A few years ago, my husband and I planned a long-weekend trip to Paris. But a week before we were scheduled to leave, our son was hospitalized with a stubborn infection. He came home from the hospital a couple of days later, and he was feeling better, but we didn’t feel comfortable taking the trip.
We cancelled our plans, and with no travel insurance, we ate the nonrefundable costs.
A lot of people, like us, take their chances with travel expenses. Brad Emery, founder of travel club Aimviva, says, “Approximately 80% of people are still traveling without any travel insurance.”
But the right travel insurance policy might have protected us. You can shop for policies that reimburse you if your trip is canceled or interrupted for a “covered reason,” such as travel delays, missed connections, medical problems, or work reasons.
You can also choose policies that include “cancel-for-any-reason” coverage.
Here’s how to figure out what you need.
Step 1: Review the coverage you already have
You likely already have some travel insurance, even if you don’t think of it as such. That’s because your existing insurance policies may cover some costs:
- Your homeowner’s or renter’s insurance might cover your belongings if they get lost or stolen while you’re traveling.
- Your auto insurance should cover you on road trips (check your policy if you’re heading to Canada or Mexico) and might include coverage if you rent car.
- You may have a credit card that offers travel insurance as a benefit. Read the contract to see what’s covered, and whether you have to use that card for all of your trips expenses to qualify for coverage.
- Your health insurance policy likely covers you within the United States but might not cover foreign travel. Medicare only covers you in the U.S.
- Trips to and from Europe may include built-in flight delay insurance required by EU law.
Make sure you understand whether you have primary or secondary coverage under these policies. “If it is secondary, you will have to up-front the expenses and then file a claim and wait for reimbursement,” says Mitch Krayton of Krayton Travel.
And keep in mind that claims filed under your homeowner’s, renter’s, or auto insurance could include deductibles and policy rate increases.
Step 2: Identify your gaps
Once you know what coverage you have, you can look for a policy that covers what you need. If you’re taking a trip that’s not very expensive, you might decide to skip travel insurance.
Rathner says, “You should be thinking about travel insurance if you’re traveling internationally or taking a cruise and are pre-paying for many trip expenses. One thing going wrong could cost you thousands of dollars.”
Travel insurance can kick in if your trip is cancelled, delayed, or interrupted for health, financial, political, or weather-related reasons and can cover:
- Nonrefundable expenses like airfare, hotels, tours, and concert tickets
- Lost or delayed baggage or sports equipment
- Lost passports
- Emergency evacuation
- Costs of delays, missed connections, and rerouting
- Work emergencies
- Medical assistance and expenses
- Coverage for pre-existing health conditions
Step 3: Find a policy that meets your needs
If you decide you want travel insurance for a trip, get it as soon as you can. A medical emergency or another problem could strike at any time, and if that happens you likely won’t be insurable.
What should you spend? It depends on the coverage you want and the expenses you’re insuring. “A general rule of thumb is that travel insurance is roughly 10% of the cost of the trip,” says Suzanne Garber, cofounder of Gauze, a database of international hospitals.
Visit sites like Insure My Trip and SquareMouth to compare travel insurance policies from various companies. You can also contact the company that handles your existing homeowner’s, renter’s, or auto insurance to see what kinds of travel insurance they offer.
Travel insurance is often an option when you buy your plane tickets. This might make sense for you—it’s simple, and it’s and tailored to your trip. Just make sure it covers what you need.
Rathner says, “Airlines offer coverage when you book your ticket, but it pays to shop around for more competitive rates for more comprehensive coverage.”
For frequent travelers, a one-and-done annual policy might make sense. Nick Brennan, the founder and CEO of My UK Sim Card, travels a lot, so he buys a multitrip policy that gives him coverage for all of his trips for a year.
“It’s much more cost effective than buying individual trip policies if you’re going to be doing five-plus trips a year,” he says.
Plus, if you plan a last-minute trip you don’t have to worry about lining up coverage.