Since moving to Nevada, we’ve been traveling more often, which got me thinking about travel insurance. Some people swear by it, while others never bother. For instance, our daughter always purchases travel insurance because she frequently visits Canada. She worries about potential health issues abroad and can’t afford to replace her wardrobe if her luggage gets lost. Inspired by her approach, I decided to dig deeper into the world of travel insurance. What I found was a bit overwhelming—there’s so much to consider! To make it easier, I’ve broken it down into a series of articles, starting with this general guide.
Travel insurance can minimize financial risks when things go wrong during your trip. Whether it’s an accident, illness, missed flight, or lost baggage, having insurance can save you from significant losses. However, not everyone needs it, as some situations may already be covered by existing insurance policies or through your booking agent. Let’s explore the basics to help you decide if travel insurance is worth it for you.
Cost of Travel Insurance:
Basic policies (emergency healthcare and cancellations) typically cost 5-10% of your trip’s total price. Policies with broader coverage, like non-emergency cancellations, can cost 20-30% or more. Premiums increase with age but are usually affordable for children.
Be aware that some travel insurance is reimbursement-only, meaning you’ll need to pay expenses upfront and submit a claim later. Before purchasing, confirm the company’s payment process and ensure they have 24/7 customer support.
Insurance basics:
Travel insurance typically falls into five main categories:
Trip Cancellation and Interruption: Covers non-refundable costs if you need to cancel or cut your trip short for covered reasons (e.g., illness, natural disasters).
Medical Insurance: Helps with healthcare costs if you get sick or injured while traveling.
Evacuation Insurance: Covers transportation to appropriate medical facilities in case of an emergency.
Baggage Insurance: Reimburses you for lost, delayed, or damaged luggage.
Flight Insurance: Provides coverage for accidental death or dismemberment during air travel.
Many companies bundle these categories into packages, which may include additional options like coverage for adventure sports, identity theft, or even pets. When choosing insurance, research the packages carefully to ensure they meet your needs.
Insurance Categories:
First, before you can decide if you need insurance, you need to know what type of insurance options are available. So here are the basic categories and a brief description of what they cover. When you decide you do need insurance, make sure to check with the company you are going to use for any restrictions, hidden costs, etc.
Trip Cancellation / Trip Interruption
I think that this is the most worthwhile policy for us because now that we’re getting a little older, I find we must change all sorts of plans for various reasons, so getting pre-paid costs back would certainly make a difference when planning a trip. A standard cancellation policy covers the non-refundable financial penalties or losses when you cancel your trip for an acceptable reason such as: you or your travel partner can’t travel because of sickness, or you miss a flight for reasons not under your control. There is also coverage for trip interruptions, such as you get hurt during your trip and must cancel the rest of the vacation, then you can get reimbursed for the portion of the trip that you miss. There are many caveats to this, like how soon you need to purchase this type of insurance so look for a company that has reasonable restrictions.
Medical Insurance
If you have health insurance in the United States your policy generally will offer coverage anywhere in the US. So, you probably don’t need to get this coverage. However, if you’re traveling abroad you need to check what your policy covers. Some don’t cover you, Medicare being one of those. Another thing to consider is that doctors at your destination may not accept your insurance, so you may have to pay out of pocket then try and get reimbursed by your insurance company. Having said this, you may still want to get special medical coverage that is supplemental to cover expenses that your health insurance doesn’t, such as deductibles. The last thing you want to do is use all your money on medical expenses. If you have an emergency that leads to a hospital stay, the hospital will typically work with travel insurance companies, so you don’t have to lay out any money, but they don’t usually work with your health insurance.
Baggage Delay/ Lost Luggage
This is something I always think about, especially the lost luggage. I know that airlines already have coverage and that you will be reimbursed, but you need to check with them what the limits are. If you are going on a long trip and their limit will only cover about half the amount of what you are taking, you may want to see if they have excess valuation coverage available. Your homeowner’s insurance will probably cover most of what you lost, but the baggage insurance will cover the deductible and items not covered by your homeowner insurance. Baggage delay insurance may be worth it though because if your bag isn’t going to show up for a few days, you will need to replace the necessary items such as toiletries, medicine, clothing, etc. Baggage delay insurance will reimburse you for these items. If you only have a carry-on, then you don’t need this.
Flight insurance
This acts as life insurance specifically for air travel. Given the rarity of plane crashes and the likelihood you already have life insurance, this may not be necessary.
Evacuation insurance
This insurance covers the cost of getting you to a place where you can receive appropriate medical attention in the event of an emergency. Worst case scenario you need to get a medically equipped plane to get you to the hospital. This is not usually covered by your everyday medical insurance. This coverage usually covers getting you to the hospital, not getting you back home. Check with the insurance company to find out what exactly is covered before and after you get to the hospital. Also check if there are any activities that you may not be covered such as scuba diving or skydiving.
