So confession: I never purchased a travel insurance plan until I turned 30. It’s a tad nerve-wracking to think about how many of thousands of dollars I spent on travel in my 20s, and how none of it was protected.
But that’s why so many people decide that they don’t need travel insurance, or think that it’ll be fine to risk going without it for a week-long trip.
To be totally transparent, I never had anything go wrong on a vacation in my 20s where I would have benefited from travel insurance, but I’ve also never had anything happen with my house to use my home insurance.
And that’s what insurance is: it’s there to protect the money you’ve put down on something very important to you when life throws you something unexpected.
What travel insurance protects
In a nutshell, travel insurance protects any non-refundable money that you’ve put towards your vacation in the event that something unforeseen happens and you aren’t able to participate in the trip as originally planned.
This means that something could happen before the trip and you have to cancel the entire thing, or something could happen during the trip and you have to cut the trip short and rearrange your flight home. It covers both trip cancellation and trip interruption.
Trip delays are covered too, if something happened out of your control that caused a travel delay of some sort and you aren’t able to arrive on your vacation when you had scheduled. Other expenses that could be incurred that are related to a cancellation, interruption, or delay like change fees or lost or stolen baggage is also covered.
Another really big benefit of travel insurance that is less well-known is coverage for medical and emergency expenses if something were to happen to you on vacation. This is arguably something that could be the most costly to you.
If you’re thinking that you would already be covered by your primary medical insurance, you probably will be covered in some way even in a foreign country, but it’s not uncommon that traditional plans will limit coverage or have a high deductible or co-pay for out-of-country medical expenses. They also typically don’t cover out-of-country emergency medical transportation, which can range from $50,000 – $250,000.
Travel insurance will only benefit you for covered reasons
The biggest thing to understand about travel insurance is that the above benefits only come into affect for covered reasons. Just like your home and automobile insurance specifies that if certain situations arise, they will protect and assist you in any expenses incurred, travel insurance is the same way.
This became a huge deal with the COVID-19 pandemic, because a pandemic has always been listed as an exclusion from all travel insurance plans. There were a lot of people who had travel insurance and had to cancel their trips, but were shocked to find out that their travel insurance wasn’t going to help them.
It’s worth nothing that this was new territory for travel insurance companies, airlines, and other travel providers, so a lot was learned last year about how travel insurance companies can support a traveler in certain situations. In a lot of cases, the travel provider themselves came through to assist the traveler with a refund or a voucher towards future credit, but not everyone.
Here are some of the more common typical covered reasons for trip cancellation or interruption. If these things happened, you would be covered by your travel insurance plan if you had to cancel or interrupt your trip:
- You or any travel companion becomes sick or injured before or during the trip or develops a medical condition and is advised not to travel
- A family member not traveling with you becomes hospitalized due to an illness or injury
- The death of a travel companion or family member not traveling with you
- Your travel provider ceases operations due to its financial condition – so if your airline declared bankruptcy out of the blue
- Your travel provider is unable to get you to your destination because of a natural disaster or severe weather
- You or your travel companions are terminated or laid off by your employer
- A terrorist event happens during your trip
- Government authorities order a mandatory evacuation
There’s a separate list of typical covered reasons for trip delay. If any of the following situations happen that delay your trip starting when you planned, you would be covered by your travel insurance plan.
- A travel carrier delay – like an airline delay
- A strike, unless threatened or announced prior to the purchasing your plan – strikes happen a lot with the train and public transportation in Europe
- A natural disaster – like a hurricane
- Roads are closed or impassable due to severe weather
- Lost or stolen travel documents
- Civil disorder
- A traffic accident.
The common theme among both lists is that all are unforeseen circumstances. You should not purchase travel insurance expecting to have a travel delay or expecting there to be a hurricane. You purchase it to cover you in case it happens. You actually won’t be covered for a covered reason if you wait to purchase travel insurance once you are expecting something to throw a wrench in your plans.
That’s why as soon as a hurricane becomes a named event it’s considered “known or foreseeable” and if you decided to get travel insurance for your Caribbean vacation after the hurricane was announced, you wouldn’t be eligible for the benefits of the plan because you didn’t purchase it until you knew about the hurricane. However, if you purchased it before the hurricane became a known event, you would be covered.
Similar to preexisting medical conditions, travel insurance providers aren’t signing up to fund your change of plans if you already know that it’s going to happen. In general, it’s not designed to be a flexible crutch for you to change your mind. Its purpose is to cover the costs of unforeseen circumstances that are out of your control that might happen on your vacation.
