What Is Travel Insurance?
Travel insurance is a type of insurance coverage that protects you from financial loss when you travel. Depending on the type of policy you purchase, travel insurance usually covers emergency situations such as trip cancellation or interruption, accidents, illnesses and trip delays.
Since your primary health insurance is not applicable abroad, many travelers will purchase travel health insurance to cover unexpected medical expenses.
The cost of a travel insurance policy depends on the age of the travelers, duration of the trip, location of the trip, how much the trip costs, policy tier selected and more. If you’re planning a trip and you’ve made a significant investment that you can’t afford to lose, you might need travel insurance.
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How Does Travel Insurance Work?
Like most types of insurance, travel insurance works on a reimbursem*nt model. You pay for your travel first and if you experience a covered loss, apply for a reimbursem*nt with your insurance provider later. For this reason, it is important to understand what a plan does and does not cover and how it works before you buy a policy.
Primary vs. Secondary Insurance Coverage
If you purchase a travel insurance policy to supplement your standard health insurance, it is important to determine which policy will serve as the primary insurance. If your travel insurance provides the primary medical coverage, it will act as the first source of payment for eligible medical expenses. So if you incur medical bills abroad, primary medical insurance will cover your expenses without requiring you first to file a claim with your standard health insurance.
If your travel insurance offers secondary medical coverage, it will only kick in after other applicable insurance policies. In most cases, you must file a claim with your standard health insurance provider first before filing one with your travel insurance provider. Your travel medical coverage would then cover any remaining eligible expenses not covered by your primary insurance.
If you do not have health insurance, having travel insurance with secondary medical coverage is likely not as beneficial. Travel insurance policies are usually more affordable than primary medical coverage, and because you do not have backup insurance, can act as immediate primary coverage.
However, some policies offering secondary coverage outline a minimum health insurance requirement for claim validity. So, read all the terms of your proposed travel policy before purchasing.
Coverage Limits and Requirements
Travel insurance policies have financial caps or dollar limits on covered situations. For example, if your policy offers $150,000 in emergency medical expenses, your provider will pay out a maximum of $150,000 toward covered expenses. If your expenses exceed $150,000, you are responsible for the extra costs.
For trip interruption and cancellation protection, insurers usually calculate coverage as a percentage of your total trip cost. So, if interruption benefits include 125% coverage reimbursem*nt on a trip with a total value of $5,000, you can claim up to $6,250 in benefits. For reference, most travel insurance plans include 100% trip cancellation coverage and a minimum of 125% trip interruption coverage to compensate for extra charges such as unexpected flight changes.
In addition to knowing coverage limits, noting any policy use restrictions before buying a plan is good practice. Your provider will likely require you to document all expenses incurred when you file a claim, such as if you buy clothing and cosmetics to replace lost baggage. Most travel insurers also ask you to contact a representative to request authorization before using a medical evacuation benefit, even after being hospitalized.
What Does Travel Insurance Cover?
Travel insurance is a holistic insurance that covers you in multiple areas. Let’s look at the most common coverages you’re likely to find on your travel insurance policy.
Trip Cancellation and Interruption
Most travel insurance plans include trip cancellation and interruption coverage to reimburse prepaid, nonrefundable expenses if your trip is canceled or delayed for a reason outlined in your policy. Valid reasons for cancellation usually involve extreme personal or financial hardship, such as:
- An illness, injury or hospitalization that prevents you from traveling
- Death of a family member or travel companion
- Legal obligations, such as jury duty
- Natural disasters
- Acts of terrorism or war
Trip interruption coverage offers financial protection if you must return home earlier than originally planned. If a family member gets sick back home while you’re abroad, your trip interruption coverage may cover a sudden return flight and reimburse unused trip expenses.
Specific reasons that qualify the use of trip cancellation and interruption benefits vary by insurance company. If you want to extend your benefits to cover more situations, consider buying cancel for any reason (CFAR) coverage, which lets you claim a partial reimbursem*nt no matter why you cancel.
