Americans’ travel plans were temporarily upended by the pandemic and the shelter-at-home orders that came with it. But even though there is still uncertainty around holiday travel, business trips and vacation planning, consumers are ready to start traveling again.
As travel picks back up, so does the question: Should I get travel insurance to cover my upcoming trip?
A quick look at the numbers reveals that a lot of people have historically responded to that question in the affirmative. In 2018, Americans spent nearly $3.8 billion on travel protection covering a wide range of potential scenarios. This represents a 40% increase from just two years before.
Travel may have taken a backseat in 2020, but consumers will be getting back to the roadways, the rails and the skies in greater numbers next year and many will be asking whether or not they should be getting a travel insurance policy.
What is Travel Insurance?
Travel insurance is a policy a traveler can take out to shield from financial risks and losses that can occur while traveling. These range from the inconvenient—for example, delayed luggage—to the more serious, like a vacation cancellation or a medical emergency while on a trip.
Some policies go beyond the basics to offer access to tour guides, interpreters, medical professionals and other kinds of assistance once the traveler reaches the destination.
In general, travel insurance reimburses the consumer for covered financial losses after the traveler files a claim and it is approved.
What Does Travel Insurance Cover?
Booking a trip often means non-refundable purchases, and this is one of the main motivators for buying a travel insurance policy. But since every trip is different, there are policies to cover a range of contingencies. These include:
- Trip Cancellation or Delay: Trips can be cancelled or delayed for a variety of reasons, and travel insurance policies recognize many of these as unavoidable, and reimburse for them accordingly. These include natural disasters, death in the family, military deployment or a change in employment status. Travelers who have other reasons they may need to cancel often have the option to upgrade their policy to “cancel for any reason” coverage, which offers more leeway.
- Travel Health Insurance: Many health plans—including Medicare–don’t cover individuals while they are on an international trip. Travel health insurance means that, if a person needs to visit a doctor while overseas, he or she will not have to pay for it out of pocket. Travelers should ask their health insurer whether or not they cover travel – if not, travel health insurance could be a smart option.
- Medical Evacuation Insurance: No one expects to be riding in the back of an ambulance while on vacation, but it does happen. Evacuation insurance covers the traveler in the case of an ambulance, boat or helicopter evacuation for medical reasons.
- Baggage and Personal Items: Trips often feature connecting flights, shuttle buses and other forms of transportation. Consider insuring personal items and luggage in case something gets lost along the way – especially if you are transporting valuables worth more than $1,000.
- Rental Car Damage: When renting a car, there is always the chance of a fender bender in another country. To mitigate the stress—and the damage—weigh the option to insure rental cars while on trips.
- Life Insurance: In some rare cases, travelers insure their lives before a trip, and travel life insurance breaks down into three categories:
o Accidental death: This offers blanket coverage for the whole trip.
o Air flight accident: This covers flights to and from the destination.
o Common carrier: This covers travel on public transport, for example buses or subways.
- Other: Some insurers offer coverage for identity theft, kidnapping and other scenarios.
What Does Travel Insurance NOT Cover?
Travel insurance can cover a range of contingencies, but there are some scenarios that no insurer will cover. If an injury or other problem occurs because the traveler took unnecessary risks, it’s likely their claim will be denied. While every plan is different, there are certain commonalities when it comes to the things insurers do not cover. These include:
- Bags and other belongings that are lost because they were unattended
- Public health crises and natural disasters that were known before the traveler took the trip
- Pre-existing medical conditions
- Luggage which is in limbo, but not lost
- Trips that are taken against the advice of the government
- Reckless or unsafe behavior
- Cancelling a trip because the traveler changed his or her mind (unless “cancel for any reason” coverage has been purchased)
- Ignoring local laws
In short, if you want a good travel insurance policy, don’t travel to places the U.S. State Department has deemed unsafe, or one that is about to get hit by a hurricane. Don’t do risky things when you travel, and don’t expect a refund if you simply change your mind about taking the trip unless you have purchased “cancel for any reason” coverage.
How Much Does Travel Insurance Cost?
Industry experts put the average cost of a travel insurance policy at somewhere between 5% and 12% of the total cost of the trip. But there are plenty of variables that can affect the cost, including:
- Type of policy: Single-trip coverage tends to cost less than multi-trip or annual trip policies, which cover longer time periods.
- Cost of trip: A more expensive trip likely means higher non-refundable costs, hence a more expensive travel insurance policy.
- Dates of trip/length: In general, the longer the trip the higher the cost of a travel insurance plan.
- Destination: If healthcare and other costs are high at the destination, it can drive up the price of a policy.
- Number and Age of travelers: Travelers above the age of 30 cost more to insure, and the more travelers being covered, the more the insurance plan will cost.
- Permanent residence: A traveler’s permanent residence and/or legal work status can affect the cost of travel insurance.
- Date of first payment/deposit: If you opt for travel insurance, get your policy as soon as you start paying for your upcoming trip. Some insurance carriers won’t let you cover your trip—or parts of it—if your trip is coming up in just a week or two.
- Add-on policies: Some travelers want to be able to cancel a trip for any reason (as opposed to the pre-established reasons most insurers accept), or they need insurance for a trip that is unusual in some way. Add-ons like these will affect the price of the policy.
Is Travel Insurance Worth It?
Travel insurance might not be worth it for a weekend getaway, but for longer trips or vacations overseas a policy can offer peace of mind while potentially saving money if something does go wrong. When evaluating travel insurance policies, make sure to read the fine print, as policies differ in terms of what is covered and what is not.
Here are just a few of the scenarios where travel insurance might be a good addition for an upcoming trip:
- International trips
- Long-distance domestic trips by airline, train or bus
A traveler’s individual circumstances can also factor into the decision on whether or not to get a travel insurance policy. Some of these include:
- Health insurance that doesn’t cover international trips
- The destination is an unstable or dangerous country
- The traveler is transporting valuable items
- The trip could be cancelled
How to Buy Travel Insurance
If travel insurance is right for you, there is more than one way to find and buy the right policy for your trip. In addition to travel insurance providers—who specialize in these policies—travel agents and tour operators often make travel insurance a part of their offerings. There are also online travel agencies and booking sites that offer policies.
If you buy a policy from a travel agent or booking site, it’s important to take note of whether the policy covers the whole trip, or just a portion of it. Some agents and sites don’t offer the trip cancellation component of travel insurance, offering a waiver toward future bookings instead. Details like this are important to sort out before deciding to buy.
As with travel itself, there is plenty of variety when it comes to travel insurance. There are varying coverage requirements and prices, and not every policy will be a perfect fit for the traveler’s budget or unique requirements.
But with all the variety, there is likely a great option out there if you have decided travel insurance is right for you.