Travel insurance: What it covers, costs, and how to choose the right policy

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Travel insurance is a type of coverage that can help protect you from the potential costs of unforeseen circumstances when you’re traveling away from home. This could include injuries, flight delays, rental car damage, lost baggage, or having to cancel a trip.

It’s typically worth considering purchasing a travel insurance policy if you have non-refundable expenses, want to have medical costs covered, or simply want additional peace of mind while traveling. It may not be worth buying travel insurance if you can cancel reservations with no penalties, don’t have high-cost bookings, or are already covered through credit card travel insurance.

It depends on your specific travel insurance policy, but common coverage types include:

• Auto rental coverage

• Emergency medical and dental insurance

• Lost, stolen, or delayed baggage reimbursement

• Medical evacuation and transportation coverage

• Optional add-ons, such as a cancel for any reason (CFAR) policy or a policy for adventure sports and activities

• Travel accident insurance

• Travel delay reimbursement

• Trip cancellation or interruption insurance

The terms and conditions of your travel insurance coverage depend on the specific policy you purchase. However, here are some common types of coverage you can expect to find among the offerings of various travel insurance providers.

What it covers: Trip cancellation insurance covers non-refundable trip expenses, such as payments and deposits, if your trip is canceled or rescheduled. In many cases, this coverage only applies before you have left for your trip.

One example of where this coverage could come into play is if you’re in a car accident before the trip begins and you sustain injuries that prevent you from traveling.

Common covered reasons:

• Non-preexisting illnesses, injuries, and medical conditions for you or a traveling companion

• Certain cases of natural disasters, severe weather, strikes, and travel mandates

• Births or deaths of family members

Common exclusions:

• You have already left for your trip

• You have a preexisting medical condition that prevents you from traveling

• You choose not to travel for a non-covered reason

What it covers: Trip interruption insurance reimburses you up to the amount listed on your policy if you have to interrupt your trip or end it early. This is different than trip cancellation coverage because this takes effect after your trip has already begun.

For example, you suffer a broken leg during your trip and cannot continue traveling.

Common covered reasons:

• Non-preexisting illnesses, injuries, and medical conditions for you or a traveling companion

• Certain cases of natural disasters, severe weather, strikes, and travel mandates

• Deaths of family members or travel companions

Common exclusions:

• You have a preexisting medical condition that prevents you from continuing to travel

• You choose to end your trip for a non-covered reason

What it covers: This coverage reimburses you for emergency medical or dental care incurred during your trip, up to the amount listed on your policy.

This coverage can be important to have, as your domestic health insurance policy may not apply if traveling abroad.

Common covered reasons:

• Sudden, unexpected illnesses, injuries, or medical conditions that need to be treated immediately

• Dental injuries, infections, lost fillings, or a broken tooth requiring immediate treatment

Common exclusions:

• Non-emergency care or services, such as routine exams, physical therapy, and cosmetic surgery

What it covers: This coverage reimburses you for emergency evacuation and transportation during your trip, up to the amount listed on your policy. This insurance could be useful in situations where you’re traveling in areas with poor infrastructure or access to adequate medical facilities.

Air ambulance costs can reach prices in the tens of thousands of dollars. If you need a medical evacuation back to the U.S., the cost could go over six figures.

Important to know: Depending on your policy, you may have to contact your provider and have their medical team consult with a local doctor about the best way to proceed, including making arrangements on your behalf. If you make the arrangements yourself, your provider may only pay up to what they would have paid if they had made the arrangements.

What it covers: Travel delay insurance reimburses you if your trip is delayed for a covered reason, such as a travel carrier delay or a natural disaster, up to the amount listed on your policy.

For example, if a flight during your trip is delayed for a sufficient amount of time and you have to buy meals and a hotel stay, your policy could reimburse you for those charges.

Common covered reasons:

• Flight and other travel carrier delays

• Closed or impassable roads due to severe weather

• Natural disasters

Important to know: Some policies have daily limits on how much reimbursement you’re entitled to for reasonable expenses incurred for trip delays.

What it covers: This coverage reimburses you for the costs of lost, stolen, or damaged luggage incurred during your trip, up to the amount listed on your policy.

