What does travel insurance cover?

No matter how well you plan a trip, something could go wrong. You could get sick before leaving, the airline could lose your bags or you could fall and break your leg in another country. Travel insurance can help cover these unexpected problems, so you don’t lose out on deposits or have to pay for additional expenses out of pocket.

How does travel insurance work?

Travel insurance works like most insurance policies: You pay a premium to get coverage for certain types of losses. “The basic use is to cover the costs of your trip and unforeseen hassles or expenses while traveling,” said Katie Kubitskey, owner of a travel consultancy in Louisville, Kentucky.

The policy you purchase lays out what is covered and how much it will pay for different situations. If you run into a covered problem, like an injury while abroad, the travel insurance company will provide reimbursement or help pay for incurred costs according to the contract terms.

What does travel insurance cover?

What travel insurance covers depends on the type of coverage you purchase. In general, travel insurance can reimburse you for the cost of your trip if you must cancel before leaving for specific reasons and for issues that come up during the journey. Some policies provide stand-alone coverage, like trip cancellation insurance or travel health insurance, while others are comprehensive plans that provide several forms of coverage together, such as emergency medical coverage, lost baggage coverage and trip delay and interruption coverage.

When you buy a travel insurance policy, it will lay out the losses and damages it will cover and any applicable coverage limits. For example, the policy might reimburse you if you cancel because of a natural disaster, a severe illness, an involuntary job loss or a jury duty summons. However, you wouldn’t be reimbursed if you simply changed your mind and decided not to leave.

What is not covered by travel insurance?

If a situation isn’t named in your policy, then it likely isn’t covered. “One of the most common misconceptions about travel insurance is that it covers every reason you may want to cancel your trip or any risk you may encounter while traveling. It doesn’t,” said Kubitskey.

Your policy could also list exceptions for travel insurance coverage. For example, it might handle your medical bills while abroad but specifically exclude costs for a preexisting medical condition you had before the trip. Or, it might cover skiing at a resort but not heli- or off-piste skiing.

Types of travel insurance

There are different types of travel insurance for different issues. A policy could include some or all these coverages together. The most common types of travel insurance are the following:

Trip cancellation coverage

Trip cancellation insurance reimburses you for nonrefundable costs on a trip you cancel before leaving. It can cover up to 100% of what you paid for flights, hotels, cruises and other travel expenses. You must cancel for a reason covered by your policy. You will need to show proof like a doctor’s note verifying you got sick the week before leaving.

Travel medical coverage

Travel medical coverage helps pay your health care bills while you’re traveling. It only lasts during the days scheduled for your trip. You might want travel medical coverage because you’re traveling internationally or outside your standard health insurance policy’s network. Regular health insurance doesn’t usually apply while abroad. And if you receive care in the US but through an out-of-network provider, it typically covers less of your medical bills — travel medical coverage can help make up the difference.

Emergency medical evacuation and repatriation coverage

If you have a severe injury or illness while traveling in a remote area or a location with poor health care, your travel insurance could cover the costs of evacuating you to the nearest adequate medical facility and, if needed, back home. If you pass away in a foreign country, repatriation coverage pays to transfer your remains back to your home country for your family.

Trip interruption coverage

Trip interruption coverage is similar to trip cancellation coverage, except it applies when you’ve already started traveling. Let’s say you must cancel your trip midway through because of an illness or family emergency. Trip interruption coverage could refund your unused, nonrefundable travel expenses, like a hotel room you paid for but didn’t use. It can also help cover additional costs to get you home, such as paying for a new flight.

Travel delay coverage

Travel delay coverage pays for unexpected costs related to canceled or delayed flights. For example, if you’re forced to book a last-minute hotel in a city while waiting, it could help cover these costs. It could also reimburse you for prepaid expenses you couldn’t use because of the travel delay, such as missing out on the first night at your resort. The policy will lay out when this travel insurance coverage kicks in, such as if a flight must be delayed more than 12 hours.

Baggage and personal items coverage

Baggage and personal items coverage pays to replace your belongings if they are lost, stolen or damaged during a trip. This coverage is typically separate from baggage delay coverage, which could pay expenses related to baggage that’s delayed and unavailable during a journey (like buying new clothes, for example).