Travel insurance plans vary by provider
The above list are the general benefits and guidelines that can be expected from standard travel insurance plans from all travel insurance providers, but be aware that details can vary from provider to provider and from plan to plan. Like medical insurance, you should be diligent about reading the terms and conditions of your particular plan to especially make sure that any situation that you are worried about would be covered.
Always remember that there is a limited number of covered reasons for cancellation under the standard insurance plans. If you are looking for an extended list of covered reasons outside of these, some insurance providers also offer a “Required to Work” plan, where as long as you can prove that your employer is making you work and you have to cancel your vacation, your are covered.
Another type of plan that offers extended covered reasons are “Cancel For Any Reason” (CFAR) plans. These are the only type of plan that will cover you for a fear or travel or changing your mind. If you want to cancel because you are worried about traveling to a destination, or because there’s gonna be poor weather the entire time you’re there, the only way an insurance plan will cover you is to purchase a CFAR plan.
The kicker with CFAR plans is that you must purchase this type of plan as soon as possible after making your first payment on your vacation in order to be eligible for the benefits. These plans can vary on their requirements, but generally will require that you purchase the plan from within 24 hours of your first payment to no later than 21 days after your initial payment towards your vacation.
CFAR plans have been particularly popular during the COVID-19 pandemic, but they aren’t as easy to come by these days. A lot of insurance companies removed their CFAR plans because of the pandemic, but there are still some out there, so reach out if you need help with that.
It’s also worth nothing that as the COVID-19 pandemic continues, there are still gray areas in the realm of covered reasons of a travel insurance plan as they pertain to a pandemic, and plans are going to vary by the insurance company.
Travel insurance is cheaper than you think
Travel insurance is actually a small additional cost when compared to your entire vacation. The price of insurance is based on the total cost of your trip, and it’s typically between 5% to 10% of the total cost of your trip.
You will want to be sure to insure your entire trip so that you are eligible for all benefits. Your total trip cost includes airfare, lodging, ground transportation like a rental car or an airport transfer, tours or excursions, and anything else you arrange and pay for in advance. It doesn’t include food, drinks, souvenirs, or like taxi rides or anything you’d pay for while you’re on the trip. It’s just the prepaid, nonrefundable costs.
If you are thinking that 5% of your total trip cost is too much to protect the money you’ve already spent on this experience, ask yourself if you had to get home in an emergency, could you afford to re-book, with all of the change fees, perhaps a spike in the airfare, and be okay with losing out on the money that you’ve already spent for the rest of your trip?
And especially if you had a medical emergency on vacation – could you afford a $50,000 to $250,000 medical evacuation from wherever you are. And even if you could afford – do you want to? Or would you rather pay a couple hundred dollars for travel insurance?
What’s the difference between the airline’s insurance and separate travel insurance?
You will get multiple offers for travel insurance as you purchase each of the pieces of your vacation. There are two typical types of offers you might see when you’re ready to push “Book”:
- Add-on insurance from the airline or cruiseline from the travel provider
- Add-on insurance from a third-party
When you purchase flights through the airline, the airline will as you “do you want to protect your trip costs? Pay $67 extra to cover your trip.” This
So everytime you pay towards your vacation- so when you book the flights, when you book your lodging – you’re gonna get asked by the airline and by the hotel or VRBO – do you want to protect your trip costs? Pay $67 extra and you’re totally covered?
The thing to know about these “add-on” insurance offers is that while it will offer some level of coverage, you will only be covered for that piece of your vacation. So if you purchased the add-on insurance through your airline and had to cancel your trip, you would receive benefits from the airline, but you would have no protection for what you’ve paid for your lodging.
It’s also worth noting that especially with the airlines, even if there is a “Cancel for Any Reason” option, sometimes this doesn’t actually allow you to cancel and get a refund. They instead issue a voucher.
Should I get travel insurance?
Considering the nominal cost of travel insurance and the peace of mind that it brings, I always recommend purchasing travel insurance, especially if the trip cost is higher than you typically spend on experiences.
My number one recommendation is to purchase an all-in-one travel insurance plan that will cover you for your entire vacation, with additional travel and medical benefits. These types of plans are available through travel insurance providers such as Travel Insured, Allianz, and Travel Guard. Wild Hair Travels can assist with partnering you with the right travel insurance provider for your particular trip and needs.
Learn more about travel insurance through these infographics from our partner Travel Insured.