Do I Need Travel Insurance?

Travel insurance can offer financial protection if you cancel an expensive, non-refundable vacation for an approved reason. Travel insurance can also cover your medical bills if you experience a medical emergency while traveling. However, sometimes you can get away without purchasing it.

“Ultimately, the decision to purchase travel insurance should be based on your individual, including your destination, planned circumstances, health condition, and financial situation,” Rajeev Shrivastava, founder and CEO of insurance marketplace VisitorsCoverage, told Investopedia via email.

Key Takeaways

  • Travel insurance typically covers a variety of situations, such as trip cancellations, travel delays, lost luggage, medical care, and emergency evacuation.
  • A travel insurance policy generally costs 4% to 10% of the cost of a trip.
  • Seriously consider buying travel insurance if you’re taking a non-refundable trip or traveling internationally.
  • Existing coverage from homeowners and health insurance and credit cards might mean you don’t need to buy a separate travel insurance policy

What Does Travel Insurance Cover?

Travel insurance policies typically cover these five financial and health risks:

Trip Cancellations, Interruptions, and Delays

Illness, the death of a traveler’s family member, bad weather, job loss, or a natural disaster are some circumstances that might trigger reimbursement of prepaid travel costs, such as plane tickets or emergency expenses. However, only reasons outlined by the insurance policy are covered, so review exclusions.

Luggage and Rental Car Damage or Loss

A travel insurance policy might cover lost, stolen, or damaged luggage, personal items, or auto rentals. In some cases, the coverage might include reimbursement of purchases (such as clothing) you needed to make because you didn’t have your luggage. An auto rental damage waiver covers a rental vehicle’s damage or theft.

TravelHealth Insurance

Travel insurance kicks in for medical or dental emergencies when your regular US healthcare insurance doesn’t apply. Remember that even if a country has a low-cost or free nationalized health system, you’ll pay out of pocket if you are not a citizen.

Medical Evacuation

Medical evacuation coverage reimburses you if you must be evacuated from a remote area to a hospital. For example, if you become seriously ill while trekking in the Swiss Alps, travel insurance may pay for you to be airlifted to a big-city hospital for treatment. Medical evacuation from a remote location can cost as much as $250,000. This insurance may be part of travel health insurance or a stand-alone policy.

Accidental Death and Dismemberment

This type of coverage pays benefits to your survivors if you’re injured or die while on a trip. Injuries are typically limited to losing an eye, hand, foot, or limb.

Many travel insurance policies provide 24/7 assistance to help you find medical care, make travel arrangements, and contact loved ones in an emergency.

What Does Travel Insurance Not Cover?

A standard travel insurance policy won’t cover some cancellation reasons. For example, a standard travel insurance policy won’t provide coverage if you decide to back out of a trip because you need to cut back on spending. You’d need to purchase “cancel for any reason” (CFAR) coverage. Even CFAR has its own rules, such as canceling within a specific timeframe.

Other losses traditional travel insurance may or may not cover include:

  • Costs associated with pre-existing health conditions, pregnancy complications, or mental health issues.
  • Injury costs after participating in higher-risk activities such as rock climbing or skydiving.
  • Trip interruptions, cancellations, or other losses due to health and disease outbreaks or natural disasters.
  • Cancellations due to terrorism, civil unrest, or any US State Department warnings.

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?

Many countries don’t require travel or health insurance now that the COVID-19 pandemic is in retreat. But future disease outbreaks can influence requirements. Check the US State Department’s website and destination government sites for the most current information on health requirements and recommendations.

For example, Thailand still requires visitors to carry $10,000 in travel medical insurance if they’re coming from a country with pre-departure COVID tests. However, the US doesn’t require pre-departure COVID testing, making the insurance unnecessary for Americans.

Some nations have blanket requirements for coverage. Cuba requires US airlines leaving from the US to pay for each passenger’s health insurance. Every international traveler entering Saudi Arabia receives government-supplied travel medical insurance for emergencies.

Travelers entering Qatar must purchase emergency and accident-services health insurance from a Qatar-registered insurer.

In some countries, you must apply for a visa to visit, even for a few days. In Nepal, US visitors applying for the required six-month visa must demonstrate proof of a six-month international health insurance policy.

When Is Travel Insurance Not Necessary?

Suppose you’re taking a short trip in your own country and have adequate health insurance. In that case, you might not need travel insurance, according to Jason Eckhoff, founder and CEO of the BusinessClass.com travel website as told Investopedia via email. In addition, if you’re taking a trip with refundable costs—such as airfare—and can cancel it without being financially penalized, travel insurance may not be necessary.

