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- Travel insurance is intended to cover risks and financial losses associated with traveling.
- Coverage can include trip cancellation, baggage protection, medical care, and emergency evacuation.
- While monetary compensation is a primary benefit, travel insurance can also provide peace of mind.
- See Insider's list of the best travel insurance »
Whether it's a trip across the world or a trip across the state, having travel insurance provides major relief if things go awry. Flight delays, lost baggage, illness, injuries, and other unforeseen events can disrupt even the best-laid plans. With a major disruption comes the potential for unanticipated expenses.
Travel insurance and the coverage it offers can help keep you protected and save you money in the long run.
What is travel insurance?
Travel insurance policies protect travelers from financial losses should something go wrong during their trip. You can customize which coverages you want to include, and there are several to choose from.
"Common types of coverage include trip cancellation, trip interruption, baggage protection, coverage for medical care if you get sick or hurt during your trip, and emergency medical evacuation," says Angela Borden, a travel insurance expert and product strategist for travel insurance company Seven Corners.
Travel insurance plans offer nonrefundable payments and other trip-related expenses. While monetary compensation is a primary benefit, there is another valuable perk of travel insurance. It can provide peace of mind.
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What does travel insurance cover?
Your specific travel insurance plan (and its terms and conditions) will determine the minutia and specifics of what is covered. As with most other forms of insurance, a general rule of thumb is the more you spend, the better your coverage.
"Travel insurance can be confusing, so it's best to research a reputable company that specializes in travel insurance and has a long history of successfully helping travelers all over the world," says Borden.
Canceled and delayed trips
A travel insurance policy can reimburse you for a prepaid, non-refundable trip if it is canceled. In addition, travel delay coverage provides reimbursement for certain incidents (depending on the coverage you buy). This can include hotels, airfare, food, and other related expenses.
Illness or injury
Typically, US healthcare plans are not accepted in other countries. So travel insurance with medical coverage can be particularly beneficial when you are abroad. Medical coverage can also help with locating doctors and healthcare facilities.
Emergency medical transportation
Medical transportation coverage will pay for emergency evacuation expenses such as airlifts and medically-equipped flights back to the US. Out of pocket, these expenses can easily amount to tens of thousands of dollars. Certain plans may even transport you to a hospital of choice for care.
Baggage coverage & how it works
Most airlines will reimburse travelers for lost or destroyed baggage, but be prepared for limitations. Travel insurance plans will typically cover stolen items, such as those stolen out of a hotel room. This may not include expensive jewelry, antiques, or heirloom items. Typically, airlines have a few days to recover your bag.
In the meantime, you can make a claim to pay for items like certain toiletries and other items you need to pick up. If your bag is truly lost or you don't get it for an extended period, you can file a true lost baggage claim.
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What does credit card travel insurance cover?
A major perk on several travel credit cards is embedded travel insurance coverage. Typically, you will need to use the specific card for the transaction (at least with partial payment) for travel coverage to kick in.
Each card has specific rules on what exactly is covered. But one of the industry leaders is the $550-per-year Chase Sapphire Reserve credit card. Here's a snapshot of what is covered with this specific card:
- Baggage delay: up to $100 reimbursed per day for up to five days if a passenger carrier delays your baggage by more than six hours.
- Lost and damaged baggage: up to $3,000 per passenger per trip, but only up to $500 per passenger for jewelry and watches and up to $500 per passenger for cameras and other electronic equipment.
- Trip delay reimbursement: up to $500 per ticket if you're delayed more than six hours or require an overnight stay.
- Trip cancellation and interruption protection: up to $10,000 per person and $20,000 per trip for prepaid, non-refundable travel expenses.
- Medical evacuation benefit: up to $100,000 for necessary emergency evacuation and transportation when on a trip of five to 60 days and traveling more than 100 miles from home.
- Travel accident insurance: accidental death or dismemberment coverage of up to $100,000 (up to $1,000,000 for common carrier travel).
- Emergency medical and dental benefits: up to $2,500 for medical expenses (subject to a $50 deductible) when on a trip arranged by a travel agency and traveling more than 100 miles from home.
