Although the cost of airfares fell slightly last month, down 1.8% in June, it is still more expensive to travel today than it was a year ago. Given rising airfare prices, a rise in flight cancellations due to labor shortages and a new, potentially more contagious, COVID variant that is floating around, should you get travel insurance to protect the cost of your trip?
Since you have no control over many of the factors that cause travel disruption, travel insurance is worth considering. Travel insurance can protect against unforeseen circumstances that disrupt your travel plans, as well as provide peace of mind in uncertain times.
Travel insurance, which is a regulated product taken out by an insurance company that provides financial and medical coverage and reimbursement, is not the same as travel insurance or credit card travel insurance. Travel Protection is less comprehensive and less expensive – generally only offering to waive a refund or give you a credit for canceling your trip.
If you’re going on a trip this summer, we’ll show you what travel insurance actually covers, how it differs from travel insurance, and how much it costs so you can decide if it’s worth adding to your summer vacation.
Read more: Best travel credit cards
What is travel insurance?
Travel insurance is an important type of insurance policy overseen by state insurance regulators. By taking out travel insurance, you can reimburse damage that may occur during your trip. Covered incidents can range from unexpected inconveniences such as delayed baggage to major disruptions such as illness or injury.
As always, consult official resources regarding visa and travel requirements to your specific destination as you don’t want to be caught off guard. For example, if you’re planning a trip to Cuba, you might be surprised to learn that you need non-U.S. health insurance, according to the State Department. Travel insurance covers this requirement.
What does travel insurance actually cover?
The typical travel insurance consists of two elements: travel cancellation services and health insurance.
If you are unable to travel due to an unforeseen event, the travel insurance will reimburse you for non-refundable upfront costs, such as flights and hotel reservations that are otherwise non-refundable. Unforeseen events typically include things beyond your control that prevent you from traveling, such as bad weather, injury or illness – which now covers most (but not all) cases of COVID-related illness.
This was not offered 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 focused on the consumer and included COVID in its policies. And so, if you get sick with COVID and can’t travel, they’ll cover your costs.”
Even contingencies caused by pre-existing circumstances are covered. For example, if you have asthma and have an attack, it still counts as an unforeseen event, according to Giusti. Foreseeable events, such as traveling during your eight months of pregnancy, are not covered.
Government mandates that can take effect while you’re traveling aren’t necessarily covered either, Giusti said. This means that if you are unable to get on a flight due to a new mandate, you may not be covered by your policy. And travel anxiety isn’t covered either — so if you’re afraid to travel because of concerns about contracting COVID, your travel insurance won’t cover your trip.
The second part of typical travel insurance covers health costs if you are outside of your home insurance network while traveling. This often includes doctor visits for minor illnesses, such as a stomach flu, as well as emergency services, including medical evacuations. Your travel insurance company will pull the tab for what your health insurance company won’t cover (depending on your plan and deductible). Read the fine print to make sure this is included in your plan.
What about travel protection? How is it different?
While travel insurance can provide financial coverage for rental damage, lost luggage, flight delays, medical bills, and ticket cancellations, travel protection usually only allows you to change, cancel, or refund a travel purchase (such as a flight or hotel). You will often encounter airlines that offer the option to purchase travel protection when you purchase a ticket online, which will give you a refund or give you a travel credit if you need to cancel a flight.
Trip protection, also known as travel protection, is not offered by hotels but can be purchased when booking a cruise. According to Benét J. Wilson, editor-in-chief of The Points Guy, it’s generally not advisable to foot the bill for cruise line protection, as coverage is extremely limited if you dig into the fine print.
Premium credit cards may also cover some travel expenses as a perk for cardholders. This coverage is commonly referred to as travel insurance, but offers a bit of what you would normally get when purchased through an insurance agency. What’s covered depends on the card, but usually you’re looking at coverage for emergency evacuation, death, loss of sight or loss of limb, according to Wilson.
