Travel Insurance Simplified: 4 Reasons You Need It & 18 Things to Know Before Buying It

Updated: 04/17/2024
Janice

You are not alone if you are confused about whether you need trip insurance. At a minimum, not having it when an interruption, injury, or loss occurs while traveling can be a budgetary pain. Though—at worst, especially if serious injury or illness happens abroad, not having a travel insurance policy can be financially ruinous.

So, to help you decide if purchasing travel insurance is necessary for your upcoming trip, I drill down to essential information, like why to get it, along with explanations of coverages, limits, and exclusions so you can make your best decision.

Already know you need to buy travel insurance? See my preferred resource to shop and compare policies here.

Table of Contents

Do you need travel insurance? 4 reasons to get it.

When you may not need travel insurance: 2 situations.

Understanding travel insurance: types of coverage

How to choose the right travel insurance policy: 5 factors to consider.

Common misconceptions about travel insurance.

Travel insurance tips and best practices

My preferred travel insurance provider: InsureMyTrip.com.

Do you need travel insurance? 4 reasons to get it.

Here are the four top reasons travel insurance is a must-have for most trips.

1. To protect your travel investment. Safeguard the money you have already spent on non-refundable trip expenses in case of trip cancellations or lost baggage. Learn more here.

2. For healthcare coverage abroad. Although your domestic healthcare insurer may provide limited out-of-network emergency and urgent care coverage abroad, many do not. Before leaving for your trip, contact your health insurer. Understand what services they cover internationally. Then, if there is a gap, buy travel insurance with medical coverage up to the limit you need. Learn more here.

3. To protect against unexpected expenses while traveling. It is unpleasant to think about, but trip interruptions related to natural disasters, strikes, pandemics, or unexpected conflicts can result in making expensive last-minute plan changes or complications returning home. Additionally, you could experience theft of valuable and difficult-to-replace items. Trip insurance can provide coverage and reimbursements for many of these events. Learn more here.

4. Ability to cancel your trip for any reason. Everyone has a different risk tolerance, comfort, and flexibility linked to travel. If you know yours is low, you may consider buying Cancel for Any Reason (CFAR) supplemental travel insurance coverage. Learn more here.

Reason 1: To protect your travel investment.

Whether due to a sudden illness, a family emergency, or unexpected work commitments, having travel insurance ensures you can recover your prepaid travel expenses and reschedule your trip for another time.

Imagine this scenario—you have spent months planning a vacation to your dream destination, including booking flights, accommodations, and tours. But just a few days before you leave, illness or a family emergency hits, forcing you to cancel your trip. Without travel insurance, you could lose a significant amount on non-refundable expenses like airfare and lodging.

To understand the situations that travel insurance companies will reimburse, read the fine print of your policy. The circumstances where it will not reimburse you are called exclusions. The maximum amount a policy will pay for a specific coverage is called its limit.

Additionally, travel insurance will compensate you for the value of your lost or misplaced baggage, helping you replace essential items and continue enjoying your trip.

love to travel?

Reason 2: For healthcare coverage abroad.

Accidents and illnesses can happen at any time, even on vacation. The last thing you want to do while traveling is manage expensive medical bills, especially in a foreign country. Travel insurance ensures that you can access quality medical care anywhere and bear the financial burden of it.

Buy travel insurance policies that include medical coverage for expenses like hospital stays, surgeries, medications, and emergency medical evacuation. In a medical emergency, your travel insurance provider will coordinate with on-the-ground medical facilities to ensure you receive the necessary care.

Additionally, some travel insurance policies may provide coverage for pre-existing medical conditions. If you have a pre-existing condition, disclose it when purchasing travel insurance to ensure you will be adequately covered. While some insurance policies may exclude coverage for pre-existing conditions, others offer options to include it as an add-on for a supplemental premium.

Reason 3: To protect against unexpected expenses.