Baggage Loss or Delay
Benefits for lost or delayed baggage pay for the cost of belongings if an airline temporarily or permanently loses your luggage. However, baggage delay coverage usually has more limited benefits for temporary needs — such as clothing and toiletries — if a travel carrier sends your luggage to the wrong location. This coverage will also typically reimburse you for stolen belongings during a trip.
To prove a loss or delay to your insurer, you usually need to provide documentation, such as receipts and a property irregularity report (PIR) from an airline. It is also important to note the financial limits on eligible claim items. For example, while most baggage loss policies cover jewelry, you may face a limitation of $100 or less for each lost piece of jewelry. You can also consider additional coverage riders for exceptionally high-value items, such as musical instruments and sporting equipment.
Auto Rental Damage Coverage
If you plan to rent a vehicle while away, consider adding rental car coverage to your travel insurance policy. Travel insurance usually includes auto collision coverage, which usually pays for damage to a rental car. So if you total your rental car in an accident, collision insurance helps pay the cost of repairs.
Depending on your rental car provider and where you’re visiting, you may need liability coverage to drive legally. In the U.S., for example, each state sets liability requirements for drivers. Travel insurance with auto coverage usually does not supply the necessary liability insurance to drive, so consult with your rental car company to learn more about meeting local requirements.
Vacation Rental Coverage
Some insurance companies also have vacation rental coverage that pays for the cost of any damage done to a short-term rental property. For example, if you rent an Airbnb and your pet urinates on the carpet, the rental owner might charge you for the cost of cleaning or replacing the rug. Depending on your policy coverage, vacation rental insurance would cover this charge.
Travel insurers typically classify auto rental and vacation rental coverage as add-ons, meaning coverage is not included under most standard plans. If you select either add-on, your premium will increase.
Emergency Evacuation and Transportation
If you’re visiting a remote area or taking a cruise, you might consider insurance to cover medical transportation. Emergency medical evacuation coverage can help you pay for the cost of transportation services if you are far from a local facility equipped to treat your injuries.
Some policies also offer the ability to use emergency evacuation services because of civil unrest or a political emergency.
Travel Medical Insurance Coverage
Travel medical insurance helps cover medical bills you might incur while on a trip away from home. Many health insurance policies, including government-sponsored policies like Medicare, do not cover injuries and illnesses incurred abroad. A travel medical insurance plan can help you pay the medical bills if you need healthcare while traveling outside your primary health insurance plan’s service area.
“Find out what, if anything, your domestic health insurance covers when you travel. Even if you do, it could be only for emergencies, and your health insurance company’s definition of an emergency might not be the same as yours. Because of this, we always recommend travel medical insurance for international travel.”
– Angela Borden, Product Marketing Specialist at Seven Corners
Travel Insurance Additional Benefits
Some travel insurance providers offer benefits beyond the above-listed standard inclusions, such as:
- Document replacement: If you lose your passport or personal ID card while abroad, you may need to visit a local consulate for a replacement. Travel insurance with document replacement coverage can help you cover the associated cost.
- Flight departure delay: Some insurers, such as Berkshire Hathaway, give you a credit if your flight gets delayed by more than two hours. You can use the credit to pay for refreshments or entertainment, such as Wi-Fi, during a delay.
- Tarmac delay: Some companies provide a set benefit if your flight is stuck on the tarmac for a specific number of hours.
- Other benefits: Some insurance providers include additional benefits, such as rental car coverage or identity theft coverage.
What’s Not Covered by Travel Insurance?
Each travel insurance company creates its own policy packages, meaning exclusions vary from company to company. You should assume that any services not listed in your contract are excluded from coverage. Some of the most common circ*mstances when you cannot use your travel insurance coverage include the following:
Most travel insurance policies cover sudden travel expenses resulting from unexpected natural disasters, such as hurricanes and tropical storms. However, your coverage won’t apply to losses caused by storms that were already named when you booked your insurance.
If you’re traveling abroad to seek medical treatments, there’s always the chance of complications increasing the cost of your services. Medical tourism expenses are not covered under travel insurance policies.
Even if you purchase trip cancellation coverage, you cannot cancel your travel for any reason and still claim a refund. If you change your mind and don’t want to travel anymore, your travel insurance will not reimburse you for your expenses
Other standard exclusions include:
- Fear of flying
- Injuries incurred during extreme sports
- Preexisting conditions (on medical policies)
- Travel to high-risk destinations
How Much Does Travel Insurance Cost?