Common covered reasons:

• Baggage delayed, lost, or damaged by a travel carrier

• Baggage lost or damaged in other circumstances

Common exclusions:

• Animals

• Vehicles

• Wheelchairs and other mobility devices

Important to know:

• You typically have to file a report, if applicable, with local authorities, your travel carrier, hotel, or tour operator for your lost or stolen baggage

• You may have to provide original receipts for lost items within your lost or stolen baggage to receive full reimbursement.

What it covers: CFAR insurance partially reimburses you for non-refundable and prepaid trip expenses. This is different than trip cancellation insurance because you can cancel your trip for any reason with CFAR insurance. With typical trip cancellation insurance, you need a covered reason to cancel your trip.

Common covered reasons:

• You don’t feel comfortable traveling because of quarantine recommendations or similar

• You have safety concerns

• You have family or work obligations

• You don’t like the recent changes made to your trip itinerary by travel carriers

• You have a preexisting medical condition

Important to know:

• Depending on your policy, CFAR may only provide 50% to 75% reimbursement of non-refundable and prepaid trip expenses.

• Required timeframes can vary by policy, but you may have to cancel your plans at least 48 to 72 hours before your trip for CFAR insurance to apply.

Travel insurance typically costs around 4% to 10% of a trip’s price. So, for a trip that costs $10,000, you might pay $400 to $1,000 for a travel insurance policy.

However, multiple factors can affect your policy price, including:

• Trip cost: In general, the higher your trip cost, the higher your insurance cost.

• Age: The cost of travel insurance tends to rise with age, as older travelers often have more health risks.

• Destination: Some providers say your cost will stay the same regardless of destination, but this isn’t the case for every insurance company. You can see if the price varies by destination by doing “dummy” quotes to see if there’s any change in cost. Just make sure the only variable you change between quotes is the destination.

• Coverage limits: Like any insurance policy, higher coverage limits often equate to higher policy costs.

• Add-ons: Adding additional insurance, such as CFAR or adventure activity coverage, will increase your policy cost.

• Trip length: It depends on the provider, but a longer trip length can increase the cost of your policy. However, some providers may keep the cost the same, no matter your trip length (within reasonable limits).

Making a list of your essential travel insurance inclusions is an easy way to simplify things for you throughout the insurance selection process. For instance, if you know you want CFAR insurance and at least $1,000,000 in emergency evacuation and repatriation coverage, you’ll be able to quickly cut out providers and policies that don’t have those options.

Here are a few factors to consider as you make your list of essentials:

• The countries you plan to visit

• Length of your trip

• Your total trip cost

• Any activities you plan to participate in

• Whether you or any travel companions have preexisting conditions you want covered

• The amount of coverage you want

The insurance industry is filled with loads of travel insurance providers, so it’s best to compare many of them to find the best deal for your upcoming trip. Keep in mind that some companies are less well-known than others, so make sure you do your research when checking reviews and recommendations.

Note that you can quickly compare providers and policies using comparison tools and websites, though you’ll likely find the most comprehensive details about each provider and their plans by visiting their websites directly.

One approach is to use a comparison website to identify the most highly-rated providers, then visit those providers’ websites directly to compare their policies.

When comparing travel insurance policies, always read the fine print. While various policies from different providers may appear to offer the same coverage, they could actually be quite different.

Here are a few considerations to keep in mind:

• Coverage caps: This is often easy to see as you compare insurance, but make sure you get as much coverage as you think you need. Some providers only go up to a certain limit with different coverages, so that’s something to keep an eye on.

• Exclusions: Unless you’re looking at CFAR coverage, you’re likely going to see some exclusions in the fine print. For example, you may not be covered for an injury if you participate in specific high-risk activities and don’t have a rider allowing those activities. You must examine the exclusion list for each policy to see what would be the best fit for you.

• Claims process: Understanding the claims process is essential for quickly receiving reimbursement for a covered occurrence. Depending on the circumstances, you may have to contact your provider as soon as you can, sometimes within 24 hours of an event, such as having your baggage stolen. You may also need to provide documentation, such as receipts, police reports, or communication with travel carriers and operators.

