What It Covers
Travel insurance is a catch-all term for several types of coverage:
- Trip cancellation: Reimburses prepaid, non-refundable trip costs if you cancel for a covered reason (illness, injury, death in family, severe weather, airline bankruptcy).
- Trip interruption: Covers additional expenses if you need to cut a trip short or are significantly delayed.
- Emergency medical: Covers medical treatment while traveling, especially important for international travel where your health insurance may not apply.
- Medical evacuation: Covers the cost of emergency transportation to a medical facility. An air ambulance from a remote location can cost $50,000-$100,000+.
- Baggage loss/delay: Reimburses you for lost, stolen, or delayed luggage and essentials.
When You Need It
- International trips: Your U.S. health insurance likely won't cover you abroad (Medicare never does). Emergency medical coverage is essential for international travel.
- Expensive prepaid trips: If you've paid $5,000+ for a cruise, guided tour, or resort package, trip cancellation insurance protects that investment.
- Adventure travel: Activities like skiing, scuba diving, or hiking in remote areas increase risk and make medical evacuation coverage valuable.
- Traveling to areas with limited medical infrastructure: Medical evacuation coverage is critical in developing countries or remote destinations.
When You Probably Don't
- Short domestic trips: A $300 weekend trip to a nearby city doesn't warrant travel insurance. Your health insurance works domestically, and the trip cost is low enough to absorb.
- Refundable bookings: If your flights and hotel are fully refundable, trip cancellation coverage is redundant.
- Credit card coverage: Many premium credit cards include trip cancellation, baggage delay, and even primary rental car insurance. Check your card benefits before buying a separate policy — you might already be covered.
What It Costs
Travel insurance typically costs 4-10% of your total prepaid trip cost. A $5,000 trip would run $200-$500 for a comprehensive policy. The exact cost depends on your age, trip cost, destination, and coverage levels.
"Cancel for Any Reason" (CFAR)
Standard trip cancellation only covers specific listed reasons (illness, weather, etc.). "Cancel for Any Reason" (CFAR) policies let you cancel for any reason — changed your mind, work came up, just don't feel like going. CFAR typically reimburses 50-75% of trip costs and adds 40-60% to the policy price. It must usually be purchased within 14-21 days of your initial trip deposit.
When CFAR makes sense: For expensive, non-refundable trips where circumstances could change — booking a trip months in advance, uncertain health situations, or volatile travel destinations.
Common Mistakes
Mistake #1: Not buying travel insurance until right before the trip. Many benefits (especially CFAR) require purchase within 14-21 days of your first trip payment. Buy it when you book.
Mistake #2: Assuming your health insurance covers you abroad. Most U.S. health plans have limited or no international coverage. Verify before you go.
Mistake #3: Buying travel insurance from your airline or booking site. Third-party travel insurance sites usually offer better coverage at lower prices. Compare before you buy.