Key takeaways
- Many travelers consider purchasing travel insurance to protect against unforeseen costs from cancellations/delays, baggage losses, rental car damages, and health emergencies
- Before buying a policy, it’s important to be aware of what’s not covered such as existing pre-conditions, potential injuries from risky activities, or loss of prepaid trip costs due to financial hardship
- There are certain countries that require travelers to have a valid travel insurance policy upon entry
- Check your credit card benefits to see if you have coverage for auto damage waivers, emergency evacuations, trip cancellations, and more
- Travel insurance premiums typically range between 4-10% of your nonrefundable, pre-paid trip expenses
Travel expenses are as costly as ever. After factoring in transportation, lodging, food, and entertainment costs, the last thing you want to think about is buying travel insurance.
But is travel insurance worth it?
It will depend on a few factors, including your destination, existing coverage, and whether your cost(s) are refundable. But before we get into the viability of travel insurance, let’s first delve into what it covers.
What does travel insurance cover?
Travel insurance—also called trip insurance—protects you from various risks (financial and non) while you travel – from minor flight delays to major health-related emergencies.
There are a number of travel-related insurances to choose from, so it can be daunting to know which one(s) to select for your trip. Here are the most common events trip insurance can help cover.
Trip cancellations and delays
Several events can lead to reimbursement of prepaid travel expenses, such as plane tickets or emergency expenses. These events may include illness, death of a family member, bad weather, job loss, or natural disasters. It’s important to note that for something to be covered, it needs to be outlined explicitly in the insurance policy. So be sure to review any exclusions to ensure proper coverage.
Baggage and rental car losses and damages
When you purchase a travel insurance policy, it usually covers the loss, theft, or damage of your luggage, personal items, or rental car. Sometimes, the coverage also includes the expense of buying necessary items such as clothes due to the delay or loss of your luggage. Additionally, you can opt for an auto rental damage waiver that covers the damage or theft of a rental car.
Travel health insurance
In case of medical or dental emergencies not covered by your regular US health insurance, travel insurance can help ease the burden of out-of-pocket expenses. It is important to note that even in countries with low-cost or free nationalized health systems, Americans must pay for medical costs out of their own pocket.
Medical evacuation (medevac)
Emergency medical evacuation coverage provides financial assistance if you must be transported from a remote location to a hospital for emergency treatment. This type of insurance covers the cost of transportation, which can cost hundreds of thousands of dollars, especially if it involves an airlift from a remote location. This coverage may be included in travel health insurance or purchased separately.
Accidental death and dismemberment (AD&D)
This catastrophic coverage pays out to your beneficiaries if you pass away or become severely injured during a trip. For these policies to pay out, aside from death, you would have to lose a limb or an eye. The low-probability of claims placed on AD&D policies is why their premiums are so low.
What doesn’t travel insurance cover?
Standard trip insurance policies won’t cover you for specific cancellation issues. For example, if you cancel a trip due to financial hardship, insurance won’t cover your losses.
For a situation like this, you may want to consider Cancel For Any Reason (CFAR) coverage. But just remember that this coverage can be limiting, too, especially if you cancel outside of a certain window.
Here are some other costs traditional travel insurance might not cover:
- Medical expenses stemming from mental health issues, preexisting conditions, or pregnancy complications
- Medical expenses for injuries resulting from participation in risky activities such as deep-sea diving or mountain climbing
- Trip cancellation, interruption, or other losses due to health or natural disasters
- Cancellations as a result of civil unrest, terrorism, or any US State Department warnings
Ask the travel insurance company or review documentation to determine which exclusions apply.
Countries that mandate travel insurance for foreign visitors
In some countries, you must have travel insurance to enter. This is due to various reasons, which may include visa requirements or unstable diplomatic relations.
Here are the 11 countries that mandate travel insurance (as of 2023).
- Myanmar
- Qatar
- The Galapagos Islands
- Saudi Arabia
- Bhutan
- Cuba
- Ukraine
- Sri Lanka
- Bermuda
- Schengen Visa countries*
- Russia*
*Requires travel insurance or can request proof of insurance for visa issuance. (List is not exhaustive.)
Situations where travel insurance may be necessary
- International travel
- Expensive trip with nonrefundable trip costs
- You have a preexisting medical condition (assuming the insurance plan covers it)
- Traveling to a remote destination lacking easy access to emergency medical care
- Participating in activities that will put your health at risk
- Traveling to a place with health risks, political instability, or prone to natural disasters
Situations where travel insurance may not be necessary
Travel insurance might not be necessary if you have sufficient health coverage and are taking a short trip within your own country. Another situation where you may not need to purchase coverage is for trips with refundable costs. For example, you don’t need travel insurance for a refundable airline ticket.
Review your credit card perks
Your credit card may offer coverage that could negate the need for travel insurance. That’s why it’s important to look into your credit card’s travel benefits to see if it covers the following:
- Auto damage waivers
- Emergency evacuation and transportation
- Trip cancellation coverage
- Trip delay reimbursement
- Roadside emergency assistance
- Accidental death and dismemberment
- Lost or delayed luggage reimbursement
Note: Even if travel insurance isn’t required at your destination, the US Department of State still recommends purchasing a policy to cover unexpected medical expenses for international trips.
Understanding the cost of travel insurance
Travel insurance premiums typically range from 4% to 10% of your nonrefundable, prepaid trip expenses. For instance, if you’re insuring a $10,000 cruise trip, expect to spend between $400 to $1,000 on your insurance policy.
Different insurers have varying rates. A recent study by Investopedia on six travel insurance providers offering coverage for trip cancellations/interruptions, emergency medical situations, evacuations, and baggage issues revealed these price brackets:
| Age | Trip Cost | Low Premium | High Premium |
| 35 | $1,500 | $51 | $69 |
| 65 | $3,000 | $135 | $186 |
Source: Investopedia
What factors influence the pricing of travel insurance?
- Age: This dramatically impacts your insurance rate. Elderly travelers or those with existing health conditions may face higher insurance costs than others.
- Coverage scope and amount: A basic policy covering fewer aspects or lower trip costs will be more affordable than a comprehensive travel insurance plan or CFAR.
- Duration of trip: The longer you’re away, the greater the potential risks.
- Number of travelers: Insuring a group of six may be more expensive than a duo due to increased potential risks.
It’s essential to note that after evaluating your application, insurance providers might either reject it or increase your rate based on their risk assessment criteria.
Final word
Like any insurance, travel insurance isn’t something most people get overly excited about. However, when something goes wrong, you’ll have peace of mind knowing that you won’t have to come out of pocket for unexpected expenses.