If you have a homeowners or renters insurance policy, you may have some coverage for the theft and loss of your belongings while traveling. However, there could be a higher deductible to pay out of pocket first. The insurance might also offer less coverage for your property when you’re traveling. Travel insurance could kick in sooner and pay out more versus your other policies.

What travel insurance add-ons are available?

Besides the standard benefits of a travel insurance policy, you could pay extra for optional add-ons for more coverage. Here are some of the most popular:

Cancel for any reason (CFAR) coverage

As the name says, cancel for any reason (CFAR) coverage lets you cancel a trip ahead of time for reasons your plan doesn’t already cover. For example, you could change your mind about going on the trip and still get money back — as long as you cancel within the time frame designated by your policy, such as 48 or 72 hours before leaving.

“These plans cost more and give you the flexibility to cancel for any reason,” Kubitskey said. “However, they never cover 100% of nonrefundable costs. It’s usually in the 50% to 75% coverage range.”

Interruption for any reason (IFAR) coverage

Interruption for any reason (IFAR) coverage reimburses you for unused travel costs if you end the trip part-way through for any reason not covered by your standard trip interruption coverage. Like CFAR, IFAR coverage will not fully refund your costs like normal interruption coverage. IFAR isn’t offered nearly as often as CFAR, and its coverage limits typically range from 50% to 75%.

Rental car coverage

Most major travel insurance companies offer rental car coverage that are automatically included in their travel policies or that you can add for an additional premium. For example, AIG Travel Guard and Allianz policies provide a rental car insurance add-on that covers up to $50,000 in damage, while Travel Insured International’s Worldwide Trip Protector Plus includes rental car coverage.

If you plan on renting a car, you could pay for rental car coverage as part of your travel insurance policy. It could provide liability, collision damage waiver (you won’t be held responsible for damage to the rental car) and personal accident coverage for your and your passengers’ medical bills.

You might already have rental car coverage from your auto insurance policy or credit card. However, keep in mind that the limits from your credit card might not be enough, and if you don’t carry comprehensive and collision coverage under your car insurance policy, you won’t be covered for any physical damage to the rental vehicle. In addition, personal auto insurance policies generally only cover rentals in the United States and Canada. If you travel abroad, rental car coverage from travel insurance could make sense.

Preexisting conditions coverage

If you have a preexisting medical condition, you might still be able to get it covered through travel insurance. Some insurers have a look-back period ranging from 60 to 180 days for determining preexisting conditions, so if you’ve received treatment within that period, you won’t have coverage for any related issues while you’re traveling. Other insurers will cover preexisting conditions without a look-back period.

However, you may qualify for a preexisting condition waiver. You typically have to purchase travel insurance coverage within a couple weeks of booking your trip, and your doctor might need to provide a note saying you’re fit enough to travel.

How to choose the right travel insurance plan

Now that you understand what trip insurance covers, how can you find the right plan? First, decide what kind of coverage you want and need. Check what benefits you have with your existing policies, such as homeowners insurance, renters insurance, auto insurance and health insurance, and through the credit card you used for booking the trip. You might already have some level of travel coverage.

Next, you should then collect quotes from multiple travel insurance companies. Sites like InsureMyTrip.com and Squaremouth allow you to get multiple quotes at once. An insurance agent or broker that sells policies from multiple insurance companies can also be a good resource for finding the best travel insurance for your needs.

Review each quote you receive for the premiums, coverage types and limits, add-on options and claims services. Consider any additional benefits, like a 24/7 helpline that can help with finding medical services, replacing passports or providing translation services.

You should also consider the financial rating of each insurer. You need the insurance company to remain in business to pay your claims. You could also pull up customer service reviews from the Better Business Bureau or Trustpilot.

Finally, start the process early, well before your trip. “The best time to book travel insurance is within 14 to 21 days of your first trip purchase (i.e., your flight or your accommodation). If you purchase after this initial time frame, you will have less coverage available to you and possibly need to pay a higher premium,” said Kubitskey.