Is Travel Insurance Worth It? Flights, Cruises, Cancel For Any Reason Coverage, & More

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Sunset view from airplane window
A sunset greets you as you land for your long awaited vacation. Is it worth the extra cost to insure your trip?

With COVID-19 restrictions lifting and life returning to normal, it’s finally time to start planning your next vacation. But flights, hotels and other travel expenses can add up, and no one wants to lose money if plans fall through. This begs the question: should you purchase travel insurance?

The answer is not so clear-cut. Sometimes travel insurance is a smart investment, and other times it’s a waste of money. Read on to find out if travel insurance is really worth it for your next trip.

Did you know? Travel spending has increased considerably and is now at its highest mark since the pandemic started, 6% above pre-pandemic levels.1

Travel Insurance: What Does it Cover?

As with any insurance policy, travel insurance can be confusing when you aren’t familiar with it. And while most travel sites make it easy to purchase insurance when you book your flight or hotel, it’s important to do your research first to ensure you aren’t wasting your money.

Travel insurance generally covers a number of risks related to your trip. From lost luggage to canceled flights, each policy covers a specific set of scenarios. And depending on the policy provider, the dollar amount of your coverage will differ. 

Most travel insurance providers offer several policies to choose from, each with a different level of coverage. Five commonly covered items include:

5 Things That Are Commonly Covered

  1. Baggage loss or damage
  2. Trip cancellation or interruption
  3. Travel delays
  4. Medical emergencies
  5. Rental car theft or damage

When choosing a policy, it’s important to read the fine print carefully to ensure you’re aware of what’s covered on your trip.

Girl walking through airport with roller bag
Luggage reimbursement (from loss or damage) is common benefit of a travel insurance policy.

The Two Main Types of Travel Insurance

There are essentially two basic kinds of travel insurance: cancellation protection and comprehensive insurance.

Comprehensive Insurance Vs Cancellation Protection

  1. Cancellation protection – a basic cancellation policy will cover lost baggage and may be able to reimburse you for missed connections. You may also be able to get a refund due to an illness or injury.
  2. Comprehensive policies cover the basic cancellation protection issues, but they go one step further by essentially covering both travel and medical risks. With a comprehensive policy, you’re likely to be covered in the event of a medical emergency, disaster evacuation and even an unexpected death.

What’s Excluded From Travel Insurance?

Unfortunately, there are some risks that travel insurance won’t cover.

3 Common Things Travel Insurance Doesn’t Cover

  1. Pre-existing conditions – medical complications related to pre-existing conditions are generally excluded, meaning you’ll lose money on top of being hurt or ill. However, some policies will cover these conditions if certain criteria are met. 
  2. Dangerous activities – many policies will also refuse coverage if you engage in any activities that could be considered dangerous, including mountain-climbing and other extreme sports.
  3. Using drugs or alcohol – these can also exclude you from coverage, as any injuries or incidents can then be considered self-inflicted.
Four people skydiving, camera at an angle, with the ground viewable far below them
While extreme sports like skydiving are not insured by most basic travel insurance policies, they may be if you purchase an “adventure sports” type policy offered by some providers.

Some providers will offer an “adventure sport” policy to cover extreme sports like skydiving and parachuting. View our travel insurance comparison to find one. And if you’re a regular extremist, you may want to consider a life insurance policy as well.

Look For The “Cancel For Any Reason” Add-On

Even policies that cover cancellations may not protect you every time. For complete flexibility, you’ll need to look for a policy that offers a Cancel For Any Reason add-on. While this add-on also varies among policies, you’ll usually be able to be reimbursed for about 75% of your prepaid trip expenses.

Travel Insurance And COVID-19

One of the reasons you’re thinking about travel insurance is likely to protect you in the event you get COVID-19. Unfortunately, you may be out of luck when it comes to coronavirus-related claims.

Many policies include specific exclusions for claims relating to COVID-19, except for those that are already in effect. For example, existing policyholders who contract the virus before or during a trip will be covered for cancellations or interruptions. But, if you haven’t already purchased a policy (which you likely haven’t), you won’t be covered for any COVID-related claims.

4 Instances Travel Insurance Isn’t Worth it

The usefulness of travel insurance depends on the type and overall cost of the trip you’re planning to take. And while you may be tempted to purchase a policy for every aspect of your trip, there are some instances where travel insurance simply isn’t worth the investment. 

1) For Airline Travel

Flights can be one of the most expensive parts of your trip, costing hundreds and even thousands of dollars. Because they’re so pricey, it can be tempting to purchase a cancellation policy to ensure you won’t lose a large sum of money. 