Comprehensive insurance
This insurance covers all the above (plus expenses incurred if your trip is delayed, if you miss your flight or if your tour company cancels the trip). As with all insurance check to see what the limits are and what it covers. Some companies offer comprehensive packages that serve as your primary coverage that takes care of your expenses regardless of what other insurance you have. This means they pay first and don’t ask about other insurance you may have. This really helps with not having out of pocket expenses.
Cancel For Any Reason
CFAR insurance is there for you to ensure that you will get some reimbursement if you cancel a trip for reasons not covered by trip cancellation restrictions. There are strict requirements for this such as, you must buy it no more than 21 days after paying for the trip or cancellation of trip must be no later than 48 hours before departure. These restrictions vary by company. You also will only get 50-75% of your trip cost back. If you check your trip cancellation policy and think that there may be a reason you might want to cancel for reasons other than it covers, say for instance you’re not positive you want to go because you booked far in advance, then this might be important to you.
These are the basic categories for travel insurance. Many companies offer supplementary insurance for things such as theft, extreme sports and pets. Once you determine if you need basic insurance, then you can investigate some extras you might need.
Factors to Consider:
Now that you know a bit about the different kinds of travel insurance it’s time to consider those factors we talked about in the beginning. You should apply all factors to each type of insurance to determine if you need it. Here is what you need to consider:
Trip Cost: If your trip involves significant prepaid expenses, whether it’s a road trip or you’re flying, then insurance may be worth it.
Distance from Home: The further you travel, the more valuable insurance becomes, especially for medical emergencies. If you’re only traveling a few hours away and any pre-paid tour isn’t very expensive or offers some reimbursement for cancellations, then you probably don’t need any travel insurance.
Personal Health: If you’re relatively fit and have medical insurance, then you may not need medical travel insurance. But if you have some health problems and are traveling internationally, then I would consider getting some extra coverage. Also consider if you have a family member that is ill, and you may need to take care of and have to cancel your trip.
Existing coverage: As discussed, your medical insurance may be enough to cover you on your trip, but what about other types of coverage. What does your homeowners/renter’s insurance cover? Is it enough for your personal belongings that you’ll be taking on your trip? Are you putting your plane tickets or tour tickets on a credit card? Lots of cards provide some travel coverage. Make sure you check your airline as they also have some travel coverage.
Type of trip: What I mean by this is what type of activity you will be doing and is this a tour booked through an agency or a trip you planned. If you booked a tour group trip, then they will cover some things like lost luggage, plane cancellation, etc. Check with your agent first to see what is covered. If you planned a family/friend trip through a travel agent, again some of the trip will probably have some type of coverage versus you planning your own trip where you may get coverage from an airline or credit card but that may not be as much coverage as you would like.
Personal Safety: Most importantly you need to ask yourself if any or all these types of travel insurance will help you feel safer. Will you be more at ease if you get the extra insurance. When you go on vacation, you want it to be as stress-free as possible and if extra insurance will help with that, then I think it’s worth it if it won’t break the bank for you.
Activities: You also need to think about the activities you will be doing on your trip. If you are going to do some sightseeing and see some shows, then your chances of having an accident are much less than if you are going rock climbing and scuba diving. You might want a little extra insurance if you are going to be doing some adventurous sports on your trip.
When you are planning a trip through a travel agent keep in mind that they will recommend that you get insurance because if they don’t tell you about insurance, they could be liable if any problems occur. They can give you information about insurance, but you need to talk directly to the insurance company you decide to go with and ask them about their policies and any concerns you may have.
Conclusion
What it comes down to is what is it worth to you financially and for your well-being. Consider the likelihood of cancelling your trip or your trip getting disrupted. What is your personal risk tolerance. What I mean is can you afford to lose your luggage and not get total reimbursement, are you fine with losing the money for a prepaid show ticket, etc. Consider what your ability is to pay unexpected expenses if you are injured, or the tour company cancels the tour in the middle of the tour, and you need to pay for the way home. Travel insurance is a very personal decision and before you start looking at travel insurance companies, you need to decide if it is worth it for you.
By understanding the different types of coverage and evaluating your specific travel plans, you can determine if travel insurance is right for you. If you decide it’s worth it, research policies thoroughly and choose a reputable company to ensure you’re protected. Verify they are open 24 hours a day, as you can’t control when you may need them. Make a list of questions you have so when you do talk to the agent you will be prepared and get all of your answers. One company I found that offers comprehensive insurance is Travelex and seems to offer decent prices. Click banner below to learn more about them.
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