Whether you missed your flight to Florida, lost your bags in Berlin, or broke your ankle in Ankara, travel insurance can help remedy all kinds of travel mishap costs. Travel insurance is a type of insurance covering financial losses associated with traveling, and it can be useful protection for domestic or international travel.
Travel insurance can be purchased online, from your tour operator, or other sources.
The main categories of travel insurance include trip cancellation or interruption coverage, baggage and personal effects coverage, rental property and rental car coverage, medical coverage, and accidental death coverage.
Coverage often includes 24/7 emergency services, such as replacing lost passports, cash wire assistance, and re-booking canceled flights.
It’s important to understand what’s covered and what’s not, any limitations on coverage amounts, and coverage requirements.
What Is Travel Insurance?
Travel insurance helps cover financial losses associated with surprise circumstances that could ruin a trip, including illness, injury, accidents, flight or other transportation delays, and other issues. This insurance costs 4%-10% of a trip’s price. So, for a $10,000 trip, trip insurance could cost between $400 and $1,000.
Premiums—or the price you pay for coverage—are based on the coverage type, your age, destination, trip’s cost, and more. Specialized policy riders focus on the needs of business travelers, athletes, and expatriates.
How Travel Insurance Works
Travel insurance may be sold online by travel agents, travel suppliers (airlines, cruise lines), private insurance companies, or insurance brokers when booking your flight, accommodations, or car. Travel insurance companies include AIG Travel, Berkshire Hathaway Travel Protection, Generali Global Assistance, GeoBlue, Nationwide, and more.
Typically, you’ll purchase coverage shortly after initial bookings for lodging, flights or other transportation, activities, and rental cars. Some policies may require you to do so to retain full coverage. Here are some terms to know for travel insurance.
Primary and Secondary Coverage
If you buy travel insurance, you may have concurrent insurance coverage, meaning you’re covered under more than one policy. When the travel coverage is primary, the travel insurance reimburses you first without needing to make a claim through another company—and sparing you potentially increased policy rates.
If the travel insurance coverage is secondary, you’ll first need to attempt to file a claim with other coverage, such as an airline (lost baggage) or your own auto insurance (damaged car).
There are usually stipulations spelled out how you qualify for coverage. Your claim must fall under the types of coverage offered. For example, lost baggage insurance might include coverage for personal items, prescriptions, credit cards, and your passport or visa. You may also need to take extra steps to qualify for coverage, such as reporting the loss or theft to the police.
Policy Coverage Limits
This is the maximum amount you can receive for the claim. For example, you might only receive $500 per bag. You may not even receive more for expensive items such as jewelry or electronic devices. You might need to provide receipts for items over a certain amount. Without receipts, the insurer may only pay for repairs.
Some coverage might require you to pay a deductible, or flat amount, before covering the remainder of your claim up to the limit.
These are the conditions under which your coverage will not cover the loss. Each policy differs. For example, your baggage damage coverage may not cover losses caused by animals. It may exclude coverage of bicycles, hearing aids or other medical devices, keys and tickets, or seizure by a government or customs official.
Pre-existing conditions may not be covered by travel medical insurance, or may only be covered if you buy a travel insurance plan within 1-2 weeks of booking your trip.
Comprehensive Travel Insurance
Comprehensive travel insurance includes many types of coverage listed below, bundled into one plan. Most commonly, comprehensive travel insurance bundles a 24-hour assistance line to help find doctors or get assistance in an emergency, reimburse you for trip cancellation, interruption and delay, baggage loss or delay, and medical expense and medical evacuation coverage.
Alternatively, you can purchase each coverage type separately. This may be wise if you already have coverage through other insurance or can cover your losses in many cases.
Trip Cancellation or Interruption Coverage
This insurance reimburses a traveler for some or all prepaid, nonrefundable travel expenses, and comes in the following forms:
Trip Cancellation: Reimburses you for paid travel expenses if you can’t travel for a preapproved reason.
Travel Delay: Reimburses you for expenses if you can’t travel because of a delay.
Trip Interruption: Reimburses you for travel costs if your trip is cut short.