Travel insurance can also help protect you against unplanned trip expenses related to unforeseen events, like natural disasters, airline strikes, or even a pandemic resurgence.

Consider this scenario—you are on a once-in-a-lifetime safari adventure, and news of a natural disaster reaches your lodge. Park authorities evacuate the area for safety reasons, cutting your trip short. Without travel insurance, you could lose your remaining non-refundandable trip expenses, like accommodations and activities. Further, you would likely have to shoulder the high cost of exiting the area and making last-minute alternate plans to keep traveling or return home.

However, with travel insurance, you can file a claim for trip interruption, and the insurance provider will reimburse you for the unused portion of your trip and any unplanned costs related to the interruption. With your funds recovered, you can put them toward a future trip.

Trip insurance can also provide coverage against theft or loss of personal belongings, travel documents, credit cards, or cash. As it is not uncommon for travelers to accidentally lose items due to frequent moving around or unexpectedly fall prey to pickpockets, you will want to be protected. In such cases, travel insurance can offer financial assistance to help replace the items and lessen the impact of the loss. Travelers with high deductibles on their homeowners or renters insurance policies—such as $1000 or $2000 deductibles—may especially welcome this coverage.

Lastly, travel insurance can protect you in case you accidentally cause damage to property or harm to others during your travels with personal liability coverage. For example, imagine you are exploring a bustling market in a foreign country—you accidentally knock over a valuable display, causing damage. You may be responsible for reimbursing the owner. However, if you have travel insurance with personal liability, this will cover you against such expenses.

Reason 4: Ability to cancel your trip for any reason.

Due to health reasons, family obligations, or schedule uncertainty, you may want the ability to cancel your trip for a reason not covered by standard travel insurance policies.

Imagine a friend or a family member schedules a last-minute wedding. Or a child qualifies for a state competition. You may want to cancel or reschedule your trip to attend. Cancellations related to these scenarios are typically not covered under travel insurance policies.

To have this kind of flexibility, you must purchase the supplemental Cancel for Any Reason (CFAR) coverage as an add-on to your primary travel insurance policy. This coverage allows you to cancel a trip for any reason and get reimbursed a majority (50 to 75%) of your non-refundable trip expenses, retaining them to spend on another trip.

However, not every insurance policy offers CFAR add-on coverage. Look for policies that do. Additionally, and this is essential, you must buy CFAR coverage within a two to three-week window after your first trip booking. After this window closes, you cannot purchase CFAR coverage.

When you may not need travel insurance: 2 situations.

Here are two situations where you may not need to buy travel insurance. They include when:

You can cancel or change prepaid trip bookings without penalty (and you have medical coverage).

If you can make travel-related cancellations last minute for a full refund or credit, you may not need to purchase travel insurance. Bookings apply to flights, lodging, rental cars, and activities.

Additionally, you have medical coverage through your domestic healthcare insurer because you are traveling domestically. Or your healthcare insurer provides full coverage to the country(s) you plan to travel. Furthermore, you are comfortable not having trip interruption or baggage loss coverage and are satisfied that your homeowners or renters insurance coverage protects you in the event of theft or loss of personal items on vacation.

Your credit card provides trip insurance.

Some travel credit cards offer travel or rental car insurance coverage for trip expenses purchased with the card. If yours does, understand its coverages, limits, and restrictions, which may be less generous than you think. See an example below for the trip insurance coverage included for United Mileage Plus Visa cardholders.

Screenshot of United Mileage Plus credit card travel insurance coverage.

Rental car insurance: Learn more in this detailed overview about whether you need to buy rental car insurance, particularly when traveling abroad.

Understanding travel insurance: types of coverage

To better understand what you buy with your travel insurance policy, here are four types of standard coverage that are likely to be included.

Medical Coverage

Medical coverage provides financial protection in case of unexpected medical emergencies while you are away from home. This coverage can include hospitalization, doctor visits, prescription medications, unplanned surgeries, and emergency medical evacuations. Healthcare costs, especially when paid out of pocket in other countries, can be higher than you realize. A travel insurance policy with medical coverage can save you from incurring catastrophic debt if you need unplanned medical attention abroad.