The price you pay for travel insurance depends on several factors, including:
- Your total trip cost: The amount you pay for your trip will impact your travel insurance quote, with more expensive trips usually costing more to insure due to the risk of higher payouts.
- Destination: Some countries have more robust government and healthcare infrastructures than others. The quality and average cost of medical services in the country you’re visiting will typically influence your insurance cost.
- Length of your vacation: The longer the duration of your trip, the more you will typically pay for travel insurance.
- Your age: Older travelers usually pay more for travel insurance because insurance companies assume they are more likely to get hurt, sick or experience an accident, such as a fall, while abroad.
To help give you an idea of what you might pay for travel insurance, the MarketWatch Guide team gathered a series of quotes for several sample trips. Here is the pricing for popular plans with our recommended providers.
| Seven Corner OneTrip Basic | Nationwide Prime | Tin Leg Standard | Generali Preferred | AIG Travel Guard Preferred | Trawick Travel Insurance Explorer | Travelex Travel Select | |
| 30-year-old couple, $5,000 trip to Mexico | $160 | $185 | $140 | $217 | $295 | $199 | $244 |
| Family of 4, $8,000 trip to Mexico | $220 | $318 | $258 | $393 | $300 | $306 | $244 |
| 65-year-old couple, $7,000 trip to London | $410 | $432 | $402 | $477 | $508 | $513 | $588 |
| 30-year-old couple, $7,000 trip to London | $206 | $293 | $182 | $264 | $378 | $247 | $330 |
| 19-year-old, $2,000 trip to Paris | $55 | $96 | $56 | $87 | $110 | $41 | $100 |
| 27-year-old, $1,800 trip to Greece | $55 | $96 | $49 | $82 | $114 | $76 | $100 |
| 51-year-old, $2,000 trip to Spain | $75 | $115 | $73 | $114 | $137 | $102 | $130 |
What Is the Cheapest Travel Insurance?
After extensive review, our team found the average cost of a basic travel insurance policy is between $91 and $108. The least expensive travel insurance companies are Travelex, Faye and Nationwide, according to our review.
Read more about the cheapest travel insurance providers in our review.
How Do I Get Travel Insurance?
Are you thinking about buying a travel insurance policy for your upcoming trip? Here’s how to start comparing policies to get the coverage you need.
Check Current Coverage
If you’re primarily concerned about buying travel insurance for medical expenses and already have health insurance, travel insurance might not be a necessary expense. Employer-sponsored medical coverage, for example, will provide health care coverage anywhere you travel within the United States. Companies that provide ACA-compliant health insurance plans are also legally required to cover emergency services administered at any medical facility in the United States.
If you’re traveling internationally, your health plan will likely have exclusions or limitations on treatments you receive abroad. For example, most Medicare plans don’t offer coverage for international treatments. Contact your health insurance provider to learn what, if anything, your plan will cover abroad.
You might also have additional protections you’re unaware of. Some credit card companies offer limited coverage for airline baggage delays, and life insurance coverage for accidental death and dismemberment still applies abroad.
Assess all your household coverages and consult with insurance providers you’re currently working with to see how much extra trip insurance you need.
Consider Individual Needs
The best travel protection for your upcoming trip will depend on what you’ve spent on the trip, where you’re going and how often you travel. You’ll also need to consider the types of coverage you might need, especially if you’re headed abroad. For example, if you have a chronic condition that requires regular medical care in professional settings, you should consider coverage for a medical evacuation.
Like every other type of insurance, no single travel insurance policy will cover all expenses you might incur. Coverage limits apply to every trip, with the upper limit as the maximum amount that your insurance will compensate you. The higher your coverage limit, the more you’ll pay for your travel insurance plan — but it’s essential to tell the truth about your trip cost to be sure that you have adequate coverage.
You can often save money on your coverage by selecting a policy with a lower deductible.
Get Quotes
Now that you understand the multiple travel insurance types available, it’s time to begin claiming free quotes from competing insurance providers. Though most travel insurance providers allow you to claim a quote online, you can also contact most companies’ representatives via phone or email if you prefer personal assistance.
