How Much Travel Insurance Do I Need?

The amount you need will depend on your trip and risk tolerance

Traveler waiting for a train on platform
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Do you have a big vacation or work trip coming up? Traveling often involves a sizable expense for booking flights, hotels, activities, and more. But what if all doesn’t go as planned?

Travel insurance helps protect you against losses due to trip cancellations, the costs of medical care at your destination, if needed, and more. However, the amount of coverage you need will depend on a variety of factors. Learn more about travel insurance and how to determine how much to purchase.

Key Takeaways

  • Travel insurance helps to reimburse you for prepaid expenses if your trip is canceled, delayed, or interrupted.
  • Travel insurance also can help cover the costs associated with emergency medical or dental care, lost luggage, a damaged rental car, and more.
  • The amount of travel insurance you need depends on factors like how far or long you’re traveling, the overall cost of the trip, and your risk tolerance.

Types of Travel Insurance

What does travel insurance include? Here’s a closer look at the common types of coverage offered by travel insurance companies: 

Trip Cancellation Coverage

If you plan a trip then have to cancel it because of a covered reason (such as a family member becoming ill or passing away), this insurance will reimburse you for your prepaid travel expenses.

Travel Disruption Coverage

Travel disruption coverage will cover qualifying prepaid travel expenses you lose due to a disruption, such as a flight being canceled or rescheduled.

Travel Interruption Coverage

If your trip is cut short because of an incident covered in your policy—such as bad weather, terrorism, jury duty, or a sick family member—you will be reimbursed for the qualifying prepaid expenses you didn’t get to enjoy.

Travel Medical/Health Insurance

Travel medical and health insurance will reimburse you for medical and emergency dental expenses you incur due to an injury or illness while traveling. The best policies will make payments directly to hospitals so you don’t have to pay out of pocket.

Medical Evacuation Coverage

If you need to be taken to a hospital outside of your vacation destination or back home, this coverage will provide you with medical evacuation transportation, which can otherwise cost more than $100,000.

Accidental Death and Dismemberment Coverage

If you happen to pass away or lose a limb while traveling, this coverage will help to cover the associated costs. It is often split up based on when the incident happens, such as during a flight, traveling on public transportation, or at any other time during your trip.

Rental Car Damage Coverage

If you plan on renting a vehicle while traveling, this coverage will reimburse you if you damage or total the vehicle and have to pay for it. While it covers property damage, it doesn’t offer liability.

Lost Luggage Coverage

Everyone hates losing luggage when flying. Baggage loss coverage will reimburse you if your personal items are lost, stolen, or damaged by an airline. Some policies even compensate you if the luggage is just delayed.

While these are the major types of travel insurance available, coverage types, limits, exclusions, and other terms can vary by provider. Be sure to read the fine print to fully understand what circumstances and amounts are covered.

Factors That Could Influence Travel Insurance Needs

With an understanding of travel insurance and the various types available, how do you decide how much you need for an upcoming trip? Like any insurance coverage, it will be a risk-benefit analysis.

Start by reviewing each coverage type and consider whether it is something you should have. For example, when considering trip cancellation, disruption, and interruption coverage, it may depend on how expensive the trip is, if anyone going has health issues, and current events at the destination. If you think there’s a higher-than-average chance you will need to cancel, and it’s an expensive trip you couldn’t rebook out of pocket, this coverage would likely be worth it. 

Some insurers may also offer a “Cancel For Any Reason” (CFAR) policy at a higher price (often 40% to 60% higher than standard rates) that removes many of the exclusions that commonly come with regular travel cancellation coverage.

On the medical insurance front, if you’re going overseas and plan to partake in hiking and other active adventures, you may want the medical coverage and evacuation in place, just in case. It may also be a wise investment for those with health conditions that put them at a higher risk. If you are traveling with expensive belongings or equipment, lost luggage coverage could be a smart investment.

Some may want coverage for peace of mind, while others may find it necessary in some situations but not others. However, before buying travel insurance, make sure you don’t already have the same coverage from another source. For example, check the airline’s cancellation and delay policies, see if your credit card offers travel insurance benefits, and contact your health/dental insurance provider to see if they will cover you while out of town.

Frequently Asked Questions (FAQs)

How does travel insurance work?

Travel insurance helps to protect you against various incidents that could cause you to lose money while preparing for a trip and traveling. For example, if you book a flight to a hotel in Hawaii but have to cancel because your significant other becomes very sick, travel cancellation coverage could reimburse you for the amount you paid to book the trip. You could rebook it later when everyone is well.

It can also help to cover a variety of other costs, such as medical care while on vacation, reimbursement for lost luggage, and even costs associated with death or dismemberment. Once you sign up, you will pay your premium to gain coverage. Upon a qualifying situation, you can file a claim with your insurer. Once approved, you’ll receive the settlement amount as per your policy.

What credit cards offer free travel insurance?

Various travel credit cards offer travel insurance, which may mean you don’t need to get an independent travel insurance policy. For example, both the Chase Sapphire Reserve Card and the Chase Sapphire Preferred Card offer coverage for trip cancellation, delay, or interruption, lost or delayed baggage, and an auto rental collision damage waiver.

The Platinum Card from American Express provides trip cancellation and delay coverage along with car rental loss and damage insurance. Your best bet for finding credit cards with travel insurance is to browse travel rewards credit cards’ benefits.

How much does travel insurance cost?

On average, the cost of travel insurance will range from 4% to 10% of your trip’s price. For example, if your trip costs $10,000, your travel insurance will likely run anywhere between $400 and $1,000. However, the cost can go much higher for premium coverage or CFAR policies that have fewer exclusions.