We’re getting closer to the start of summer, which means more people are prepping vacation plans and family getaways. Even when we have those travel plans in place, unforeseen circumstances can always pop up to change our course. With so many factors outside of our control (like the ongoing COVID-19 pandemic ) that could lead to a trip being canceled or postponed, you may be wondering if travel insurance is a worthwhile expense.
Travel insurance is not the same as trip protection, even though it sounds like the same thing, and many travelers think they’re interchangeable. Travel insurance is a regulated product underwritten by an insurance company. Trip protection, which is often offered by travel agencies or travel companies, is less comprehensive and less expensive, and it typically only offers to waive a fee or to give you a credit for canceling your trip.
Early in 2020 when the pandemic first started, travel insurance didn’t always cover trip cancellations due to the shutdown. But now, travel insurance policies have changed, offering more COVID-related protections.
If you’retraveling this summer , we’ll tell you about travel insurance coverage for cancellations, how it’s different from trip protection, and what to consider before making a purchase.
What is travel insurance?
Travel insurance is a major type of insurance policy overseen by state insurance regulators. By purchasing a travel insurance plan, you could be reimbursed for losses that may arise while you travel. Covered incidents can range from unexpected inconveniences such as delayed baggage, to major interruptions such as illness or injury.
As always, check with official sources regarding visa and travel requirements to your specific destination, since you don’t want to be caught off-guard. If you want to take a trip to Cuba, for instance, you may be surprised to find you need non-US medical insurance, according to theDepartment of State. A trip insurance policy will cover this requirement.
What does travel insurance actually cover?
The typical travel insurance policy consists of two elements: trip cancellation services and health costs.
If you’re unable to travel due to an unforeseen event, travel insurance will reimburse you for the nonrefundable upfront costs, like flights and hotel reservations that otherwise can’t be refunded. Unforeseeable events typically include things you have no control over that prevent you from traveling, such as inclement weather, an injury or a sickness — which now includes COVID-related illness in most (but not all) cases.
This wasn’t on offer when the COVID-19 shutdowns began in 2020. “[The public] was nervous because most insurance policies had pandemic exclusions,” said Michael Giusti, an analyst at Insurance Quotes. “But the travel industry pivoted toward the consumer and included COVID under the policies. And so, if you get sick with COVID and can’t travel, they’ll cover your expenses.”
Unforeseen events caused by preexisting conditions are even covered. For instance, if you have asthma and experience an attack, that still counts as an unforeseen event, according to Giusti. Foreseen events, such as traveling during your eight month of pregnancy, are not covered.
Government mandates that may come into effect while you’re traveling aren’t necessarily covered either, Giusti said. This means that, if you can’t get on a flight because of a new mandate, you may not be covered by your policy. And fear of travel is also not covered — so if you’re afraid to travel due to concerns of contracting COVID, your travel insurance policy won’t reimburse your trip.
The second portion of the typical travel insurance policy covers health costs if you’re outside of your home insurance network while traveling. This often includes doctor’s visits for smaller illnesses, say, a stomach bug, as well as emergency services, including medical evacuations. Your travel insurance company will pick up the tab for whatever your health insurer won’t cover (depending on your plan and deductible). Read the fine print to ensure this is included in your plan.
What about trip protection? How is it different?
While travel insurance can offer financial coverage for rental damages, lost luggage, flight delays, medical bills and ticket cancellation, trip protection usually only lets you change, cancel or refund a trip purchase (such as a flight or hotel). You’ll often find airlines offering the option to purchase trip protection when you purchase a ticket online, which can help you recoup your money or offer you a travel credit if you have to cancel a flight.
Trip protection, also called travel protection, is not offered by hotels but can be purchased when booking a cruise. Footing the bill for cruise line trip protection is generally not recommended though, since the coverage is extremely limited when you dig into the fine print, according to Benét J. Wilson, a senior editor for The Points Guy.
Premium credit cards may also offer coverage for some travel expenses as a cardmember perk. This coverage is usually labeled as travel insurance, but offers a modicum of what you would typically get when purchasing through an insurance agency. What’s covered depends on the card, but typically, you’re looking at coverage for emergency evacuation, death, loss of eyesight or losing limbs, according to Wilson.