To make sure you get genuine travel insurance, don’t just search for the word “insurance,” look for a well-known travel insurance brand that works with a travel insurance provider, such as Allianz Travel Insurance. Plus, make sure the company you’re buying from is listed on AM Best and the US Travel Insurance Association before you buy.
How much does travel insurance cost?
The amount you pay for travel insurance depends on a number of factors:
Your ageCost of your tripTravel destinationDuration of the tripYour coverage selections (flights and hotels, prepaid excursions, etc.)
That said, according to Giusti, a good rule of thumb when budgeting for travel insurance is 5 to 10% of total travel costs.
Abnormal times call for abnormal measures, including insuring your trip.
What is cancellation insurance for any reason?
Cancellation insurance for any reason, or CFAR, does exactly what the name promises: You can cancel for any reason and receive compensation beyond the limits of typical travel insurance. However, these policies are not only more expensive, they usually do not cover 100% of your costs in the event of cancellation. And you must take out this insurance shortly after booking your trip.
“Once you’ve made your deposits for your trip, the clock starts ticking,” Giusti said. “So you have to buy that insurance within the allotted time. They don’t want you to buy the policy six months later when you’re about to travel and you hear about a new COVID variant.”
“CFAR can reimburse up to 75% of a traveler’s travel expenses in the event they have to cancel for a reason not otherwise covered by their policy,” said Megan Moncrief, chief marketing officer at SquareMouth.com, a pricing and travel insurance comparison system. † “It costs an additional premium of 40 to 50% and is only eligible within 21 days of the first booking for the trip.”
Do all travel insurance companies cover COVID-related claims?
While most travel insurance companies generally focused on covering COVID-related cancellations, not all of them did. In addition, while most plans offer COVID-related protection, they only cover you if you’re sick, not if you’re afraid to travel because of an outbreak.
Coverage amounts vary by policy and can range from $50,000 to $1 million in coverage per traveler, according to Moncrief. SquareMouth.com suggests looking for a policy with a minimum of $50,000 in medical coverage and $100,000 in medical evacuation coverage.
If you are specifically concerned about contracting COVID, or if you are at high risk and concerned about hospitalization costs, consider a policy with higher medical benefits. Some companies offer plans for $500,000 in COVID medical coverage per person and reimburse 100% of travel expenses for COVID-related illness cancellations. These companies include:
It’s important to talk to the insurance company and read the fine print if you have any questions about your coverage.
Does travel insurance cover quarantine costs?
This is where it gets difficult. Let’s say you are traveling to London and you contract COVID just before your outbound flight, and now you have to quarantine until you test negative. You suddenly need extra money for shelter, meals and possibly medical care while you are away from home.
Does 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 case you need to quarantine. That said, the shelf may not cover all of the quarantine, but only part of it. You’ll want to review the travel delay or disruption benefits of your plan to see if quarantine disruptions are included.
“Most policies extend seven days beyond the scheduled return date, although some policies may last longer,” Moncrief said. The benefit of travel delay can range from a few hundred to a few thousand dollars in coverage. At the high end is a maximum payout of $2,000 per traveler, which equates to about $150 to $250 per day.
If quarantine is included in your Interruption Benefit, your plan may also provide compensation for missed prepaid portions of your trip, including excursions.
We contacted travel insurers to review their offerings, but did not receive an immediate response. We will keep this article updated as we receive new information.
Do you need to take out travel insurance?
It depends. If you have a deposit for your trip, especially for trips that are paid in full, such as cruises, it may be worth getting travel insurance. If something happens, you risk losing all the money you’ve deposited, and travel insurance eliminates that risk.
On the other hand, if you’re only flying to visit your family and you’re not paying for accommodation, getting travel insurance may not make sense, especially if the airline offers a clear cancellation policy. But if you’re concerned about having to cancel your trip due to contracting COVID, opting for broad-coverage travel insurance can give you peace of mind.
To learn more, check out CNET’s recommendations for the best airline credit cards, tips for safe travel in 2022, and how to make travel more affordable despite the rising cost of flights.