- Rental car coverage: primary coverage for damages caused by theft or collision up to $75,000 on rentals of 31 days or fewer
More protections are included with cards with an annual fee, but there are exceptions. The no-annual-fee Chase Freedom Flex, for instance, includes up to $1,500 per person (and up to $6,000 per trip) in trip cancellation and trip interruption coverage.
However, there are some differences between credit card travel coverage and obtaining coverage from a third party.
"Credit card coverage does not typically provide travel medical benefits," Borden says. "For protection if you get sick or hurt while traveling, you'll want a travel insurance plan with medical coverage."
Whether you get your travel insurance in a standalone policy or through a credit card, it's important to review your plan details carefully. In either case, there may be exclusions and other requirements such as deadlines when filing a claim, Borden notes.
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What travel insurance coverage do you need to pay more for?
Knowing what travel insurance doesn't cover is as important as knowing what it does cover.
"Travelers should understand that travel insurance benefits come into play only if a covered reason occurs," Borden says. Most standard travel insurance plans won't reimburse you for the following:
Cancel for any reason (CFAR)
Unless you specifically purchase cancel-for-any-reason travel insurance, your standard benefits won't kick in unless it's a covered event. For instance, you won't be reimbursed simply for changing your mind about taking a trip. For this reason, CFAR may also reduce the amount of paperwork you have to submit.
Foreseen weather events
Sudden storms or unforeseen weather events are typically covered by standard travel insurance plans. There are exceptions to be aware of. For example, an anticipated and named hurricane will not be covered.
Pandemics and epidemics
As COVID-19 disrupted travel around the globe, many travelers learned the hard way that some standard travel insurance plans do not cover pandemics and epidemics. Many policies, especially for countries like Thailand, will cover COVID-specific medical and other coverage. You'll need to check your medical coverage to see if it covers other conditions.
Medical tourism
If you're going to travel internationally for a medical procedure or doctor's visit, your travel insurance plan will not cover the procedure itself. Most medical travel plans also won't cover you if something goes wrong with your procedure.
Pre-existing conditions and pregnancy
Those with specific pre-existing conditions, such as someone with diabetes and needing more insulin, will not be covered by most plans. In addition, pregnancy-related expenses will likely not be covered under most plans.
Extreme sports and activities
Accidents occurring while participating in extreme sports like skydiving and paragliding will typically not be covered under most plans. However, many plans offer the ability to upgrade to a higher-priced version with extended coverage.
Trip interruption insurance
Unfortunately, we can't always plan for everything in life the way we'd like to. Trip interruption insurance would cover you if you're already on your trip and you get sick, there's a natural disaster, or something else happens. Make sure to check with your travel insurance providers to discuss any inclusions, coverage, and more.
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World Nomads Travel Insurance -
Allianz Travel Insurance
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Travelex Travel Insurance
What type of travel insurance do you need?
Each plan should be personalized to meet the insured party's needs. Some travelers prefer to stick to the bare minimum (flight cancellation benefits through the airline). Others want a comprehensive plan with every coverage possible. Before you buy anything, set your destination. Are there any travel restrictions or changes pending? Does your destination country require emergency or other medical coverage?
If the destination airport is known for lost or delayed luggage, travelers should keep important items in carry-ons. Lost or delayed luggage coverage protects insured parties in the event of a significant delay or total loss.
Second, check current credit card travel benefits to avoid redundancies. Savvy travelers don't need to pay for the same coverage twice.
Finally, consider your individual needs. Do you have a chronic medical condition, or do you feel safe with emergency-only medical coverage? Keep in mind, this does not include coverage for cosmetic surgery or other medical tourism. Do you have a budget limit for travel insurance? Asking and answering these important questions will help every traveler find the right product.
The bottom line
Most travel insurance plans are simple, and Personal Finance Insider's guide to the best travel insurance companies outlines our top picks. Remember, read your policy and its specifics closely to ensure it includes the items you need coverage for.
No one likes to dwell on how a trip might not go as planned before even leaving. However, at its core, travel insurance provides peace of mind as you go about your trip. While the upfront cost may seem significant, when you compare it to the potential expenses of a canceled flight, emergency evacuation, or a hefty medical bill, it's a small price to pay in the grand scheme of things.
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Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer. Read our editorial standards.
Please note: While the offers mentioned above are accurate at the time of publication, they're subject to change at any time and may have changed, or may no longer be available.
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