The Ultimate Guide to Travel Insurance: Everything You Need to Know

Editor’s Note: For travel insurance information specific to the current COVID-19 epidemic, see our stories on Travel In the Time of COVID: What You Need to Know; Travel Insurance Coverage: 18 Things Your Policy Won’t Cover; and Cancel for Any Reason Travel Insurance, Explained.

Purchasing travel insurance is wise if you want to protect your trip against an array of unforeseen events such as natural disasters, missed flights, personal injury or sickness abroad, tour operators going bankrupt, or even acts of terrorism. But with so many types of travel insurance, lots of fine print, and complicated insider lingo to decipher, it can feel impossible to determine which kind of travel insurance is right for you.

With the right resources, however, it’s possible to pick a trip insurance policy you’ll be confident traveling with and paying for. This ultimate guide to travel insurance covers:

• Who needs travel insurance
• The basic types of travel insurance
• The most common policy needs to consider
• Little-known trip insurance technicalities you need to know in case they affect you

Click on any bold, linked text on this page to read more about the subject elsewhere on SmarterTravel.com.

Who Needs Travel Insurance?

There are several different types of travel insurance policies available, ranging from trip cancellation insurance to emergency medical evacuation, all of which vary widely in what their coverage includes and how much it costs. Make sure you know exactly what your policy will and will not cover before you purchase anything, and always buy your insurance from a reputable company (check out our list of travel insurance providers at the end of this article).

Is Travel Insurance a Waste of Money? For some people and certain trips, travel insurance is a virtual necessity; for others, it’s probably not worth the money. The question boils down to a matter of risk, and the best way to assess that risk is by answering four basic questions.

• Are you willing to risk the loss of deposits or prepayments if your trip is canceled for any reason?
• Are you willing to pay out of pocket if you need to return home early from your trip for any reason?
• Are you willing to foot the bill for any out-of-pocket medical expenses, ranging from basic emergency care to emergency medical evacuation home, if you encounter any sickness or injury on your trip?
• Do you have a credit card or general insurance that includes bundled travel insurance?

If you answered “no” to any of the first three as well as the final question, you would probably be wise to invest in a travel insurance policy that includes TCI (trip cancellation or interruption) and/or travel health insurance. Read more about weighing risk and the cost of travel insurance here. 

If you need to buy trip insurance for an upcoming vacation, first look at the insurance policies you already have to see what they will cover. Some health insurance policies cover medical emergencies overseas, while others will not. Many credit cards and homeowner’s policies cover baggage loss. Also, many credit card companies (particularly gold cards) offer their members international medical assistance, and accidental death and dismemberment insurance if the user simply charges their airline tickets on their credit card. Read more about where you might already have access to travel insurance coverage here.

The Basic Types of Travel Insurance

Following is a brief description of the different types of travel insurance options available. Note that every policy is a little bit different, so be sure to read the fine print carefully before purchasing.

Trip Cancellation/Interruption Insurance

Trip cancellation/interruption insurance covers you if unforeseen events cause you to cancel or interrupt your trip. In general, this coverage is meant for illness, injury, or death suffered by the insured or a member of the insured’s immediate family. Some policies also cover cancellation in the event of illness, injury, or death to the insured’s travel companion. Most policies exclude trip cancellation in the event of war, civil disturbance, or a change in your own financial circumstances. (Lose your job before your trip? If you don’t have job loss protection—not offered by all companies—you could be out of luck.) Some policies also exclude travel to specific destinations that are prone to political unrest.

Many comprehensive travel insurance policies now include coverage if your tour operator defaults; however, it is important to understand exactly what is covered by your policy. If you buy a policy directly from a tour provider, usually it does not cover the default of that provider—so it’s generally a good idea to purchase your policy from an independent company. Some policies only cover tour operator default if the operator ceases operations entirely, which it may not do even if it files for bankruptcy.