However, these basic policies usually aren’t worth the added cost. As an airline passenger, you’re entitled to certain rights with the purchase of any ticket. For example, if your flight is canceled the airline is required to get you a seat on the next available flight to your destination free of charge. 

Plus, you may even be entitled to some compensation without ever needing to purchase insurance. For flights to some destinations, your airline may be required to reimburse you in the event of a cancellation or major delay. 

2) When Traveling Domestically

Domestic travel is generally less expensive than international trips. It typically takes less time to plan a trip within the U.S., and the average domestic vacation spans about four nights and costs less than $600 per person. Additionally, you’re likely to be covered for any medical emergencies that may occur, provided you already have health insurance. 

With such few risks, travel insurance generally isn’t worth it for domestic trips.

3) If Your Credit Card Covers You

Before purchasing any travel insurance, be sure to take a look at your credit card policy. Some cards, including Chase Sapphire Preferred and Citi Prestige, offer built-in travel insurance that can reimburse you if your trip is interrupted or canceled. Some plans may even cover lost or damaged baggage. Depending on the thoroughness of your credit card coverage, you may not need travel insurance at all—even when traveling internationally.

4) If You’re Thinking Of Canceling Your Trip

If you’re thinking you might purchase travel insurance just to keep your options open, you’re mistaken. In reality, even policies that cover cancellations will only do so if certain criteria are met. Simply changing your mind isn’t usually enough to warrant a reimbursement, making travel insurance just an unnecessary expense. 

However, there are ways you can cut your losses without purchasing a comprehensive insurance policy. Instead, opt for a hotel that allows cancellations right up to your stay so you can change your mind without sacrificing your wallet.

3 Times Travel Insurance Is Worth It

There are some cases where travel insurance is an absolute necessity. To keep things simple: if you’re going out of the country, you should purchase travel insurance. 

Essentially, trips that require more planning and have a higher degree of risk are the ones that you should be insured for. To break things down further, here are three specific times it’s a good idea to invest in travel insurance. 

1) If You’re Traveling Internationally

There are many factors that make international travel more complex than domestic. International trips are generally more expensive, last much longer and take much more effort to plan. They also tend to be booked much further in advance than domestic trips. 

For these reasons, international trips are a bigger investment with bigger financial risks. Since you’ll likely be booking flights and hotels months in advance, it’s a good idea to purchase comprehensive travel insurance. This way, you’ll be covered for any unexpected events during and leading up to your vacation. 

2) For Long-Distance Medical Emergencies

While vacations are meant to give you time to relax and have fun, accidents do happen. Getting sick or injured far away from home can make for a scary situation, and can cost you thousands of dollars if you aren’t protected. 

For this reason, comprehensive travel insurance is essential for peace of mind during international trips. While some medical insurance policies already cover hospital costs in major cities abroad, you may be at risk of owing thousands of dollars if you experience a serious accident. 

To keep out-of-pocket expenses low no matter where you are, travel insurance that covers medical emergencies is a must-have for international trips.

3) When You’re Going on a Cruise

Europa Aassau cruise ship in water with onlooker bottom left and green hills on both sides
Cruises meet all the criteria for recommending travel insurance.

If there was a single event that warranted the purchase of travel insurance, it would be a cruise. Cruises count as international travel, require a large upfront payment and have an extremely high risk of problems, making travel insurance all but mandatory. 

You have plenty of options when it comes to insuring your cruise, but comprehensive plans are a must. You may even be able to find a good policy if you purchase your insurance directly from the cruise company. These policies generally cover a wide range of scenarios, including major storms like hurricanes. 

Is Travel Insurance Worth It? Sometimes

The bottom line is that travel insurance is worth it in some cases and not in others. Depending on the costs and risks involved in your trip, the investment may save you money in the event of an accident. For low-risk trips like domestic flights, you can probably get by without the extra cost.

You’ve been saving money for years to take that once-in-a-lifetime, dream vacation; you’re all booked and can’t wait for your big trip. It’s going to be a perfect escape — a week in a tropical paradise, Paris, or Peru. But what if reality rears its unfortunate head? Stuff happens when you least expect it, and you’re not immune just because you’re traveling.

Whether you have to cancel your trip altogether or disaster strikes while you’re on vacation, travel insurance can help save you from an utter financial loss — or an even larger financial burden. Our travel insurance reviews will help you sort through all of your options to see which providers are right for you.

Sources: [1] U.S. Travel Association

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