Do I Need Travel Insurance? Spoiler Alert: Yes!

Travel is all about the thrill of discovering new places, meeting interesting people, and creating unforgettable memories. But what if an unexpected hiccup turns your dream vacation into a logistical nightmare? This is where travel insurance steps in, like a trusty sidekick, promising peace of mind whether you’re exploring the bustling streets of Tokyo or relaxing on a secluded Caribbean beach. From trip cancellations and medical emergencies to lost luggage and travel delays, having comprehensive travel insurance can make all the difference. 

I was an insurance lawyer for 12 years so I’ve seen firsthand the detrimental effects that can occur when someone doesn’t have insurance coverage for big, unexpected expenses. That’s part of the reason I always make sure I have travel insurance before I leave home, whether it’s through my credit card that I’ve used to pay for the trip, or through a standalone policy I’ve purchased (or both). 

So, if you’ve ever wondered “do I need travel insurance?” the answer is yes!

Let’s dive into why travel insurance should be on your pre-trip checklist and how to choose the best policy for your needs.

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Why Do You Need Travel Insurance? A Real Life Story

Imagine this: you’re in Queenstown, New Zealand and you slip on some gravel on the exterior staircase to your AirBnB, break your ankle, and you get to take a giant plaster cast and crutches home as souvenirs. Once home, you find out you need surgery and won’t be allowed to walk for 4-6 weeks, so you have to cancel a nonrefundable multi week biking trip in southern Spain that you’re supposed to leave for in less than a month.

Sound oddly specific? Yep, it is, because this happened to me in February 2024. 

Fortunately, I had travel insurance through my Chase Sapphire Preferred credit card that covered trip cancellation due to injury.

I submitted a claim for my cancelled trip to Spain, and within about a month I was able to get reimbursement for almost all my nonrefundable trip costs, which were pretty significant. I ended up being out about $35 in the end, which I was fine with given how bad it could have been. (As it turns out, New Zealand doesn’t charge for emergency care for accidents, so I got lucky there, but if I had gotten a large bill for the ambulance and ED visit, my travel insurance would have paid that too.)

This is exactly the type of scenario travel insurance is meant to address. But it can also help with non-medical travel issues like lost or delayed luggage, cancelled tours, expenses because of cancelled flights, emergency evacuation and a whole slew of other potential issues that may arise before or during a trip.

Essential Features to Look for in a Travel Insurance Policy

When shopping for travel insurance, it’s crucial to understand what features should be included in a comprehensive policy. You don’t want to be caught off-guard by unexpected expenses or situations during your adventures. Here are some key features to look for: 

• Trip Cancellation Coverage: Trip cancellation coverage and trip interruption coverage are often confused, and policies don’t necessarily have both. Trip cancellation coverage can reimburse you for non-refundable trip expenses if you need to cancel your trip before it begins due to a covered reason. The covered reasons will be listed in your policy, and usually include injury or illness, family emergencies, or natural disasters. There is usually a maximum dollar amount that a policy will cover, regardless of whether your nonrefundable expenses exceed that amount, so keep that in mind when choosing a policy.
• Trip Interruption Coverage: This is slightly different than trip cancellation coverage in that it covers certain expenses if you have to cut your trip short after leaving home due to covered reasons such as injury or illness, family emergencies, or natural disasters. Like trip cancellation coverage, there is usually a maximum dollar amount that a policy will cover, regardless of whether your expenses from cancelling your trip exceed that amount, so keep that in mind when choosing a policy.
• Cancel For Any Reason (CFAR) Coverage: This type of coverage is one of the most flexible options you can add to your travel insurance plan, though it will more expensive than a traditional travel insurance policy. With CFAR, you have the luxury to cancel your trip for virtually any reason and still receive a partial refund. Typically, this will be up to 75% of your total trip costs. Keep in mind, though, that CFAR nearly always must be purchased within a certain timeframe from your initial trip deposit, often within 14-21 days, depending on the insurer.
• Medical Coverage: Ensure your policy covers medical expenses for illnesses or injuries that occur while traveling. This should include hospital stays, doctor visits, and emergency medical evacuation if you need to be transported to a medical facility. Again, there will be a maximum dollar amount for coverage under a policy, so be sure to pay attention to that before purchasing.
• Baggage Delay Coverage: This protects you if your luggage is delayed and you need to purchase essential items like extra clothing or toiletries during your trip. Note that airlines will often cover some of this cost as well, but having additional coverage under a travel insurance policy can supplement that.
• Baggage Loss Coverage: This protects you if your luggage is lost, stolen, or damaged during your trip. Look for policies that cover both your checked and carry-on baggage, and make sure the maximum amount of reimbursement will cover your expenses to replace lost items. Much like baggage delay, airlines will often cover some of this cost, but you may want additional coverage under a travel insurance policy to supplement that especially if you travel with expensive clothing or personal items.
• Emergency Assistance Services: Access to 24/7 emergency assistance is essential. Whether you need help with medical emergencies, lost passports, or travel arrangements, having a support line can be a lifesaver.
• Travel Delay Coverage: This can reimburse expenses incurred due to significant travel delays (e.g., meals and accommodations) if your trip is delayed for a covered reason. 
• Rental Car Coverage: If you plan to rent a vehicle, this coverage can protect against costs from damages or theft of the rental car. There are often limitations about types of cars (e.g. luxury vehicles or vehicles with a MSRP over a certain dollar amount are often not covered) and certain countries might be excluded. 
• Missed Tour or Cruise Connection: Anyone who’s missed a tour or cruise connection knows how stressful it can be, not to mention the financial hit. Having this type of coverage included with your travel insurance means you can be reimbursed for additional transportation costs to catch up to your tour or for unused portions of your cruise. 
• Pre-existing Conditions Waiver: If you have existing health issues, look for a policy that includes a waiver for pre-existing conditions. This can ensure your conditions are covered provided you meet certain stipulations, like purchasing the insurance soon after making your initial trip deposit.
• Emergency Evacuation: Coverage for transportation to the nearest adequate medical facility in the event of a medical emergency. This can be crucial if you are traveling to a remote location or a country with limited healthcare options.
• Repatriation: This covers the cost of returning you to your home country in the event of a serious illness, injury, or death. While it’s not pleasant to think about, it’s an essential part of being prepared for any eventuality.
• Accidental Death and Dismemberment (AD&D) Coverage: This provides a benefit to your beneficiary if you suffer a fatal accident or serious injury during your trip.

