What is Travel Insurance and What Does it Cover?
Travel insurance is actually more of a catch-all term that can refer to several different types of insurance policies often used by travelers.
Travel insurance policies will vary, but they can offer coverage for a variety of events that can arise during a trip, including:
- Emergency medical evacuations
- Trip delays
- Baggage loss
- Rental car insurance
- Trip cancellations
Some travel insurance policies may even cover pre-existing medical conditions, though you may have to disclose the pre-existing condition and/or get a pre-existing conditions waiver from the insurance carrier. Travel insurance can make sense in a variety of situations depending on one’s financial situation and how comfortable an individual is with risk.
Does Travel Insurance Cover COVID-Related Expenses?
You might wonder if travel insurance covers COVID-19 and the variants (Delta, Omicron, etc.) that are out there. Most travel insurance policies do NOT cover medical expenses from COVID-19. Because the COVID pandemic is considered a “known event,” most travel insurance policies will not provide trip interruption benefits or medical benefits due to COVID. This includes if you get sick with COVID while traveling, if you have to quarantine, if you change your mind about traveling somewhere due to the high risk of catching coronavirus or if your airline cancels your booking.
To be insured for COVID under travel insurance, you will have to look for travel insurance providers that specifically state they offer COVID coverage under their travel insurance policies. This can be offered as an add-on to a typical travel insurance plan.
Will My Own Insurance Cover Me While I’m Traveling?
Some existing insurance coverage may be applicable for travel-related incidents, such as:
Homeowners’ or Renter’s Insurance
You probably already have different kinds of insurance like homeowners’ insurance or renters insurance. If that’s the case, you might have wondered if any of those policies already cover you for travel, making travel insurance not necessary.
You’ll want to check with your insurance agent or read your policy documents to be sure, but generally, these policies do offer coverage for theft of belongings, even while you are traveling.
It’s also common for your auto insurance policy to provide some benefits while you’re driving, no matter what car you’re driving, including rental vehicles. Many credit cards also provide insurance benefits for car rentals.
Check your policy or credit card information so that you understand exactly what is and is not covered. That way you know what types of additional travel insurance will make the most sense for your upcoming trip.
You will need to check with your insurer and the fine print of your insurance policy to verify the extent of the coverage.
Types of Travel Insurance Policies
Here are four of the most popular types of trip insurance for travelers:
- Trip Cancellation and Interruption Insurance: For those who have already paid a significant amount of non-refundable expenses, trip cancellation or interruption travel insurance might be beneficial. This type of travel insurance policy offers coverage for situations such as last-minute cancellations or if you need to leave early.
- Baggage and Flight Delay Insurance: This type of travel insurance can cover you if your flight is delayed or if your checked or carry-on bags are lost or delayed. You may be able to file a claim to recover the value of the items you lost in your luggage, especially if they are valuable items like laptops or cameras.
- Emergency Medical Insurance: Medical insurance can cover medical costs incurred while traveling, including coverage at an adequate care facility. This is most useful when traveling in a country where your traditional health insurance doesn’t cover you.
- Evacuation Insurance: This can cover you if you need emergency transport to be evacuated back to your home as part of a medical emergency.
Is Travel Insurance Worth it?
Travel insurance can be worth it in two situations:
1. For Those Traveling Outside the Country.
For those who are going out of the country or a place where their health insurance coverage does not apply, it can make sense to get some sort of medical coverage for emergency evacuation or medical care. Without coverage, you could be on the hook for thousands of dollars (or more) in medical expenses if you engage in high-risk activity such as a diving accident abroad. If you’re staying on a month-long vacation overseas, the risk of a medical emergency can also increase.
On the other hand, if you are staying in-country where your regular health insurance will cover you for medical emergency treatment, or if you have a relatively small amount of money at risk, travel insurance may not seem worth it. It will depend on your own specific risk/reward calculation, and whether you would feel comfortable if you had to walk away from the trip should your situation change from the booking conditions you had when you first made your plans.
2. For Those Who Paid a Significant Amount of Nonrefundable Money Upfront for the Trip.
Another instance where travel insurance may be worth it for many people is if they prepaid a large expense for the trip. In these situations, you may be reimbursed if anything goes wrong.
Common examples of this might be a cruise line trip or non-refundable expenses like a deposit or airline flights. If you have a significant amount of money on the line (more than you would be willing to lose), it can be worth it to insure the trip to cover against a situation like a family member emergency where you would have to cancel the trip or leave early.
When Is Travel Insurance Not Necessary?
While travel insurance can be hugely important in situations where someone is traveling out of the country or if there is a lot of money at risk if a trip is canceled, it’s not always necessary.
For shorter (cheaper) domestic trips where the traveler is covered by their own medical insurance and there isn’t a lot of nonrefundable expenses at stake, travel insurance may seem unnecessary and an excessive expense.
How Much Does Travel Insurance Cost?
If you’re wondering how much travel insurance costs, the answer is that the premiums are generally fairly affordable. Premiums for a basic travel insurance policy for a one-time trip will likely be under $100, though that will vary based on the type of travel insurance policy, the benefit limits of the policy, the length of your trip and possibly your own medical situation. Depending on the situation, paying a small amount of premium may be worth it for the additional peace of mind that it provides.