Is Travel Insurance worth It?
The right policy can protect your belongings, your bank account and your peace of mind.
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In April 2024, the White House introduced new rules for airlines that mandated automatic and timely refunds for passengers whose flights were changed, delayed or canceled.
This is a big relief for travelers – but there are still many unexpected situations where travel insurance can be a lifesaver before or during your trip.
“Travel insurance is often an overlooked investment until something unforeseen happens,” says Beth Godlin, president of the Aon Affinity Travel Practice. “It is designed to give travelers peace of mind and financial protection against travel risks.”
A policy doesn’t have to be expensive, Godlin says, to add a layer of protection and security.
Arrangement of travel insurance
What does travel insurance cover?
How much does travel insurance cost?
The best travel insurance companies
Alternatives to travel insurance
Is travel insurance worth it?
Frequently asked questions
What Does Travel Insurance Cover?
Travel insurance generally covers your expenses, your belongings and your well-being. Look for these benefits when purchasing a policy:
Trip Cancellation
If your trip is canceled for a covered reason, the policy will often reimburse for airfare, hotel rooms, car rentals, tours, cruises and other prepaid non-refundable expenses. According to Daniel Duraz of Allianz, covered situations can include illness or injury, the death of a family member or travel companion, job loss, military deployment and even unplanned jury duty.
Cancellations may also be covered if a natural disaster, inclement weather or an airline strike prevents your carrier from getting you to your destination for at least 24 hours.
CFAR plans provide much more flexibility and typically reimburse 50% to 75% of your expenses. But they can increase costs by about 40%, Durazo said. Insureds are also usually required to cancel no later than 48 hours before scheduled departure.
Travel Delay
If you experience a hiccup in your plans, your policy may provide some relief: Food, lodging and local transportation are usually covered if the delay is caused by inclement weather, airline maintenance or civil unrest.
“To be eligible, a passenger must be delayed for the minimum amount of time specified in their policy,” Squaremouth spokeswoman Megan Moncrief said. “Some policies are very lenient and provide benefits for any length of delay, while others state a length requirement — usually somewhere between three and 12 hours.”
Daily payout limits range from $150 to $250 per passenger, while the total policy limit can be anywhere from $500 to $2,000, according to Moncrief. Save all receipts to submit with your refund request.
Trip Interruption
If you need to cut your trip short due to illness or injury, or if there’s a family emergency at home, your policy can cover the non-refundable expenses you lose.
It can also cover the cost of a one-way economy ticket home.
Loss of Luggage
Airlines are required to compensate passengers for baggage lost in transit, but travel insurance may have a higher coverage limit. It can also cover you if your luggage, passport or other property is lost, damaged or stolen once you reach your destination.
Travel insurance doesn’t cover every loss: Cash isn’t refundable, and many insurance policies won’t pay for expensive jewelry or heirlooms. Read your policy carefully to see what it contains.
Medical Expenses and Emergency Evacuation
If you are traveling within the US, your health insurance should cover any illness or injury you suffer. However, if you travel internationally, your plan may provide little or no coverage. The right travel insurance should cover doctors’ fees and hospital bills, Durazo said.
The provider can also help coordinate care and ensure you are in a healthcare facility that meets US standards.
An emergency medical evacuation can cost anywhere from $15,000 to more than $200,000, Durazo added.
How Much Does Travel Insurance Cost?
Travel insurance usually costs between 4 and 10% of the total cost of your trip. Price may vary:
Plans with higher limits and more optional coverage are more expensive.
A plan with the CFAR benefit can cost up to 40% more.
Older passengers usually pay more as there is a greater likelihood of making a claim.
Whichever plan you choose, read the fine print to understand what you’re paying for.
The best travel insurance companies
There are many options in the travel insurance market: SquareMouth’s Aggregator site allows you to get quotes from dozens of carriers. And because he gets a commission from the insurance companies on his site, he doesn’t pay any surcharges or other fees.
American Express has separate travel policies with coverage not available as part of regular cardholder benefits – including emergency medical and dental insurance, medical evacuation and travel accident death or dismemberment.
The company is known for its customizable policies, flexible rates and good customer service.
Allianz has both single and annual plans with a Cancel For Any Reason (CFAR) policy that reimburses up to 80% of pre-paid non-refundable expenses. That’s more than most similar plans on the market.
In addition to trip cancellation, the popular Allianz OneTrip Prime plan also includes trip interruption, emergency medical care and emergency transportation. Children under the age of 17 have free insurance if they are traveling with a parent or grandparent.
AIG’s Travel Guard® plans are great if you need to customize your coverage: The mid-range Travel Guard Preferred plan pays 100% for trip cancellation and 150% for trip interruption, with coverage up to $50,000 for medical expenses and up to $500,000 for emergency evacuation . There’s even a payout of up to $1,000 if you miss a connection.
The Platinum Plan from AXA Assistance USA has a benefit limit of $3,000 for lost luggage, which is much higher than the $1,700 that airlines must provide on international flights. AXA has offices in more than 50 countries with multilingual operators available 24 hours a day to help reschedule flights, book hotels and make other arrangements.
Alternatives to Travel Insurance
If you book with the right credit card, you can get built-in travel protections from your card provider: Chase Sapphire Preferred® Card, Southwest Rapid Rewards® Plus Credit Card and *American Express® Gold Card all come with trip and tour cancellation. delay protection, among other benefits.
Keep in mind that the coverage you get with your card may not be as strong as a stand-alone policy. Many cards offer things like trip delay and cancellation protection, delayed/lost baggage insurance, and rental car insurance, but few cover medical treatment, emergency evacuation, or travel insurance.
Is Travel Insurance worth It?
While government regulations are getting stricter about compensating passengers for delayed or canceled flights, it doesn’t do you any good unless it was the airline that disrupted your plans.
Travel insurance can be particularly useful if:
- You spent a lot on prepaid non-refundable expenses
- You are traveling abroad where your health insurance does not cover
- You are traveling to a remote area or for an extended period of time
- You have an existing medical condition
- You have planned adventure activities like skiing, bungee jumping or hang gliding
- Your flight includes multiple connections or destinations
- “When deciding whether travel insurance is right for you, ask yourself how much you could lose if you had to cancel at the last minute,” Godlin said.
Meet Our Experts
At CNBC Select, we work with experts with specialized knowledge and authority. For this story, we interviewed Beth Godlin, president of Aon, which provides travel insurance to travel agencies, cruise lines, travel websites and more. We also spoke to former Squaremouth Megan Moncrief and Allianz Communications Director Daniel Duraz.
Why Trust Cnbc Select?
Our mission at CNBC Select is to provide our readers with high-quality journalism and comprehensive consumer advice so they can make informed decisions with their money. Every insurance article is based on rigorous reporting from our team of expert writers and editors. While CNBC Select earns a commission from affiliate partners for many offers and links, we create all of our content without intervention from our commercial team or any external third parties, and we pride ourselves on our journalistic standards and ethics.
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