Is Travel Insurance Worth It?

Does everyone need travel insurance?

While travel insurance is a great option for everyone, it may not be necessary for all trips or people. For example, if your traditional health insurance covers medical emergencies while traveling within the U.S., you may not need emergency travel medical coverage for a domestic trip.

However, at a minimum, you should ensure you can weather the losses and extra expenses that you could potentially incur on any trip you take. For example, most people probably could not afford to pay out of pocket for a medical airlift evacuation from a foreign country, even as close as Canada. Therefore, it’s important to weigh the odds of these types of scenarios occurring. Additionally, some countries will legally require you to have travel insurance before you are allowed to enter.

Consider the following instances where travel insurance is definitely worth it, and when you may be able to go without.

When buying travel insurance is worth it

When travel insurance may not be worth it

Understanding what travel insurance covers

Before you can decide whether travel insurance is worth it or not, it helps to have a full understanding of the types of coverage you can buy.

This step is crucial since some types of travel protection can only save you around $100 to $200 per day, whereas others can prevent you from racking up tens of thousands in expenses (or more) during trips overseas.

Types of travel insurance

The following types of travel coverage are typically included in the most comprehensive travel insurance plans, although policy details and coverage limits vary by provider.

• Accidental Death and Dismemberment (AD&D): This type of insurance policy provides a cash payment when a traveler is killed or dismembered during a covered trip. Coverage can be worth up to $25,000 or more for each individual covered by the plan.
• Baggage Delay Coverage: Baggage delay coverage reimburses travelers for incidental expenses that arise when bags are delayed for a certain length of time, usually 6 or 12 hours. This protection can pay for clothing, toiletries, and more, and it’s typically worth $100 to $200 per day.
• Cancel for any reason (CFAR): This type of optional travel insurance lets travelers get reimbursed for up to 80% of pre-paid trips, and nonrefundable costs when they need to cancel a trip for personal reasons.
• Emergency Evacuation: Emergency evacuation coverage is typically offered in amounts up to $1 million, and it protects against the exorbitant costs of transportation to a local hospital for care or even supervised medical transportation to your home country.
• Emergency Medical Expenses: Coverage for emergency medical expenses typically pays for $25,000 to $500,000 in medical expenses during international trips. This coverage is crucial for travel to destinations where a person’s own health insurance policy does not apply.
• Lost or Stolen Baggage: Coverage for lost or stolen baggage can reimburse you for your actual luggage and personal effects when your bags are lost while in the care of a common carrier. Coverage is typically worth $500 to $3,000 per traveler.
• Trip Cancellation Insurance: Trip cancellation insurance can be worth up to 150% of the total cost of your trip when a vacation must be canceled for a covered reason, such as the death of a family member or contraction of COVID-19 by a member of your party.
• Trip Delay Coverage: This type of insurance can pay for incidental expenses that pop up when a trip is delayed for a specific length of time, usually 6 to 12 hours. Coverage kicks in to pay for hotel stays, meals, and more, and it can be worth $150 to $200 per traveler or more with some plans.
• Trip Interruption Insurance: This coverage kicks in to pay for up to 175% of the total trip cost when a trip is delayed for a covered reason, such as inclement weather that ruins a trip to the Bahamas or COVID-19-related quarantine.

As you can see, some types of coverage offer a nominal amount in benefits while others can be worth up to 1 million dollars.

For example, missing out on trip delay coverage may cost you a few hundred dollars in hotel stays and meals if your flight is delayed overnight. Likewise, you may be out a few thousand dollars if you don’t have travel insurance and your luggage and belongings are stolen while you’re on vacation in Canada, for example.

If you wind up sick or injured overseas, however, not having travel insurance for medical expenses or evacuation could easily leave you on the hook for tens of thousands of dollars in bills and potentially more. Ultimately, this is why most travelers purchase a travel insurance policy that includes medical insurance and evacuation coverage first and foremost.

What is not covered by travel insurance?

Buying a travel insurance policy can provide considerable peace of mind, but you should know that some situations typically are not covered by most travel plans.

As an example, “disinclination to travel” due to COVID-19-related reasons or other pandemic fears is typically not covered by travel insurance unless you have optional CFAR coverage in place. For full COVID-19-related, coverage you should consider looking into COVID-19 travel insurance.

Another scenario not covered by travel insurance is when a natural disaster has already begun. If you are planning a trip to the Caribbean during hurricane season and a major storm system has already been named, for example, you can no longer purchase most types of travel insurance for that specific trip.

Most travel insurance plans also exclude pre-existing conditions, but exceptions can be made when you pay for additional coverage for pre-existing medical conditions and purchase your travel insurance plan within a few weeks (usually within 15 days) of making your initial trip deposit.

Other situations not typically covered by travel insurance include:

• Acts of war
• Claims resulting from alcohol or drug use
• Claims that result from medical tourism
• Illegal activities that result in injury or other losses
• Risky adventure activities and sports (unless specifically covered in your travel insurance policy)

Should I use my credit card travel protection instead of buying travel insurance?

If you’re tempted to use credit card travel insurance instead of buying a policy, you’ll want to read over the fine print from your card issuer so you know what is and isn’t covered. Also check to make sure coverage limits are sufficient for your needs based on the trip you are planning to take, and make sure you understand any exclusions that apply.

Finally, keep in mind that credit card travel insurance rarely provides any coverage for medical emergencies. Even the Chase Sapphire Reserve® Credit Card, which is one of the few travel credit cards that does provide medical coverage, only includes up to $2,500 in coverage for emergency medical expenses (including dental), and only after you pay a $50 deductible.

If you decide to travel with credit card coverage only, you’re leaving yourself vulnerable to expenses that can arise if you need emergency medical care. With that in mind, you should only rely on credit card coverage if you’re willing to take that risk.

Bottom Line: Is trip insurance worth it?

The benefits of travel insurance include financial protection from life’s many “what ifs” and the peace of mind you get knowing you’re covered.

Meanwhile, the disadvantages of travel insurance include the additional cost required and the fact you have to spend time and energy researching and comparing policies before you buy.

Either way, travel insurance is well worth it if you wind up needing coverage, and you won’t know that part until it’s far too late. With most travel insurance plans adding just 5% to 6% of your total trip cost, you’re better off factoring this coverage into your travel budget from the start.