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When you’re preparing for an exciting trip, the last things you want to think about are medical accidents, canceled plans, or lost luggage. It’s understandable. But if you consider what can go wrong before you travel, you can avoid stress during the trip.
That’s where travel insurance can help, by protecting you from the worst-case scenarios so you can enjoy your trip in peace.
You may not necessarily need travel insurance for every trip, but it’s usually a good idea if you’re planning an expensive trip or you can’t afford the costs associated with unexpected changes.
What is travel insurance?
Travel insurance protects against unforeseen cancellations, delays, medical treatment, and other events that can occur during travel, including some natural disasters. For example, if you spend $4,000 on a cruise but end up canceling due to sickness, travel insurance can help pay for some or all of the travel costs so you can get some of your money back.
Paying for travel insurance might make sense if trip delays, flight cancellations, or international medical expenses are a financial risk you can’t afford. In some cases, the cost of your travel insurance can pay for itself. But you might not need it for a short or inexpensive trip.
Types of travel insurance
Travel insurance coverage can vary dramatically depending on your policy type, your coverage limits, and the cost of your trip, but comprehensive policies are the most common. Comprehensive policies typically include coverage for trip cancellations or delays, baggage loss, medical insurance, and a 24-hour phone line for assistance.
Here’s what each travel insurance policy covers, including the different aspects of comprehensive coverage.
If certain events prevent you from going on your trip, this policy helps reimburse your travel costs. The coverage can also help reimburse you for the unused portion of the trip if you need to shorten your stay due to an emergency.
This policy helps pay for expenses associated with trip delays, like hotel or lodging.
If your luggage is lost, stolen, or damaged, this policy helps pay for replacement items.
Emergency medical insurance
If there’s a medical emergency during your trip, like a broken leg, medical coverage helps pay for medical care, including any emergency room visits. This coverage is also known as travel health insurance, and it can cover a variety of medical costs.
This policy is similar to life insurance and may not be necessary if you already have coverage. But if you or a family member dies on a trip, this policy helps pay for associated expenses.
How much does travel insurance cost?
The price you pay for travel insurance depends on your destination, trip length, coverage amount, and age. Generally, you can expect this cost to fall between 4% and 8% of the total trip expense. The cost of the trip helps the travel insurance company determine how much a claim might cost if something goes wrong. If your trip costs $3,000, you can expect your travel insurance to cost between $120 and $240. A trip that costs $10,000 will have insurance costs between $400 and $800.
Shopping around and comparing multiple policies from different insurers is the best way to secure a good deal on coverage. Comparing quotes lets you determine whether you’re getting a reasonable rate. Make sure to understand the coverage details and read the fine print before you purchase a policy.
Here’s a deeper look at the factors that determine how much your coverage will cost.
Length of trip
The length of your trip affects how much you pay for travel insurance. Longer trips are typically more expensive to insure because a longer trip means there’s an increased likelihood that something will go wrong.
Your trip destination is another factor that influences the cost of travel insurance. Where you’re spending time throughout your trip affects how much it might cost for an insurance company to cover a claim. For example, coverage might be more expensive if you’re traveling to a remote site without access to medical care since you may need a policy with medical evacuation coverage. But you might pay less if your destination is a populated area located in the country where you live.
Age of policyholder
Older travelers typically pay more for travel insurance due to an increased likelihood that they’ll file a claim for medical care or cancel a trip due to medical conditions. Insurance companies try to minimize claims, and age is one factor that companies consider since it might indicate certain health conditions. Younger travelers tend to pay less, but that might not always be true since age is only one of many factors that insurers review.
How to find cheap travel insurance
The most effective way to save money on travel insurance is to compare quotes from multiple insurers, as coverage costs range from 4% to 8% of your travel expense.
For example, imagine you have a trip that costs $2,000, and your first insurance quote is $160, or 8% of the total costs. You may be able to halve the coverage price if you keep shopping and secure coverage for $80, or 4% of the total cost.
Booking early can also help you save money. Most travel companies offer the best rates and coverage options if you establish a policy within 15 days of paying your first deposit for the trip.
Here are a couple other steps you can take to get the best deal on travel insurance:
Find the right coverage amount. Having adequate travel insurance is essential, but you want to find a balance between too much and too little coverage. For example, you may find that you don’t need 24-hour phone assistance and feel comfortable researching information independently. If that’s the case, skip the coverage and save money.
Check your current coverage. Certain credit cards offer travel protection for flights, hotels, and other expenses you pay for with the card. The coverage is often more limited than what you can find with an insurance policy. But if some aspects are covered, it can help lower your policy costs.
Do you need travel insurance?
Travel insurance makes sense in some circumstances. One of the most important factors is whether or not cancellations, medical care, and other unforeseen travel expenses would cause you financial hardship. If so, it’s usually best to opt for travel insurance to protect your finances. But if not, you might be okay to skip the coverage. The only catch is that if you skip it, you must be comfortable paying out of pocket for expenses.
Here are a few examples of when the benefits of travel insurance might make sense:
You can’t afford airfare home. If you need to shorten your trip due to unexpected medical treatment or another emergency, travel insurance can help pay for the new flight with no additional cost.
Your health insurance won’t provide coverage. Many health plans don’t extend to international travel. If that’s true for you, travel insurance can help fill the gap and ensure you can access medical facilities while traveling in a foreign country.
You can’t pay to replace items in your luggage. If your bag is lost or stolen, travel insurance can help cover the cost of replacing your items.
Travel insurance FAQs
Travel insurance can help protect you against financial loss and unforeseen expenses. The information presented here can help you determine if coverage makes sense for your circumstances and budget.
Is travel insurance worth it?
Travel insurance is worth it if unexpected travel expenses due to medical care or trip delays would cause you financial hardship. Coverage also makes sense if your trip is a significant investment. For example, if you’re planning a $10,000 trip around the world, travel insurance is a helpful way to protect your investment. But insurance might not be necessary if you’re going on a two-day road trip in the United States that costs $300.
Where are the cheapest places to travel?
The cheapest place to travel depends on where you live since staying close to home is often cheaper. Far-off destinations typically cost more to book, and those trips might be more expensive to insure. Popular travel destinations also cost less since the areas are ready for travelers, and the high volume of people helps decrease costs.
Does your credit card offer travel protection?
Your credit card might offer travel protection if you use the card to book your trip. It’s different from travel insurance since the coverage through your card is usually less. Still, it’s worth checking if your card offers protection.
Taylor Milam-Samuel is a writer and credentialed educator who is fascinated by how people earn, save, and spend their money. When she's not researching financial terms and conditions, she can be found in the classroom teaching.