Should You Buy Travel Insurance?

What Does Travel Insurance Cover?

While travel insurance can't make up for the experiences you might miss, it can reimburse you for nonrefundable trip-related expenses. Here are some common expenses it typically covers.

• Trip cancellation or interruption: Travel insurance reimburses you for expenses such as airfare, hotel stays and prebooked activities if you cut your trip short or cancel it due to a covered incident. Commonly covered events include the death of a family member, injury, illness and more. Check your policy details for a complete list of emergencies your plan may cover.
• Trip delay: If your flight is significantly delayed (read the fine print to find out what qualifies) or canceled, your plan will pay for a hotel stay and meals until you can get a flight to your destination. It will also reimburse you for nonrefundable prepaid expenses affected by the disruption.
• Baggage loss and damage: If you've been standing at baggage claim, watching the conveyor belt go around and around only to realize that your luggage isn't on it, your insurer may reimburse you for essentials, such as clothing, toiletries and medication, until you get your bags back. If your luggage is lost for good, you'll typically receive payment for each lost bag up to your policy's limit.
• Medical emergencies: If you get sick or injured on your trip, your plan will pay for the cost of your care.
• Rental car damage: Some plans include or allow you to add protection for a rental car. If your rental is in an accident, stolen or vandalized, the insurance company will cover the damage up to the policy's limit.
• Accidental death and dismemberment: If you're severely injured or die because of an accident on your trip, you or your beneficiaries will receive a payout from the insurer. Some plans limit the types of accidents that are covered.
• Emergency evacuation: This benefit pays for transportation to the nearest medical facility or hospital if you need treatment that isn't available in your current location.
• Natural disasters: Earthquakes, tornadoes and severe storms can come out of seemingly nowhere. If you're unable to take your trip or have to cut it short because of a natural disaster, travel insurance usually covers you.
• Cancel for any reason (CFAR): Most travel insurance plans only cover certain expenses in certain situations, but a CFAR plan is the exception. It allows you to cancel your trip for any reason and typically reimburses you for 50% to 75% of the insured costs. To qualify for a CFAR plan, you usually have to purchase it within 14 to 21 days of making your first trip payment, and meet other requirements.

What Does Travel Insurance Not Cover?

While travel insurance can help you avoid a big financial hit if your trip goes awry, it won't cover everything. Here are some common exclusions.

• Preexisting medical conditions: Many (not all) travel insurance plans exclude coverage for preexisting conditions. Check your plan documents to understand what is and isn't covered.
• Adventure sports: Accidents and injuries from high-risk activities like skydiving, hang gliding, mountain climbing and more are often excluded from standard travel insurance plans. If you want coverage, look for a plan that specifically covers these activities.
• War and acts of terrorism: If you have to cancel or cut your trip short because of civil unrest, terrorist activity or a full-blown war, your insurer probably won't cover it.
• Pandemics: As many people learned at the height of the COVID-19 pandemic, travel that must be canceled or is interrupted because of a pandemic often isn't covered.
• Named storms: If you're traveling to an area where hurricanes, tropical storms or other severe weather is common, your trip won't be covered if you purchase your policy after a storm has already been named. If you buy coverage before a storm pops up, you should be covered.

When Travel Insurance Is a Good Idea

Not every trip requires insurance, but in these scenarios, it may be worthwhile.

• You're traveling internationally. Your U.S.-based health insurance plan typically won't cover you if you get sick or injured overseas. If you're traveling to another country, purchasing a plan is usually worth it for the medical coverage it provides.
• You're traveling to a remote area. Not all trips involve sitting on the beach or walking down Main Street. If you're traveling to an out-of-the-way location that's difficult to access, purchasing travel insurance that covers emergency evacuation may make sense.
• Expenses are nonrefundable. If most of your travel expenses are nonrefundable, getting a plan is probably worth it. Travel insurance will reimburse you for a variety of expenses, including airfare, cruise fees, prebooked excursions, train tickets and more if you have to cancel or interrupt your trip for a covered reason.

When You Might Not Need Travel Insurance

While buying travel insurance makes sense in certain situations, it isn't necessary for every trip. Here are some scenarios when it may make sense to skip the added expense.

• You're not going far. If you're driving or taking a short, inexpensive flight in the U.S., paying for travel insurance may not be worth it.
• Your trip is refundable. Airlines typically allow you to cancel up to a few minutes before your flight and get your money back or receive a credit for a future flight. Many hotels and tour companies allow you to get a full refund if you cancel 24 to 48 hours before you're scheduled to arrive. Travel insurance may not make sense if most or all of your expenses are refundable.
• Your health insurance will cover you. If you're traveling domestically, your health insurance will cover you. If you don't have a ton of nonrefundable travel expenses, you may be OK skipping the insurance.
• You have coverage through your credit card. Travel credit cards often provide some level of insurance when you're traveling. It isn't typically as robust as a standalone plan, but it may be enough, depending on your trip.

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How Much Does Travel Insurance Cost?

The cost of travel insurance is calculated based on a percentage of your prepaid expenses for each person going on the trip. Expenses may include lodging, airfare, train tickets, cruise charges, prebooked activities and more. Standard plans generally cost about 4% to 8% of the trip's value. If you opt for a cancel-for-any-reason plan, expect to pay an additional 40% to 50% on top of that.

Example: Here's how it works. Let's say you're traveling with your spouse and two kids and your nonrefundable, prepaid expenses come out to $5,000 per person. To insure the $20,000 of nonrefundable travel expenses you had to pay upfront, a standard travel insurance policy would typically cost $800 to $1,600.

Where to Buy Travel Insurance

Some businesses, such as airlines and tour companies, may give you the option to purchase insurance to cover the cost of your tickets when you book. You can also buy policies through travel insurance companies that allow you to cover the total cost of your trip without purchasing insurance for each expense separately.

If you book your trip with a credit card, it may have travel insurance as an added perk. However, coverage provided by credit card companies isn't usually as comprehensive as coverage you get by purchasing a standalone policy. If you plan to rely on credit card travel insurance, check the terms and conditions to ensure it meets your needs.

Learn more: How Your Credit Card Can Protect You When Traveling

The Bottom Line

Travel insurance can help protect your investment in your next trip. Whether spending the extra cash is worth it depends on where you're going, how much you're spending, how many expenses are nonrefundable and what other coverage you have.