• You’re worried about getting your money back from non-refundable bookings, including flights, hotel stays, cruises, and tours

• You plan to travel with health concerns

• You plan to travel for an extended period of time

• You plan to travel to remote destinations or locations with less infrastructure

• You plan to travel internationally, where your domestic health insurance may not cover you

• You have refundable bookings

• Your overall trip costs are low

• You plan to travel where your domestic health insurance covers you

Travel insurance for flights typically focuses on coverage for cancelled or delayed flights, as well as insurance for lost, damaged, or delayed baggage. You can receive flight insurance by booking your flight with certain travel credit cards, purchasing a policy from an insurance provider, or, if available, purchasing trip insurance through an airline when you book your flight.

The terms can vary by policy, but most flight insurance policies will only reimburse you for expenses incurred because of covered reasons. For example, some credit cards reimburse you for reasonable expenses incurred during trip delays if you’re delayed for a covered hazard for more than six hours or require an overnight stay. A covered hazard could include equipment failure or inclement weather.

In many cases, credit card travel insurance may be enough coverage to give you peace of mind while traveling. However, it’s important to review the terms of your credit card insurance to see if it’s sufficient for your needs. In some instances, it could be worth paying for an additional policy if it has more favorable terms or extra coverage.

Keep in mind that you may also be entitled to some form of refund or assistance from the airlines themselves if you experience a cancelled flight, schedule change, or significant delay.

According to the U.S. Department of Transportation, you’re entitled to a refund if the airline cancels your flight, regardless of the reason. However, you have to choose not to travel or accept any other form of compensation from the airline, including travel credits or vouchers.

You’re also entitled to a refund if the airline significantly delays or changes a flight and you choose not to travel or accept another form of compensation from the airline.

Note that different airlines have their own policies regarding rebooking you on flights with other airlines at no additional cost, offering complimentary hotel accommodations and ground transportation when applicable, and more.

Travel insurance typically won’t reimburse you for trip cancellations or interruptions, or anything similar, as a result of normal pregnancy concerns and issues. For example, if you’re traveling near full-term pregnancy dates and you end up going into labor and having your baby in another country, a standard travel insurance policy likely wouldn’t cover the cost of the labor and delivery.

However, your policy likely would cover the cost of any emergency medical care for unforeseen circumstances, such as pre-eclampsia or gestational diabetes.

Note that airlines and cruise operators often have gestational cutoffs, where they won’t allow you to travel if you’re past a certain timeframe in your pregnancy. For airlines, the cutoff may be up to 36 weeks, though it depends on the airline. Cruise operators may cut you off after 24 to 28 weeks.

It’s common for standard travel insurance policies to exclude high-risk activities and adventure sports in their coverage because the chances of injury are higher. For example, looking at a Travelex travel insurance policy, it has exclusions for scuba diving, mountain climbing, bungee cord jumping, skydiving, parachuting, hang gliding, and parasailing.

If you plan to travel and engage in these types of activities, certain providers offer add-ons or riders you can purchase as supplements to their standard coverage. For instance, Travelex has an adventure activities upgrade that includes mountain climbing, bungee jumping, snow skiing, free-falling, mountaineering, and more. Similarly, Travel Guard has an adventure sports bundle you can add if you plan to participate in extreme activities.

Depending on the provider, you may be able to purchase either single-trip coverage or an annual travel insurance policy. In general, annual plans are more favorable for frequent travelers, while a one-off policy makes sense if you’re only taking one trip in a year. However, it’s worth considering both types of plans to see if either one better fits your needs.

• You plan to take multiple trips in a year

• You don’t need high coverage limits

• You want the flexibility to plan and take last-minute trips

• You want an affordable and convenient travel insurance option

• You only plan on taking one trip in a year

• You want high coverage limits

• You don’t need flexibility for last-minute trips

You can typically cancel a travel insurance policy during a review or free-look period, which often lasts up to 15 days, though some policies may extend it. After that, you’re typically locked in.

1. Make a list of the coverages you need, including coverage limits

2. Carefully review and compare different providers and their various policies

3. Examine the fine print of any policy’s terms and conditions, including exclusions, as well as claims processes and requirements

Tim Manni edited this article.