When considering trip cancellation insurance, take time to think about how much money you’ll be putting down before your trip. Are you purchasing expensive airline tickets that can’t be refunded? Are you putting down a large nonrefundable deposit on a cruise or tour? If the answer is yes, or if you might cancel for any reason, then buying trip cancellation insurance is a prudent idea. Some travel insurers also offer comprehensive “cancel for any reason” policies. Read more about TCI/TII (Trip Cancellation Insurance) here.

Medical/Medevac Insurance

Medical insurance encompasses several types of coverage. Emergency medical evacuation insurance covers the cost of transportation if a qualified physician determines that you must be evacuated for treatment to the nearest medical facility or to your home country (if it’s warranted), due to injury or sickness. This insurance is highly recommended for cruise passengers and travelers visiting remote areas or developing countries.

For example, if you fall and are injured while trekking in the Himalayas, you might need to be evacuated by private helicopter, then airplane—which can get quite expensive. Emergency medical evacuation back to the United States without insurance can easily cost $35,000 or more. Check to make sure you choose an insurance provider that does not exclude adventure travel from its coverage. If you’re an adventure traveler who has paid $3,000 up front for a white water rapids package deal in a remote area of South America and you won’t receive any refund if you cancel, then you might want to consider both trip cancellation and emergency medical evacuation insurance. Read more about buying medical and evacuation insurance here.

Other types of medical insurance coverage include:

• An app, or service you can call, that will direct you to English-speaking doctors while you are overseas. In some cases the policy will also provide a physician monitoring service, where a qualified physician from the U.S. will monitor the treatment you are receiving by a local physician via telephone.
• Cash payment to the insured or beneficiary in the event of accidental death, loss of sight, or loss of limb.
• Expenses for repatriation of the insured’s remains in the event of death.

Keep in mind that you may need to pay up front for your medical services, and then your insurance company will reimburse you later, once you’ve filed a claim. On the other hand, some services provide “proof of direct payment” to the healthcare provider, who may require one before treatment occurs. Talk to your insurance provider about the process upon purchasing the policy.

Before purchasing a travel insurance policy with medical coverage, be sure to check what your regular medical insurance does or doesn’t cover, particularly when traveling overseas. You should also consider the medical care offered at your destination. Many Western countries have excellent socialized medical care available, and you may not even be charged for the care you receive. On the other hand, if you are in a remote area of a developing country and need to be evacuated for adequate medical care, the expenses can mount quickly.

Read the fine print regarding coverage or lack thereof for pre-existing conditions. Generally any medical problem that arises within 60 days prior to purchasing the policy is not covered; however, there are some exceptions to this. (See below for more information on pre-existing medical conditions.)

Baggage Loss/Delay

Baggage loss and delay coverage protects you in the event that your luggage is lost, delayed, or stolen. This often includes a cash payment if your bags are delayed for more than 12 hours after you arrive at your destination.

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Flight Delay/Cancellation

Flight delay or cancellation insurance (sometimes called “travel delay”) typically pays for accommodations, meals, and new travel arrangements once you’ve been delayed a certain amount of time (often six to 12 hours—read your policy carefully).

Travel Document Protection

Travel document protection can kicks in to help you replace a passport or other travel documents when they’re lost or stolen.

 

Annual Travel Insurance

If you travel many times a year (particularly internationally), it may be more economical to purchase annual insurance instead of individual policies for each trip. Annual insurance may also be a good idea if you regularly travel to developing countries, even if it’s only a few times a year.

Most annual policies provide medical evacuation coverage, benefits in the event of loss of life or limb, as well as minimums for lost luggage and treatment costs for illness or injury. These policies typically do not include trip cancellation coverage, but in some cases you may add this for an additional fee. Read more about annual travel insurance (and whether or not it could save you money) here.

Now that you know what kind of insurance you might need, you can read more here about how to buy travel insurance before your trip.

The Most Common Insurance Coverage Needs

When buying trip insurance, it’s important to keep in mind the situations that might arise that call for insurance help—and to make sure they’re covered as part of the policy you purchase. The most common incidents that travelers hope are covered on their travel insurance policy are weather-related delays and cancellations, including both winter weather conditions and hurricane-season natural disasters.