When evaluating policies, don’t just look at the price. Review the benefits, limits, and exclusions to ensure you get the best coverage for your needs. For example, do you travel with a lot of expensive items in your suitcase? Look for a policy with a higher maximum dollar amount for baggage coverage.  Understanding what the different types of coverage apply to and how much you can be reimbursed under different scenarios helps you make an informed decision about what type of policy you need.

You can compare, contrast, and purchase a wide variety of policies from different insurers on websites like Squaremouth to find the right policy for your specific needs.

Understanding Basic Insurance Terms

Take it from someone who has read more insurance policies than I care to admit, insurance can sometimes feel like deciphering a foreign language. Let’s break down some of the key phrases you’ll encounter: 

• Deductible: This is the amount you pay up front out of pocket before your insurance kicks in. For example, if you have a $100 deductible and you incur $500 in covered expenses, you would pay the first $100, and your insurance would cover the remaining $400.
• Copay: Copays and coinsurance are less common with travel insurance plans than American health insurance, but certain policies might have them, usually for travel medical expenses. A copay is a small, predetermined amount you pay out-of-pocket for certain medical services covered by your insurance plan. For example, if you have a $250 copay for emergency medical treatment, you’ll have to pay $250 for a trip to the ED even if you’ve met your deductible already. This is an important term to understand because it directly affects your out-of-pocket expenses for a claim.
• Coinsurance: This is the percentage of the cost that you must pay after the deductible has been met. For example, if your policy has 20% coinsurance for emergency medical coverage, after you meet your deductible, you’ll pay 20% of the covered medical expenses, and the insurance company will cover the remaining 80%. This is another important term to understand because it directly affects your out-of-pocket expenses for a claim.
• Policy Coverage Limits: The maximum amount that your insurance company will pay for a covered claim. It’s essential to know these limits to avoid finding yourself underinsured in a costly situation. For example, if the policy coverage limit for medical expenses is $25,000, any medical costs beyond that amount will have to be paid by you.
• Exclusions: These are situations or conditions that are not covered by your travel insurance policy. Common exclusions include pre-existing medical conditions, risky activities like extreme sports (though most policies have an option to add coverage for extreme sports), or travel to certain high-risk destinations.
• Claim: A request you make to your insurance company for payment based on the terms of your policy. For example, if your luggage is lost, you would file a claim to be reimbursed for the cost of your belongings.
• Premium: The amount you pay for your travel insurance policy. This can vary based on factors like the length of your trip, your age, and the level of coverage you choose.

Familiarizing yourself with these terms will not only help you choose the right policy but also give you peace of mind, knowing exactly what to expect from your travel insurance policy.

Travel Insurance for Different Types of Travelers

Everyone’s travel style is unique, and so are their insurance needs. Whether you’re a solo adventurer, a family vacationer, or a business traveler, there’s a travel insurance policy tailored just for you. Let’s delve into some specifics: 

• Frequent Travelers: Multi-trip policies are available that will cover multiple trips over a year. This is the type of policy I generally purchase, because it will cover an unlimited number of trips in a year as long as each trip is no longer than 40 days. Even if you only have 2 or 3 trips planned in a year, this may provide cost savings over purchasing individual policies for each trip. 
• Family Vacationers: Traveling with family adds layers of responsibility. A robust family travel insurance policy should cover trip cancellations, trip interruption, medical expenses, and baggage loss for all family members. Additionally, it’s worth checking if they offer child-friendly benefits like coverage for lost toys or emergency child care.
• Adventure Travelers: If your trips involve extreme sports or adventurous activities, specialized coverage is a must. Policies designed for adventure travelers usually include high-risk sports coverage, evacuation services, and equipment loss. This ensures peace of mind while you push your limits.
• Business Travelers: For those jetting around the globe for work, a corporate travel insurance plan is ideal. It typically covers emergency medical, trip delay, and loss of professional equipment. Moreover, some policies offer coverage for business-related cancellations and missed connections, helping you mitigate the risks of business travel.
• Older Travelers: Certain policies are limited based on age, so it’s essential to choose a policy that provides comprehensive medical coverage for you, including pre-existing conditions.