Cancel For Any Reason (CFAR): Reimburses you for a portion of costs if you cancel the trip for any reason; typically more expensive than the other types listed above.
With most of the above, acceptable cancellation and interruption causes and reimbursement amounts vary by provider. Acceptable reasons for a claim might include the following:
Illness or death in your immediate family
Sudden business conflicts
Legal obligations such as jury duty
You may need to pay more or meet more requirements to file a claim for a cancellation due to financial default, terrorism in your destination city, or work reasons.
Damage and Baggage Losses Coverage
Baggage and personal belongings being lost, stolen, or damaged is a frequent travel problem—and can quickly ruin a trip as you must shop for replacements. Baggage and personal effects coverage protects lost, stolen, or damaged belongings during travel to, in, and from a destination.
However, many travel insurance policies pay for belongings only after you exhaust all other available claims. Baggage coverage may have many restrictions and exclusions, such as only covering up to $500 per item and $250 for each additional item. You may be able to increase or decrease amounts, shop around for coverage, or increase limits by paying more.
For example, the insurance may not pay for lost and damaged luggage due to airline fault.
Most carriers, such as airlines, reimburse travelers if baggage is lost or destroyed due to the airline’s error. However, there may be limitations on reimbursement amounts, so baggage and personal effects coverage provides an additional layer of protection.
Vacation rental insurance covers costs from accidental damage to a vacation rental property. Some plans also offer trip cancellation and interruption to help reimburse costs when you can’t use your vacation rental. Some of these reasons could include the following:
Lost or stolen keys
Unsanitary or unsafe vacation property
Vacation rental wasn’t as advertised
The company oversold your vacation rental
Travel Health Insurance
Medical coverage can help with unexpected international medical and dental expenses, and help with locating doctors and healthcare facilities abroad. As with other policies, coverage will vary by price and provider.
Foreign travel medical coverage: These policies range from five days to one year or longer, and cover costs arising from illness and injuries while traveling.
Medical Evacuation: May cover airlift travel to a medical facility and medical evacuation to receive care.
Other Travel Insurance Coverage
Depending on your plan or package selected, you may be able to add the following travel insurance types:
Identity theft resolution services
School activity coverage
Destination wedding coverage
Adventure sports coverage
Pet health as a reason for cancellation or delay
Hunting or fishing activities as a reason for cancellation or delay
Missed flight connections
How to Get Travel Insurance
Travel insurance varies in cost, exclusions, and coverage. Coverage is available for single, multiple, and yearly trips. To get travel insurance, you fill out an insurance company’s application about your trip, including the following:
Date of first payment toward your trip
The insurance company reviews the information using underwriting guidelines to guide issuing a policy and the rate. If it accepts your application, the company will issue a policy covering your trip. If the company rejects your application, you can apply with another insurer.
Do I Need Travel Insurance?
You might consider travel insurance if you can’t afford to cancel and then rebook an expensive or long trip. You might also consider travel health insurance if your health insurance doesn’t cover international costs. An alternative is to book an easily cancellable vacation—look for a pay-later hotel room and car rental options, flexible cancellation terms, and the ability to rebook without a fee.
What Is Not Covered By Travel Insurance?
Review the travel insurance policy to discover exclusions. According to NAIC, common travel policy exclusions are:
A traveler’s pre-existing health conditions
Civil and political unrest at the traveler’s destination
Pregnancy and childbirth
Coverage for those engaging in adventure or dangerous activities.
How Can I Get Cheap Travel Insurance?
Your homeowners or renters insurance may provide some protection for personal belongings,
and airlines and cruise lines are responsible for loss and damage to your baggage during transport. Also, credit cardsmay provide automatic protection for things like delays and luggage or rental car accidents if used for deposits or other trip-related expenses.
The Bottom Line
The main types of travel insurance include trip cancellation or interruption coverage, baggage and personal effects coverage, medical expense coverage, and accidental death or flight accident coverage. Before buying a policy, check to see if you already have coverage through your own health or car insurance, or through a credit card.