Travel insurance: What does it cover and how much does it cost?

When planning a big trip, a common question that arises is whether or not to buy travel insurance, and if so, how to choose the right policy. There are a plethora of options out there and a wide range of potential price points. Here’s how to make sense of the offerings and evaluate your options to find the right travel insurance policy for you.

Who needs travel insurance?

Before you go down the rabbit hole of comparing travel insurance policies, it’s helpful to know whether or not you actually need it. Consider buying travel insurance if:

• You’re traveling overseas. You might be able to skip purchasing a policy if your health plan offers global coverage, but “many health plans lack robust global coverage, or impose high out-of-network deductibles for care outside the U.S.,” according to Forbes. Check your plan and proceed accordingly.
• Parts of your trip are non-refundable. If you won’t be able to get your money back if things don’t go according to plan, then travel insurance can offer some protection. Some common non-refundable elements of a trip include “prepaid tours, excursions or other expenses you may have secured a good deal on by accepting they were nonrefundable (like airfare),” explained CBS News.
• You’re going somewhere remote. Your location also plays into the decision of whether or not to get travel insurance. If you’re going to be far away from any medical facilities you’d be comfortable receiving care from, then “medical evacuation coverage will pay to medevac you to an adequate facility,” Forbes added. 
• Your trip is planned for particular times of year. Taking the weather into account when determining if purchasing a policy makes sense, CBS News suggested. For instance, if you’re going somewhere tropical during hurricane season, some added protection may be wise.
• You simply feel more comfortable with a backup. Some travelers would rather have peace of mind when they’re away from home, knowing their travel insurance could help them if the unexpected happens or they’re in a pinch.

In other instances, however, travelers might be just fine skipping out on travel insurance, Nerdwallet said. This includes if your airline tickets are already flexible, or if all of the parts of your trip you’ve booked are refundable or cancellable. 

Some credit cards automatically offer travel insurance when you make a purchase using the card related to your trip. “So, for instance, if you have trip cancellation insurance on a card, you’re covered when you book a flight using that card. Same goes for checking your bag and activating your lost luggage protection,” Francis Hondal, president of loyalty and engagement with MasterCard, told CNBC.

What does travel insurance cover?

If you’ve determined that you need travel insurance, it’s essential to be clear on what travel insurance does — and doesn’t — usually cover. There are comprehensive travel insurance policies that offer a bundle of benefits, and then there are different types of travel insurance policies that cover specific elements of your trip.

That said, “policies generally provide coverage for three things: protection for your financial expenses, protection for your well-being and protection for your personal belongings,” according to CNBC. Look for the following areas of coverage when sorting through the options:

• Trip cancellation, delay, and interruption
• Medical expenses and emergency evacuation
• Baggage loss

Other benefits might include 24-hour assistance services, “cancel for any reason” coverage, accidental death and dismemberment, and car rental collision insurance.

What’s not usually covered?

What’s covered can vary from policy to policy, which is why it’s so important to read the fine print to fully understand how your specific policy protects you. In general, however, here are some common situations travel insurance won’t shell out for:

• Protection against a storm or weather event that’s already been named
• Activities performed when under the influence of alcohol or drugs
• Extreme sports, such as scuba diving or rock climbing
• Pregnancy, including potentially medical costs incurred on a trip while pregnant
• Medical costs for elective procedures
• Fear of travel
• Lost or stolen cash

How much does travel insurance cost? 

Based on a Forbes Advisor’s analysis of travel insurance rates, on average, travel insurance runs around 6% of your trip’s cost.

However, the cost of travel insurance “can vary a lot depending on how much coverage you’re getting and how expensive your trip is,” CNBC said. So if you want a lot of coverage in different areas, and you’ve planned a lengthy and expensive trip with a number of preplanned and nonrefundable expenses, you’ll generally pay more for travel insurance.

High health care costs at your destination, your existing medical conditions, and your age can all drive up the price of travel insurance, said Nerdwallet.

How to find the right policy

Once you have a general sense of what to expect with travel insurance in terms of coverage and cost, you’ll need to suss out what you want out of your policy, and how much you’re willing to spend.

Start by assessing your financial risks and whether you’d be able to handle those costs on your own, Nerdwallet said. Also take a look at what coverage you may already have, either from a travel credit card, your homeowners insurance policy, or your health plan. You might already be covered in some areas, which could help you avoid doubling up.

It’s also important to shop around rather than just go with the first offer you see. You could use a travel insurance comparison site out to shop around and compare benefits and price.

Take the time to read the fine print, rather than moving forward based on price alone. “You may find that the lowest-priced policy is too restrictive and that paying a little more gets you the coverage you need,” Nerdwallet said. “Or you might find that the cheapest, most basic policy fits the bill.”

Becca Stanek has worked as an editor and writer in the personal finance space since 2017. She has previously served as the managing editor for investing and savings content at LendingTree, an editor at SmartAsset and a staff writer for The Week. 

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