Travel Insurance Explained: When You Need It and How to Buy It
When do you need travel insurance?
It’s a good idea to buy travel insurance if your trip is international. It might also be worthwhile to buy insurance if your trip is domestic but expensive (e.g., you’re taking an Alaskan cruise or a packaged tour), especially if you don’t have a premium credit card that includes some insurance coverage.
For most domestic US trips (e.g., Florida beaches, big cities, national parks), medical coverage from your health care plan is fine, and the trip cost is usually lower, so you don’t really need travel insurance. But, it’s always a good idea to book hotels and rental cars that have flexible cancellation policies; ditto for airlines, which post-pandemic have thankfully adopted more flexible change policies.
Do you have a premium credit card that comes with travel insurance benefits?
If you have a premium credit card, such as Chase Sapphire Reserve or American Express Platinum, these sometimes come with insurance benefits that are worth googling for your specific card so you’re aware of them.
As an example, the Chase Sapphire Reserve will reimburse you up to $500 per ticket bought with the CSR if your flight is delayed 6 hours or more (you can use this to reimburse food, drinks, and hotel); if your bags are delayed more than 6 hours, you can get reimbursed up to $100 per day for 5 days. It also includes up to 20k of trip cancellation coverage (more on that later). An awesome bonus is that the CSR includes collision and loss on a rental car, so you can decline those coverages and save money. (We used this coverage when someone backed into our rental car in Utah, and it was completely covered and easy to process). Tip: if you have the CSR, ALWAYS use it to book your flights, hotels, and rental cars so you can take advantage of these benefits.
Why should you get insurance for international and/or expensive trips?
There are really 2 reasons to buy comprehensive trip insurance, and you can buy coverage for either or both.
The first is to get “primary medical” insurance for where you’re going. If you don’t buy this, you’ll have to rely on your US health care plan for medical expenses abroad, which they are not generally designed to cover—thus, the coverage is not great and it can be a hassle to use, both while abroad (e.g., you’ll have to call back to the US to find out where you can go that is “in network”) and when you get back home (e.g., fighting to get your expenses covered). If you buy primary medical insurance for abroad, you can generally go anywhere to get treated (without calling first) and it’s super easy to use.
Two years ago just before a flight from Australia to New Zealand, my daughter’s eye swelled up and we were able to find a clinic when we landed. We ended up paying about $20 for the appointment and medicine…turns out it was a spider bite, yikes!
The second reason is to protect the cost of your trip in the event of a delay, interruption, or cancellation, which is called “trip cancellation/interruption insurance.” This allows you to get reimbursed if your trip gets cancelled or interrupted for a “covered” reason (e.g., you get in a car accident on the way to the airport, you or a traveling companion gets injured or sick and is certified by a doctor as unfit to travel); always read plan rules carefully to determine what is and isn’t covered.
If you have a premium credit card with great benefits, you might not need this. (I have a Chase Sapphire Reserve card but still usually purchase a comprehensive plan for international trips, both for some added benefits beyond the credit card and for the primary medical insurance). If you don’t have a premium credit card, I would definitely consider buying a comprehensive plan to cover the costs on an international trip.
How much does it cost?
The price can vary based on the age of the travelers, which country or countries you’re going to, and how much your trip costs. As an example, for a recent 3-week trip to Italy and Greece for our family of 3 (2 spouses and 1 adult child) with a trip cost of 14k, it was $100 for primary medical insurance only and $500 for trip cancellation coverage plus primary medical (we chose the comprehensive plan for peace of mind).
The easiest way to buy travel insurance
My go-to site for comparing plans is InsureMyTrip.com, which has access to many great plans and wonderful customer service (note: I don’t get any kickbacks from this site; this is just a company I genuinely use and love).
I like to do it by phone (1-800-487-4722) because you can ask questions and they’ll explain the pros and cons of certain plans. Every agent I’ve ever talked to has been incredibly knowledgeable and helpful. They have access to 25 or so plans (all of which are rated A or better by A.M. Best) and if you tell them what you’re looking for, they can quickly zero on the best plan for your circumstances (I’m usually off the phone in 15 minutes). I like to pay by credit card right then to be done, but they can also send you a payment link and you can study the plan if you prefer. You can also do all of this online, but especially if you’re new to travel insurance, it’s helpful to be able to talk it through.
To apply for the insurance, they’ll ask you the number and ages of travelers , which country or countries you’re going to, the dates of travel, the first date you made any payment toward your trip, and how much your trip costs. (It’s good to have all this information ready before you call).
In figuring out your trip costs, only include “uncrecoverable” costs (e.g., non-refundable flights and hotels, payments for a cruise or travel agent package). In my case, I don’t include flights booked with Southwest airlines (which has no cancellation fees) or with frequent flyer miles (which can be redeposited) or hotels or tours that have a 24-hour cancellation policy.
When to purchase the plan
I usually wait until a couple weeks before my trip, once I’ve paid everything and have a good estimate of final cost.
However, there are 2 reasons you’d want to buy it earlier:
First, if you need maximum flexibility and want “cancel for any reason” insurance (which means you can literally cancel for any reason!), you’ll usually need to buy this insurance within 10-21 days of making your FIRST trip payment (that can be your airline tickets, a hotel deposit, or a travel agent payment). Note that CFAR insurance is expensive (it can be double or triple the insurance price), it only reimburses you for 75% of your trip costs, and it can only be used up to 48 hours prior to departure. For these reasons, I almost never buy this.
Second, if you or a loved one has a pre-existing condition (e.g., cancer or another illness) that could cause a claim to be denied, then you’ll also need to buy the insurance early. What the “pre-existing condition waiver” does is act like a shield so that the insurance company can’t look at your recent medical history to use that information to deny your claims. Many plans have a pre-existing condition waiver IF the plan is purchased within a certain time period (e.g., 14-21 days) of making your first payment on a trip. The good news is that this waiver doesn’t usually cost extra (and if you add more trip costs after you open the initial plan, you simply call the company and add the costs, and they’ll adjust your premium).