Remember to get a free quote from multiple insurance providers before choosing the right policy.
How Do I Use My Travel Insurance?
If you’ve ever needed to file a claim with your car insurance or pet insurance provider, you’re already familiar with the process of filing a travel insurance claim. While you’ll need to cover any emergency expenses on your own at the time of service, you can file a claim with proof of your loss or expense to your insurance company. Your insurance company will then assess your claim to ensure that your situation is covered before reimbursing you according to your policy.
You’ll need to incur a travel cost or expense that’s specifically covered by your insurance policy to claim a reimbursem*nt. Make sure you read the fine print on your insurance contract before signing up for coverage, and save all receipts from your trip to maximize your benefits.
Do I Need Travel Insurance?
While some countries or visa requirements require travel insurance, many countries do not require U.S. travelers to purchase a policy as a condition of entry. You also do not need travel insurance to travel within the U.S. or visit Canada.
Whether you should purchase travel insurance depends on your circ*mstances. Travel insurance is typically most valuable for expensive trips because you can recoup a higher value of expenses. In other words, reimbursem*nt eligibility scales with vacation value. You may find insurance for low-cost trips tougher to justify financially — especially if part of the trip is refundable or you already have some insurance benefits through a travel credit card.
Travel insurance is potentially of value if your regular health insurance is limited or you’re traveling to an area with a limited medical infrastructure. Getting sick or hurt abroad often comes at a high expense, especially if you require medical evacuation services to a hospital. Travel insurance that covers medical expenses and evacuations can help cover these costs, especially if your primary health insurance does not extend abroad.
Is Travel Insurance Worth It?
If you’re preparing for a trip, is it worth purchasing travel insurance? The answer to this question will vary depending on your unique circ*mstances. If you’re preparing for an expensive international vacation, it’s likely worth the money to insure your trip against cancellation. This is especially true for long-distance trips that require expensive airfare.
You might also want to consider travel insurance if you have known medical conditions that might cause you to need last-minute trip adjustments.
Even if you don’t think you’ll buy travel insurance, getting a free quote or two takes only a few minutes — coverage might be more affordable than you think.
Frequently Asked Questions About Travel Insurance
No law mandates purchasing travel insurance when you go abroad. However, you will be financially liable for any money lost due to travel delays or cancellations if you don’t have insurance. If you’ve prepaid for your upcoming trip, you should at least consider a trip cancellation coverage package to recoup a portion of your funds in an emergency.
Travel insurance benefits can include reimbursem*nt for lost baggage, medical expenses and other costs incurred when you cancel a trip or encounter a delay. Travel insurance can give you the peace of mind that comes with knowing you can recover a portion of the cost of your trip if something goes wrong or you have an emergency.
You can purchase travel insurance through independent insurance companies, many of which offer a range of insurance products. Some of the most well-known names in travel insurance include Allianz, Nationwide and AIG. If you booked your vacation through a travel agency, your agent might also be able to recommend and book travel insurance for your journey.
Travel medical insurance is a limited type of health insurance coverage that can help you pay for treatments and emergency services you require abroad. While you likely have a medical plan in the form of health insurance through your employer, most insurance companies don’t extend benefits to international services. Travel insurance covers medical expenses like a domestic medical plan but allows you to file claims for specific services and treatments received abroad.
If you have feedback or questions about this article, please email the MarketWatch Guides team ateditors@marketwatchguides.com.
Sarah HorvathAuthor
Sarah Horvath is one of the home service industry’s most accomplished writers. Her specialties include writing about home warranties, insurance, home improvement and household finances. You can find her writing published through distributors like HouseMethod, Architectural Digest, Good Housekeeping and more. When not writing, she enjoys spending time in her home in Orlando with her fiance and parrot.
Tori AddisonEditor
Tori Addison is an editor who has worked in the digital marketing industry for over five years. Her experience includes communications and marketing work in the nonprofit, governmental and academic sectors. A journalist by trade, she started her career covering politics and news in New York’s Hudson Valley. Her work included coverage of local and state budgets, federal financial regulations and health care legislation.
