Travel insurance provides financial protection in case you need to cancel a costly, nonrefundable vacation for a valid reason. Additionally, it can cover medical expenses in the event of a medical emergency during your travels. However, there are instances where you might not find it necessary to buy travel insurance.
Rajeev Shrivastava, founder and CEO of the insurance marketplace VisitorsCoverage, emphasized the importance of deciding to purchase travel insurance based on individual circumstances. These factors include your destination, planned activities, health condition, and financial situation. He shared this insight with Investopedia via email.
“Ultimately, the decision to purchase travel insurance should be based on your circumstances, including your destination, planned activities, health condition, and financial situation,” explained Rajeev Shrivastava, the founder and CEO of the insurance marketplace VisitorsCoverage, in an email to Investopedia.
What Does Travel Insurance Cover?
Travel insurance policies commonly provide coverage for five specific financial and health risks, which include:
Trip Cancellations, Interruptions, and Delays:
Various circumstances, such as illness, the death of a traveler’s family member, adverse weather conditions, job loss, or a natural disaster, may serve as triggers for the reimbursement of prepaid travel costs. These costs may include expenses related to plane tickets or emergencies. It’s important to note that only reasons specified in the insurance policy are eligible for coverage, so it is crucial to review any exclusions mentioned in the policy.
Luggage and Rental Car Damage or Loss
A travel insurance policy can encompass protection for lost, stolen, or damaged luggage, as well as personal items or rented automobiles. In certain situations, the coverage may extend to reimbursing expenses for necessary purchases, such as clothing, that were made due to the absence of your luggage. Additionally, some policies may include an auto rental damage waiver, which specifically addresses damage or theft of a rented vehicle.
Travel Health Insurance
Travel insurance becomes effective in situations of medical or dental emergencies where your regular U.S. health insurance is not applicable. It’s essential to note that even in countries with a low-cost or free nationalized health system, non-citizens would need to pay out of pocket for medical expenses.
Medical evacuation coverage provides reimbursement in the event that you require evacuation from a remote area to a hospital. For instance, if you fall seriously ill during a trek in the Swiss Alps, travel insurance could cover the expenses for airlifting you to a major city hospital for necessary treatment. The cost of medical evacuation from a remote location can be as high as $250,000. This type of insurance may be included in travel health insurance or available as a stand-alone policy.
Accidental Death and Dismemberment
This particular coverage provides benefits to your survivors in the unfortunate event of injury or death during a trip. Typically, the injuries covered are limited to the loss of an eye, hand, foot, or limb.
What Does Travel Insurance Not Cover?
A conventional travel insurance policy may not encompass certain reasons for cancellations. For instance, deciding to back out of a trip due to a need to cut back on spending is not typically covered by standard travel insurance. To address such situations, you would have to acquire “cancel for any reason” (CFAR) coverage. However, it’s important to note that CFAR coverage also has its own set of rules, including the requirement to cancel within a specified time frame.
Other losses that traditional travel insurance may or may not cover include:
- Expenses linked to preexisting health conditions, complications arising from pregnancy, or mental health issues
- Costs related to injuries incurred while engaging in higher-risk activities like rock climbing or skydiving
- Interruption of trips, cancellations, or other losses resulting from health and disease outbreaks or natural disasters
- Cancellations prompted by terrorism, civil unrest, or any warnings issued by the U.S. State Department43
- Source: U.S. Centers for Disease Control and Prevention. “Travel Insurance, Travel Health Insurance & Medical Evacuation Insurance: CDC Yellow Book 2024.”
Ask the insurer about exclusions to find out which exclusions apply, or review documentation. You may be able to find travel health insurance coverage that won’t exclude your mountain-climbing injuries, for example.
Which Countries Require Travel Insurance?
In the current phase of the receding COVID-19 pandemic, many countries no longer mandate travel or health insurance. However, it’s important to note that future disease outbreaks can impact these requirements. To stay updated, consult the U.S. State Department’s website and the official sites of the destination governments for the latest information on health requirements and recommendations.
For instance, Thailand maintains the stipulation that visitors from countries requiring pre-departure COVID tests must carry $10,000 in travel medical insurance. Conversely, the United States, which does not require pre-departure COVID testing, does not necessitate such insurance for American travelers.
Some nations enforce universal coverage requirements. Cuba, for instance, mandates U.S. airlines departing from the U.S. to cover each passenger’s health insurance costs. Additionally, every international traveler entering Saudi Arabia receives government-provided travel medical insurance for emergencies.
In Qatar, travelers entering the country are obliged to purchase emergency and accident services
When Is Travel Insurance Not Necessary?
If you’re embarking on a brief trip within your own country and already possess sufficient health insurance, travel insurance might not be a necessity. This insight comes from Jason Eckhoff, founder and CEO of the BusinessClass.com travel website, as conveyed to Investopedia via email. Furthermore, if your trip involves refundable costs, such as airfare, and can be canceled without financial penalties, opting for travel insurance may not be essential.