Remember, the key is to choose a policy that fits your travel style and meets your unique needs. Don’t skimp on coverage just to save a few bucks—it’s all about ensuring a stress-free and memorable trip.

Tips for Choosing the Right Travel Insurance Plan

When it comes to choosing the right travel insurance plan, it’s crucial to tailor it to your specific needs and travel style. Websites that let you compare multiple different policies from different insurers are excellent resources to find the right policy for you. Squaremouth is the comparison website I have used quite a bit to shop for and purchase travel insurance and I recommend it highly.

Here are some tips to help you make an informed decision: 

• Assess Your Needs: Think about the activities you’ll be doing and the destinations you’ll visit. For instance, are you planning an adventurous trip with activities like skiing or scuba diving? You’ll need coverage that includes these higher-risk activities.
• Check the Coverage Limits: Ensure the policy provides sufficient coverage for medical expenses, emergency evacuations, trip cancellations, and baggage loss. Look for policies that offer high payout limits on medical expenses abroad.
• Compare Plans: Use comparison tools to evaluate different policies. Look at the premiums, coverage limits, exclusions, and additional benefits. Websites like InsureMyTrip and Squaremouth offer great comparison features.
• Understand the Exclusions: Every policy has exclusions. Common exclusions can include pre-existing medical conditions, certain adventure sports, and traveling against government advisories. Make sure you’re aware of what isn’t covered to avoid unpleasant surprises.
• Consider Add-Ons: If you need extra protection, such as Cancel For Any Reason (CFAR) coverage, check if your plan offers these add-ons. They can provide greater flexibility but will often come at a higher cost.
• Read Customer Reviews: See what other travelers have to say about their experiences with different insurance providers. Reviews can offer insight into a company’s reliability and customer service.
• Consult Your Health Provider: If you have specific health concerns, talk to your healthcare provider about the kind of medical coverage you might need while traveling.

Remember, the cheapest plan isn’t always the best option. It’s about finding the right balance between affordability and comprehensive coverage to ensure you’re fully protected for the types of coverages you may personally need. 

Credit Card Travel Insurance Benefits

Before you purchase a separate travel insurance policy, it’s worth taking a closer look at the benefits already provided by your credit cards, or consider getting a new credit card specifically for the travel insurance benefits. Many premium cards offer travel insurance benefits that can save you money, but only if you know how to leverage them effectively. 

First, dig into the fine print of your card’s terms and conditions. Some cards provide coverage for trip cancellations and interruptions, lost luggage, comprehensive medical care, and even car rental damage or theft. However, be aware that coverage limits and exclusions may apply. For instance, there might be a cap on the reimbursement amount for trip cancellations or delays, and certain types of travel-related emergencies might not be covered at all. 

Two of the best options with robust travel insurance are many of the Chase travel-related cards (Sapphire, United, Marriott, etc.) and most American Express cards. For example, Chase Sapphire cardholders can obtain trip cancellation/interruption insurance, trip delay reimbursement, and emergency evacuation coverage, among other perks when they use their card to pay for a trip. And, in addition to the travel insurance included with its cards, American Express offers customizable travel insurance that can augment your credit card benefits with additional emergency medical and evacuation coverage.

Annual fees vary quite a bit by card. Personally, I find the $95 annual fee for the Chase Sapphire Preferred to be well worth it (especially after that card insurance reimbursed me a large chunk of change for my cancelled Spain trip earlier this year), and as an added bonus, the points that you earn from spending on the Chase Sapphire card can be used to book travel.

Generally speaking, for your credit card travel insurance benefits to cover you trip, you have to charge some or all of your travel expenses to the card. The requirements will vary by card. For the Chase Sapphire, for example, you only need to charge some of your trip to the card for coverage.

While credit card insurance benefits can be valuable, but they aren’t always enough on their own depending on the specifics of your trip. They often come with limitations, and for comprehensive coverage, a standalone travel insurance policy might still be necessary to augment any credit card benefits. So, before relying solely on your credit card benefits, assess your travel plans, consider the potential risks, and decide if additional coverage makes sense. 

Final Thoughts

Travel insurance might seem like just another expense, but its value becomes undeniable when you’re dealing with unforeseen circumstances away from home. Whether it’s a medical emergency, a canceled flight, or lost luggage, the peace of mind of knowing you’re covered is well worth it. 

Ready to safeguard your next adventure? Explore top travel insurance options now and choose a policy that gives you comprehensive coverage and confidence. Don’t leave your travel plans to chance—click here to compare the best travel insurance products and set off on your trip with total peace of mind!