Takeaways
- Travel insurance protects you from trip cancellation, lost baggage, and medical issues.
- Travel insurance can be purchased online by third-party insurance providers.
- Travel insurance generally costs between 5%-6% of the total cost of your trip.
- Travel insurance covers domestic weekenders and luxury international trips.
- Travel insurance premiums vary by insurance provider, degree of coverage, term, and total trip cost.
What Is Travel Insurance?
Travel insurance is a specialized policy that protects you from financial losses while traveling. Depending on your policy and coverage options, travel insurance can cover issues like flight cancellations, medical emergencies, or lost luggage.
According to an AAA survey, 88% of travelers who get coverage say the most valuable benefit to them is reimbursement in case of a trip cancellation.[1] You can use travel insurance to get domestic and international travel coverage.
The best time to purchase travel insurance is before you start your trip. That way, you can calibrate the insurance premium you need to get the appropriate coverage.
- Average Travel Insurance Premium: The average insurance premium is $306 for travel in the United States, with most plans being comprehensive.[2]
Once your travel insurance plan is active, you have a financial safety net in case something unexpected and costly happens, whether you are traveling to Florida or Spain. Travel insurance is not just for expensive vacations; it also covers weekend getaways and business trips.
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How Travel Insurance Works
Getting travel insurance starts with you deciding what type of policy fits your risk tolerance and travel plans. You will choose from single-trip or multi-trip policies, and you can customize your policy based on available features. You then pay monthly premiums based on variables within your plan, like the duration of your trip, total trip cost, and traveler age.
You can purchase travel insurance from online brokerages, travel agents, or “bolt-on” insurance options when purchasing travel (like flight cancelation coverage when you buy flights with major airlines like United, Delta, or American).
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Processing a Covered Issue
If a covered issue occurs during your trip, you only need to contact your insurer. They will guide you through formally making a claim, including telling you what relevant documents to collect and how to process a claim. Once your claim has been processed and approved, the insurance company reimburses you within the policy's coverage limits.
Depending on your travel insurance, you may also be required to pay an insurance deductible before your policy kicks in. Insurance deductibles are the out-of-pocket expenses you pay before your insurance policy begins to reimburse you for claims.
While travel insurance cannot eliminate every possible risk associated with travel, it significantly reduces the potential financial burden you could face in a medical emergency, canceled trip, or damaged rental car. However, you need to know your travel insurance agreement inside and out, including exclusions and coverage limits.
Exclusions and Coverage Limits
All travel insurance policies will come with exclusions and coverage limits. Here’s how those work:
- Exclusions are events that your travel insurance explicitly does not cover. For example, your lost baggage coverage may not cover lost jewelry, concert tickets, or medication.
- Coverage Limits are the maximum dollar amount your insurance will cover. Your policy could state that it only reimburses you for lost bags up to $1,000 per bag, regardless of the contents.
When To Get Travel Insurance
Consider getting travel insurance during or immediately after booking your trip. Getting it early means you will have coverage for unforeseen circumstances that can pop up before you leave. If you wait until you are closer to departure to secure your travel insurance, you could risk a period of lapsed coverage when you suddenly need to cancel your trip due to illness or other reasons.
You should also buy travel insurance any time you travel abroad, where healthcare costs or language barriers can be challenging. Your coverage could help handle hospital bills, travel cancellations, or unexpected changes to your itinerary.
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Factors Affecting Travel Insurance Costs
Several variables impact the potential cost of your travel insurance. One of the most significant factors is your destination since the cost of living and travel can vary wildly. The total cost of your trip is also essential because a more expensive vacation can lead to higher premiums (surpassing the 5-6% average premium).
Like with almost all other insurance types, your age will impact the cost of your plan. Older individuals have higher risks and pay elevated premiums. Insurers will also consider the length of your trip, with shorter trips being more economical to insure than longer ones.
Insuring a traveler with preexisting medical conditions can mean a higher cost. Finally, the general level of coverage you choose, from basic to comprehensive, will also determine the total cost of your policy.
What Does Travel Insurance Cover?
Travel insurance covers many unforeseen issues or situations that can disrupt your travel.
Trip cancellation or interruption coverage lets you claim reimbursement if you must cancel your trip or cut it short for reasons outlined in the policy. This usually includes reasons like sudden illness for you or a traveler or family emergencies. (Read more about How a Will Protects Your Assets).
Medical coverage can help cover doctor visits, hospital expenses, and emergency evacuations. You can also purchase coverage for your baggage and personal belongings so that you can claim reimbursement if any of your things are lost, damaged, or stolen.
Some plans even cover inconveniences like travel delays, missed connections, and rental car damages. Depending on what you want, you can add a la carte insurance coverage to suit your coverage needs.
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Pros of Travel Insurance
- Financially protects you from a wide range of unexpected travel expenses.
- Policies often cover emergency transportation, which is crucial in countries without modern medical facilities.
- It gives you peace of mind so that you can go on your trip with less worry.
- Many policies will help services deal with language barriers, locate medical care, and even coordinate unexpected travel changes.
Cons of Travel Insurance
- Insurance premiums can add to the total cost of your trips.
- Some policies have exclusions that are helpful when traveling.
- Coverage limits could cap your claims and still leave you with a financial loss.
- Meeting specific requirements for medical coverage, such as disclosing preexisting conditions or undergoing medical screenings, can be challenging.
- Your policy might not offer refunds for changed or canceled travel without proper planning.
Smart Summary
Travel insurance is short-term insurance coverage that financially protects against canceled flights, rental car accidents, or missed travel plans. It gives you a financial buffer and flexibility in case there is a travel interruption on your trip, you have a sudden change of plans, or you get sick before or during your trip. Travel insurance can easily offset unforeseen change fees, new ticket costs, or lost travel expenses.
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(1) AAA. More Americans Protecting Their Vacation Investments with Travel Insurance. Last Accessed February 15, 2025.
(2) SquareMonth.com. How Much Does Travel Insurance Cost in 2025? Last Accessed February 15, 2025.
