Is Travel Insurance Worth It? Here’s How to Decide
Travel planning is complicated.
With finding flight or train routes, arranging accommodations, finding 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 threat of canceled flights and lost luggage, your trip might end before it ever begins.
This brings us to one question that pops up a lot during trip planning: Is travel insurance worth it?
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.
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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.
Accidental Death
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.
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.
Keep in mind that you’re generally still required to cancel at least two to three days before your trip to be eligible for CFAR reimbursement.
How Much Does Travel Insurance Cost?
The average cost of travel insurance is typically between 4% and 8% 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.
2. You do 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.
Tip: Top-rated travel credit cards often offer perks that include things like travel insurance, free baggage check and late hotel check-outs.
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 couple tips if you decide to buy travel insurance:
- 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.
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.
Under new rules set by the U.S. Department of Transportation, those refunds will become automatic. If your flight is canceled, delayed by three hours if it’s a domestic flight and by six hours if it’s international, you will automatically receive the refund if you choose not to accept alternative transportation or travel credits. Under the previous rules, airlines could choose how long was considered a significant delay. And then you had to go hunting for the refund yourself by talking with customer service, even if the flight was flat out canceled.
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).
Travel Reward Credit Cards
Several travel reward credit cards 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.
We have a list of the best travel credit cards that offer such perks.
Travel Insurance FAQs
Do you really need travel insurance?
While you don’t need travel insurance, it can be a good idea to purchase it if you’re concerned about running into costly issues while traveling. Keep in mind that many travel rewards credit cards offer some level of travel insurance coverage.
What are the disadvantages of travel insurance?
The main disadvantage of travel insurance is the cost. Travel insurance purchased through a company like TravelGuard, Nationwide or SquareMouth can cost anywhere between 4% and 8% of the total cost of your trip.
Is it OK to fly without travel insurance?
Yes, it is absolutely OK to fly without travel insurance. There is no requirement to have travel insurance to fly, even internationally.
What is the best travel insurance to buy?
Some top-rated travel insurance companies include Travel Guard, Nationwide, TravelInsurance.com, InsureMyTrip and SquareMouth. You should always check to see what travel insurance coverage your travel rewards credit cards may offer before buying additional travel insurance.
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.