In cases where your credit card offers robust benefits, you may find that travel insurance is not imperative. Travel credit cards and other types of credit cards often provide a range of coverages, including trip cancellation insurance, trip delay reimbursement, emergency evacuation and transportation, accidental death and dismemberment, lost or delayed luggage reimbursement, auto damage waivers, and roadside emergency assistance. However, it’s important to note that Jiten Puri, founder and CEO of the insurance marketplace PolicyAdvisor.com, pointed out that this coverage might have limitations, such as offering only basic medical care or not covering trip cancellation or interruption.
How Much Does Travel Insurance Cost?
Typically, travel insurance expenses range from 4% to 10% of the overall prepaid, nonrefundable costs associated with your trip.1 For instance, if you decide to purchase travel insurance for a cruise valued at $6,000, the policy could cost you anywhere between $240 to $600.
The specific cost of travel insurance varies among insurers. A recent review by Investopedia of travel insurance plans from six different providers, covering trip cancellation/interruption, emergency medical/evacuation, and baggage loss/damage, revealed the following cost ranges:
Several factors influence the cost of travel insurance, including:
Age: This is the primary factor determining the rates for travel insurance. Older travelers and those with preexisting medical conditions may face higher travel insurance costs compared to other travelers.
Coverage Type and Dollar Amount: Policies with fewer coverage types and lower trip expenses typically have lower costs. Conversely, coverage for higher dollar amounts or additional benefits, such as Cancel for Any Reason (CFAR) insurance, tends to be more expensive.
Trip Length: Longer trips may pose increased risks, impacting the cost of travel insurance.
Number of Travelers: A trip involving more people, such as six individuals, may be perceived as riskier and consequently cost more than a trip with fewer participants.
It’s important to note that an insurer may either reject your application or charge you higher premiums based on their risk standards after reviewing your application.
When Is Travel Insurance Worth It?
David Leiter, the publisher of The World Travel Guy blog, advises that purchasing travel insurance with suitable coverages is generally a wise decision if you are:
- Taking a costly trip with nonrefundable expenses.
- Traveling internationally.
- Visiting a remote location with limited access to medical care.
Eckhoff recommends considering travel insurance if you:
- Have a preexisting medical condition, provided that the policy covers your specific needs.
- Are visiting a country facing political instability, natural disasters, or health risks.
- Engage in higher-risk activities that increase the likelihood of injury or illness.
In addition to the considerations mentioned above, the U.S. Centers for Disease Control and Prevention (CDC) suggests acquiring supplemental travel health insurance for trips lasting more than six months. The U.S. State Department advises obtaining short-term supplemental health insurance if your policy lacks overseas benefits, and also recommends medical evacuation insurance for certain popular tourist destinations like Belize, the Bahamas, and Costa Rica.
Leiter emphasizes that when shopping for travel insurance, it’s crucial to choose a plan that aligns with your needs, destination, and style of travel. He recommends identifying potential challenges in your specific situation and selecting a plan that provides coverage for those scenarios.
Do I Need Travel Insurance If I Have Health Insurance?
Your current health insurance might offer coverage for emergency care while traveling internationally, but not all health insurance plans provide this benefit. Before considering additional travel insurance, it’s advisable to contact your health insurance company to inquire about coverage during international travel. Ask whether preauthorization is required and clarify any exclusions that may apply.
Do I Need Travel Insurance If My Credit Card Has Built-in Travel Protection?
The built-in travel protection provided by one of your credit cards could be sufficient for your trip needs. If your main objective is to secure trip cancellation coverage, the benefits offered by your credit card might be satisfactory. However, it may be prudent to consider purchasing travel insurance if your credit card lacks adequate medical coverage or provides no medical coverage at all.
Is Travel Insurance the Same as Cancellation Insurance?
Travel insurance and cancellation insurance are not synonymous. Cancellation insurance is frequently a component within the broader category of travel insurance. While your travel insurance policy may provide reimbursement for cancellations under certain circumstances, such as in the case of a death, it also encompasses coverage for various other situations like medical expenses, lost baggage, and auto rental damage.
Does Travel Insurance Protect My Possessions?
Homeowners and renters insurance can extend coverage to your belongings while you are traveling. However, this coverage may fall short in safeguarding high-value items like jewelry, and it might not cover the entire replacement cost. Additionally, filing a claim with your homeowners or renters insurance could potentially lead to an increase in your premium.
How Can I Save Money on Travel Insurance?
Avoid settling for the first travel insurance policy you encounter. Instead, take the time to explore different options to ensure you secure the most comprehensive coverage at the best price. Additionally, if you are booking a trip through a travel agency or tour operator, inquire about a package deal that includes travel insurance.
The Bottom Line
Purchasing travel insurance may not be essential if you are traveling domestically, embarking on a refundable trip, or already have sufficient coverage through a credit card. However, Jiten Puri noted, “We would always recommend getting travel insurance. But if you are extremely elderly or in very poor health, your travel insurance premiums may be expensive.”
According to Puri, travel insurance typically offers “invaluable peace of mind.” For example, it can be a prudent investment when traveling internationally, especially if you have secured a high-cost, nonrefundable trip.