Trip Cancellation and Interruption Coverage.

As mentioned above, trip cancellation and interruption coverage will reimburse you for non-refundable expenses such as deposits, airfare, lodging, and activities if your trip gets canceled or cut short. Additionally, it provides reimbursement for unexpected costs related to interruptions.

Baggage and Personal Belongings Coverage

Baggage and personal belongings coverage protects you if your luggage or other items are lost, stolen, or damaged during your trip. It can provide reimbursement for the value of your belongings. Additionally, it can cover the cost of essential items temporarily needed until your luggage is recovered or replaced.

Personal Liability Coverage

Personal liability coverage is often overlooked but can be essential in certain situations. It protects you in case you accidentally cause damage to property or harm to others during your travels. For example, if you accidentally break an expensive item in a hotel room or injure someone while participating in a recreational activity, travel insurance will provide coverage for legal expenses or compensation.

Common Add-On Coverages

In addition to the travel insurance coverages listed above, there are four common coverages you can supplement on to your trip insurance policy. These include Rental Car Insurance, Cancel for Any Reason (CFAR), Pre-existing Medical, and Adventure Sports coverage.

Learn more about when you need to purchase rental car insurance here—often for international rentals. Then, learn more about CFAR coverage here. Adventure Sports coverages are typically required if you plan to engage in activities considered a higher risk, such as scuba diving, mountain climbing, or bungee jumping.

How to choose the right travel insurance policy: 5 factors to consider.

Choosing the right travel insurance policy for your needs can feel overwhelming. My preferred place to shop and compare policies is InsureMyTrip.com. Learn more about it here. Additionally—here are five helpful factors to consider before choosing the best travel insurance policy.

Coverage limits.

Carefully review the coverage limits of the policy you are considering. A coverage limit is the maximum amount an insurer will pay for a specific coverage related to a claim. Ensure the limits of your policy sufficiently cover potential expenses, especially for medical and trip cancellation/interruption.

Exclusions

Pay close attention to the exclusions of a policy. Exclusions are a list of activities or situations in a trip insurance policy that are not covered. Every policy has limitations, so it is essential to understand these scenarios. For example, certain pre-existing medical conditions may not be covered, or there may be restrictions on high-risk activities such as extreme sports. For these scenarios, you may need to purchase add-on coverages to ensure you are fully protected.

Additional coverage options/add-ons.

Consider any additional coverage options you may need. See here for some common add-on coverages. For example, if you plan to engage in adventurous sports like scuba diving or skiing, ensure that your base travel insurance policy covers these activities. If not, you will likely need to pay an additional premium, purchasing supplemental coverage.

Additionally, if you plan to travel with expensive equipment, such as cameras or laptops, check your policy limit for baggage and personal belongings coverage. If the dollar limit is too low, and you do not feel adequately covered by your homeowners or renters insurance policy, you will want to purchase additional coverage.

Reviews and reputation.

Research the reputation and customer reviews of the insurance provider you are considering. Look for feedback on their claims process, customer service, and overall satisfaction. This feedback can give you an idea of a company’s reliability and how it handles claims.

InsureMyTrip.com, my preferred platform for comparing and purchasing travel insurance policies, shows general customer reviews and even more insightful claimant reviews. If a travel insurance company consistently shows high marks from claimants—customers who filed a claim—it demonstrates its trustworthiness. Learn more about InsureMyTrip.com here.

Gather and Go Travel screenshot of article "From An Expert: InsureMyTrip.com Is My #1 Pick For Trip Insurance"

Cost.

While cost should not be the sole determining factor, it is essential to consider the price of a policy related to the coverage provided. Compare quotes from different insurers for similar coverage limits and exclusions to ensure the best value for your money.

Common misconceptions about travel insurance.

