses, including passenger fares, tours and hotels. There is a $40,000 maximum benefit amount per 12-month period.
Up to $500 for travel delay reimbursement costs, which covers things like meals and lodging if your travel is delayed more than 12 hours.
Other Details: The Chase Sapphire Preferred card offers perhaps the best travel insurance coverage with a lower annual fee than you’ll find with many other reward credit cards.
It also provides theft and collision damage insurance for most rental cars.
Capital One Venture X
Annual Fee: $395
Trip cancellation and interruptions: For you and immediate family members for prepaid, non-refundable tickets.
Trip delay reimbursement: Coverage for reasonable expenses like hotel rooms and toiletries if your flight is delayed by six hours or more.
Lost luggage reimbursement: Covers you if the airline damages or loses your bags.
Up to $2,000 for trip cancellation and interruption.
Up to $500 for trip delay reimbursement.
Up to $3,000 for lost luggage.
Other Details: The Capital One Venture X Card also offers cell phone protection and up to $75,000 for car rental accidental collision and accident insurance.
Marriott Bonvoy Brilliant American Express
Annual Fee: $450
What’s Covered: This card offers trip cancellation and interruption insurance. It also features baggage protection insurance and trip delay insurance for trips delayed by more than six hours due to a covered reason.
Up to $10,000 for trip cancellation and trip interruption insurance per trip and up to $20,000 per 12-month period.
Up to $3,000 for lost, damaged or stolen luggage.
Up to $500 per trip for trip delay insurance.
Other Details: The Marriott Bonvoy Brilliant American Express card comes with a hefty price tag, but offers good travel insurance benefits.
It also comes with rental car accident and collision insurance, though not all vehicle types or rentals are covered.
Bank of America Premium Rewards
Annual Fee: $95
What’s Covered: Trip delay coverage, baggage delay coverage, trip interruption and trip cancellation insurance and lost luggage reimbursement.
Up to $2,500 for non-refundable passenger fares if your trip is canceled or interrupted by sickness or other covered situations.
Up to $100 per day (up to five days) when your bags are delayed.
Up to $500 for reasonable expenses if a covered trip is delayed for more than 12 hours.
Other Details: The Bank of America Premium Rewards credit card offers less robust travel protection perks than some other reward cards, but with an annual fee under $100, it’s a good value.
The card also includes car rental insurance, emergency evacuation insurance and a referral dispatch network that provides emergency roadside assistance, towing and locksmith services.
Rachel Christian is a Certified Educator in Personal Finance and a senior writer for The Penny Hoarder. Lisa McGreevy is a former staff writer at The Penny Hoarder.