You may not need travel insurance if your credit card offers robust benefits. Travel credit cards and other credit cards may provide the following coverages:

  • Trip cancellation insurance
  • Trip delay reimbursement
  • Emergency evacuation and transportation
  • Accidental death and dismemberment
  • Lost or delayed luggage reimbursement
  • Auto damage waivers
  • Roadside emergency assistance

However, Jiten Puri, founder and CEO of insurance marketplace PolicyAdvisor.com, noted that this coverage might be limited, such as providing only basic medical care or not covering trip cancellation or interruption.

How Much Does Travel Insurance Cost?

Generally, travel insurance costs 4% to 10% of the total prepaid, non-refundable expenses for your trip. If you buy travel insurance for a cruise with a $6,000 price tag, you might pay anywhere from $240 to $600 for a policy.

The cost of travel insurance varies from one insurer to another. A recent Investopedia review of six insurers’ travel insurance plans offering trip cancellation/interruption, emergency medical/evacuation, and baggage loss/damage found the following ranges:

age Trip Cost Low Premium High Premium
35 $1,500 $51 $69
65 $3,000 $135 $186

Factors that affect the cost of travel insurance include:

  • Age: This is the largest factor in rates charged for travel insurance. Older travelers and travelers with pre-existing medical conditions might find travel insurance costs more than it does for other travelers.
  • Coverage type and dollar amount: A policy with fewer coverage types and where your trip expenses are lower typically costs less than coverage for higher dollar amounts or extra benefits, such as “cancel for any reason” insurance.
  • trip length: The more days you travel, the more risks you might encounter.
  • Number of travelers: A trip with six people might be riskier (and cost more) than a trip with two people.

Remember that an insurer may turn you down or charge you more after reviewing your application based on the insurer’s risk standards.

When Is Travel Insurance Worth It?

David Leiter, the publisher of The World Travel Guy blog, said it’s generally a good idea to buy travel insurance with appropriate coverages if you’re:

  • Taking a pricey trip with non-refundable costs
  • Traveling internationally
  • Visiting a remote location without easy access to medical care

Eckhoff suggested considering buying travel insurance if you:

  • Have a pre-existing medical condition, as long as the policy covers your needs.
  • Are visiting a country threatened by political instability, natural disasters, or health risks.
  • Participate in higher-risk activities, increasing the odds of becoming injured or ill.

In addition to the above, the Centers for Disease Control (CDC) recommends buying supplemental travel health insurance if you’re traveling for more than six months. The US State Department recommends short-term supplemental health insurance if your policy doesn’t provide overseas benefits, and medical evacuation insurance for some popular tourist destinations such as Belize, the Bahamas, and Costa Rica.

The CDC recommends seeking a travel health insurance policy that makes payments directly to the provider or hospital, provides 24-hour physician support, offers emergency medical transport to the US or equivalent, and covers high-risk activities.

“If you’re shopping for travel insurance, make sure you get something that fits you, your destination, and your style of travel. Think of what’s most likely to go wrong in your situation, and then choose a plan that will cover it,” Leiter recommended.

Do I Need Travel Insurance If I Have Health Insurance?

Your existing health insurance may cover emergency care during international travel. However, only some health insurance plans kick in when traveling abroad. Before buying extra travel insurance, check with your health insurance company about on-the-go coverage; ask if you must seek preauthorization and which exclusions apply.

Do I Need Travel Insurance If My Credit Card Has Built-in Travel Protection?

Built-in travel protection from one of your credit cards may be all you need for your trip. For example, if your primary goal is to obtain trip cancellation coverage, your credit card benefits might be adequate. However, you may want to buy travel insurance if your credit card lacks sufficient medical coverage—or offers no medical coverage.

Is Travel Insurance the Same As Cancellation Insurance?

Travel insurance is not the same as cancellation insurance. However, cancellation insurance is often one component of travel insurance. So, your travel insurance policy may offer reimbursement for a cancellation due to specific circumstances, such as a death. But travel insurance can also cover medical expenses, lost baggage and auto rental damage.

Does Travel Insurance Protect My Possessions?

Homeowners and renters insurance can cover your possessions when you’re traveling. However, that coverage might not be enough to protect valuable items such as jewelry or may not cover the total cost for replacement. Furthermore, filing a homeowners or renters insurance claim might increase your premium.

How Can I Save Money on Travel Insurance?

Don’t go with the first travel insurance policy you come across. Instead, shop around to make sure you’re getting the most coverage at the best price. Also, If you’re booking a trip through a travel agency or tour operator, ask for a package deal, including travel insurance.

bottom line

Buying travel insurance might not be necessary if you’re traveling domestically, going on a refundable trip, or you carry adequate coverage through a credit card. “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,” Puri said.

Travel insurance generally provides “invaluable peace of mind,” Puri said. For example, travel insurance can be a smart investment if you’re traveling internationally and purchased a high-cost non-refundable trip.

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