Here are four common misconceptions about travel insurance and why they are wrong.

“I’m young and healthy, so I don’t need travel insurance.”

No one is immune to accidents or unexpected health issues. Even if you are young and healthy, travel insurance provides financial protection and peace of mind when something unforeseen happens during your trip, and you do not learn until too late that your domestic health insurance does not cover you abroad. It is better to be safe than sorry.

“I already have health insurance, so I don’t need travel insurance.”

While your regular health insurance may cover some medical expenses abroad, you will want to check the extent of coverage. Many health insurance plans have non-existent or limited coverage for international travel or may not cover emergency medical evacuations. Travel insurance ensures comprehensive coverage tailored for travel-related situations.

“Travel insurance is too expensive.”

Compared to the potential burden of having to shoulder the cost of unexpected expenses, travel insurance offers a relatively affordable peace of mind for the financial protection it provides. Additionally, the price of travel insurance can vary depending on factors such as your age, destination, and coverage limits. You will find options that suit different spending levels. Consider travel insurance an essential part of your trip, incorporating this 5 or 10% extra expense into your travel budget.

“I can rely on my credit card’s travel insurance.”

While some credit cards offer travel insurance as a perk, you will want to read the fine print and understand the extent of coverage. Limits may be low, exclusions may be broad, or cards may require you to meet specific eligibility criteria. Only rely solely on credit card travel insurance if you are confident that you have the comprehensive protection you need.

Travel insurance tips and best practices

Now that you understand the importance of travel insurance and how to choose the right policy, here are some additional tips and best practices to make the most of your coverage.

Read the policy details.

Carefully read your travel insurance policy documents and understand what is covered, including policy limits and exclusions.

Keep documentation organized.

Keep copies of your travel insurance policy, receipts for prepaid expenses, and any documentation related to your trip accessible. Organized paperwork and receipts will make for a more streamlined claims process if one becomes necessary.

Know how to contact your travel insurance provider.

Familiarize yourself with the contact information for your travel insurance provider and the emergency assistance helpline. Keep this information accessible in case you need to reach out during your trip.

Inform travel companions & family members.

If you are traveling with others, let them know about your travel insurance coverage and how to contact the insurance provider in an emergency. Additionally, share your policy with trusted family or friends at home. That way, someone not traveling with you can access your insurance documentation when needed.

Follow safety guidelines.

While travel insurance provides financial protection, you will still want to take necessary precautions and follow safety guidelines to minimize risks during your trip. Get some best practice safety tips for international trips here.

Keep a record of expenses related to a claim.

If it becomes clear you need to file a claim, keep a record and the receipts of any additional costs you incur due to travel disruptions or medical emergencies. These costs could include replacement items due to delayed baggage, medical expenses, alternative transportation, or accommodations.

My preferred travel insurance provider: InsureMyTrip.com.

InsureMyTrip.com is an online platform where users can compare and choose trip insurance policies from 20 travel insurance providers. I prefer using it for its easy-to-use interface, robust search filters, and unbiased comparison tool, showing policies side-by-side.

Additionally, I appreciate that InsureMyTrip.com shares user reviews for all insurers. I especially find the feedback from claimants valuable as it helps me decide which insurance provider to purchase from. Good reviews from claimants are an excellent sign of a dependable and easy-to-work-with insurer—ideal in an emergency. To see claimant reviews when scrolling through a list of travel insurance quotes on InsureMyTrip.com, click the Filed Claim checkbox, shown in the screenshot below. Learn more about InsureMyTrip.com in this comprehensive review.

Screenshot of Insure My Trip example of a claimant review. — A poor review indicating hassles related to filing a claim is a good sign to keep looking.

Takeaways

The bottom line is that you risk more than your prepaid trip expenses when you do not buy travel insurance, especially when traveling internationally. When you find a policy and insurer that meets your needs, take the time to read the travel insurance fine print, especially its coverages, limits, and exclusions. These components vary wildly from policy to policy.