To make sure you’re purchasing a true travel insurance policy, don’t just look for the word “insurance” — make sure to look for a well-known travel insurance brand that works with a travel insurance underwriter, like Allianz Travel Insurance. Additionally, you can make sure the company you’re purchasing from is listed onAM Best and the US Travel Insurance Associationbefore buying.
How much does travel insurance cost?
The amount you’ll pay for trip insurance depends on a few factors:
That said, a good rule of thumb when budgeting for travel insurance is 5 to 10% of the overall trip cost, according to Giusti.
Abnormal times call for abnormal measures, which might include insuring your travel.
What is cancel-for-any-reason insurance?
Cancel-for-any-reason insurance, or CFAR, does exactly what its name promises: It lets you cancel for any reason and receive reimbursement, going beyond the bounds of typical travel insurance. However, not only are these policies more expensive, they also typically don’t cover 100% of your costs in the event of cancellation. And you need to purchase this insurance soon after you book your travel.
“As soon as you put your deposits down for your trip, the clock starts ticking,” Giusti said. “So, you have to buy that insurance policy in the set amount of time. They don’t want you buying the policy six months later when you’re about to take the trip and you hear about a new COVID variant.”
“CFAR can reimburse up to 75% of the traveler’s trip cost in the event they need to cancel for a reason otherwise not covered by their policy,” said Megan Moncrief, chief marketing officer at SquareMouth.com, a travel insurance quoting and comparison engine. “It costs an additional 40 to 50% premium, and is only eligible within 21 days of the first booking toward the trip.”
Do all travel insurance companies cover COVID-related claims?
While most travel insurance carriers generally pivoted into covering COVID-related cancellations, not all did. Moreover, while most plans offer COVID-related protections, they’ll only cover you if you’re sick, not if you’re apprehensive about traveling because of an outbreak.
Coverage amounts vary by policy, and they can range anywhere from $50,000 to $1 million in coverage per traveler, according to Moncrief. SquareMouth.com suggests looking for a policy with at least $50,000 in medical coverage and $100,000 in medical evacuation coverage.
If you’re specifically concerned about contracting COVID, or if you’re at high risk and concerned about hospitalization expenses, you may want to consider policies with higher medical benefits. Some companies offer plans for $500,000 of COVID medical coverage per person and reimburse 100% of trip costs for COVID-related illness cancellations. These companies include:
It’s important to talk to the insurance provider and read the fine print if you have any questions about your coverage.
Does travel insurance cover quarantine costs?
Here’s where it gets tricky. Say you’re on a trip to London and you contract COVID right before your outbound flight, and now you have to quarantine until you test negative. You’ll suddenly need extra cash for lodging, meals and, potentially, medical attention while you’re away from home.
Will travel insurance cover these costs? It depends. “This is going to be policy by policy,” Giusti said. Some plans may have additional coverage for hotel stays and airfare in the event you have to quarantine. That said, the plank may not cover the entirety of the quarantine, just a portion of it. You’ll want to look at the Travel Delay or Trip Interruption benefits of your plan to see if quarantine interruptions are included.
“Most policies extend seven days beyond the scheduled return date, although some policies may extend for longer,” Moncrief said. The travel delay benefit can shift between a couple of hundred to a couple of thousand dollars in coverage. At the highest end is a max payout of $2,000 per traveler, which breaks down to about $150 to $250 per day.
If quarantine is included under your Trip Interruption benefit, your plan may also provide reimbursement for missed prepaid portions of your trip, including excursions.
We reached out to travel insurance carriers to see their offerings, but did not receive an immediate response. We’ll keep this article updated as we receive new information.
Should you purchase travel insurance?
It depends. If you’ve put down deposits for your trip, especially for all-expenses-paid trips like cruises, it may be worth purchasing travel insurance. If something happens, you risk losing all the money you’ve deposited, and travel insurance would bar that risk.
On the other hand, if you’re just flying to visit your family, and you aren’t paying for lodging, it may not make sense to purchase travel insurance, especially if the airline offers a straightforward cancellation policy. But if you’re worried about having to cancel your trip from contracting COVID, then opting for travel insurance with broad coverage can provide peace of mind.
For more, check out CNET recommendations for the best travel credit cards , tips for safe travel in 2022 and how to make travel more affordable despite the rising cost of flights.