Winter weather issues typically covered by travel insurance include:

• Missing your flight due to weather problems that prevent you from physically getting to the airport on time
• Flights being canceled because of winter weather conditions preventing take-off
• Flights to or from your destination being delayed because of winter conditions either in your destination or at home, which may incur lost deposits and/or extra hotel stays

Generally, you shouldn’t wait until bad weather hits or is in the forecast to purchase insurance—it won’t cover known events. Read more here about buying travel insurance that will cover winter weather issues.

Hurricane travel insurance coverage also has to be bought well in advance, generally before a storm is known or named. Hurricane travel insurance plans (and most travel insurance plans) typically cover three primary scenarios, with different levels of coverage: advance cancellation, trip interruption, and delay. Each is fairly self-explanatory, but cancellation covers the full canceling of your trip prior to departure. Read more here about how to buy hurricane-season travel insurance.

Other common travel insurance coverage needs include:

• Missed connections
• General weather problems, not just winter or hurricane coverage
• Cruise insurance

Insurance Coverage Technicalities You Need to Know

Travelers with pre-existing medical conditions will need to be more careful about the travel insurance or healthcare coverage they purchase. Pre-existing medical conditions are often defined by insurance companies as: “Any injury, sickness or condition for which medical advice, diagnosis, care or treatment was recommended or received within the 180-day period ending on your date of departure. Conditions are not considered pre-existing if the condition for which prescribed drugs or medicine is taken remains controlled without any change in the required prescription.” Meaning: The insurance may only cover health problems that are proved to be unforeseen. Read more here about how to buy travel insurance when you have a pre-existing condition.

Since September 11, 2001, and many headline-making tragedies since then, many are looking to travel insurance to safeguard their trip against any unforeseen terrorist attacks at their destination, whether it be cancellation, delayed departure, or an emergency flight home. Many policies now have an “Acts of Terrorism” clause that will reimburse you if you miss or are delayed in getting to your destination because of acts of terrorism. Check to make sure acts of terrorism are included before purchasing; some policies specifically exclude them. Read more here about how to tell if your travel insurance covers acts of terrorism.

And then there are the seemingly random things that travel insurance policies simply will not cover. Among them are some inconspicuous healthcare categories, like dental care and pregnancy complications, as well as some topics you should now know better than to try getting covered—like named hurricanes and other natural disasters that have already made the news. Flights purchased with miles also might not be covered, among other items. Read more here about things your travel insurance probably won’t cover.

Checking the specific terms of your agreement is also generally a good idea, as technical jargon could be the difference between your policy covering that nightmare situation you bought it for and the insurance company dodging responsibility. For example, some policies list supplier “bankruptcy” as a covered reason; others say supplier “default.” Default protection is stronger: Companies often fail without ever officially declaring bankruptcy, and insurers can cite that as a way to weasel out of coverage. Read more here about the travel insurance jargon tricks to look for in your policy agreement. 

Travel Insurance Companies and Comparison Sites

Here are several established travel insurance companies and comparison sites from which you can consider buying a policy:

• Allianz Travel
• GeoBlue
• SquareMouth
• Travel Guard
• TravelInsurance.com
• World Nomads

Be sure to read all terms and conditions carefully to be sure the policy provides the types of coverage you’re looking for and is valid in the countries you’ll be visiting. And don’t be afraid to ask an expert there to help you choose a policy—you are paying for it, after all. Read more here about the best independent sites for comparing and buying a travel insurance policy.

Readers: Have you ever been saved by travel insurance? Had a nightmarish travel insurance experience? Comment below.

More from SmarterTravel:

• 5 Common Travel Insurance Questions, Answered
• Travel Insurance Coverage: 18 Things Your Policy Won’t Cover
• The 8 Worst Travel Decisions You Can Make on Vacation

Editor’s note: This story was originally published in 2017. It has been updated to reflect the most current information. Shannon McMahon, Ed Perkins, and Carl Unger contributed reporting and editing.