When you plan a vacation, you’re thinking about what hotel to book and what beach to hit first—not what will happen if you’re in a car accident or someone in the family gets sick.
Those doom-and-gloom scenarios are why travel insurance exists.
I first bought travel insurance only when I was forced to—a tour provider required it. Since then, I’ve regularly bought it for most of my family’s trips. Fortunately, we’ve never “needed” it. But while some people might consider the extra money I spent a waste of cash, for us it was a prudent decision.
“I recommend travel insurance to every client,” says Madeline Jhawar, owner of Italy Beyond the Obvious tour provider. She leaves the decision up to the client, but she considers it so important that if they decide not to get it, they have to reject it in writing.
But travel insurance can be confusing. We broke down some of the basics, so you can make the best decision for your family.
Check Your Existing Coverage
Before you spend any money to insure your next family vacation, make sure you have to.
A number of credit cards—especially the fancier ones—automatically include medical and cancellation insurance for any trip you pay for on that card. They may also cover damage to a rental car. You can see your coverage under the benefits section of your account online. Or, call the company to inquire.
Contact your health insurance provider, to see what’s covered when you travel. If you’re employed by an organization or company that has a strong benefits package, you should check to see if there are any travel-related perks as well.
Understand the Terms
There are different kinds of travel insurance, and it’s important to understand your coverage so you aren’t left high and dry—or with an enormous, unexpected bill. Read the fine print of any policy you’re considering; if the details are incomplete or too complicated to understand, move on to another provider.
When it comes to accident, injury or illness, travel insurance typically covers:
- Emergency medical care. “Travel medical coverage supports you and your family in the case of a medical emergency that happens during your trip, reimbursing for things such as hospital stays, emergency room visits, surgical procedures, and prescription medication,” explains Lisa Cheng, spokeswoman for World Nomads Travel Insurance. That includes the stitches in the head your teen needs after a surfing accident or a trip to a walk-in clinic when your toddler has a high fever.
- Emergency evacuation. This kicks in when an injury or illness is so serious that it requires that a family member get back home or to a hospital. “It can also cover the transportation of your children back home if you or another adult on the policy is hospitalized for an extended period of time,” says Cheng. “Paying for an evacuation on your own can be an enormous amount of money, so it’s an extremely beneficial coverage to have.”
Insurance can also help if you have to cancel a trip or you get delayed. It usually covers:
- Trip cancellation. “When you have to cancel a trip for a covered reason, such as a sudden sickness or the death of a close family member, trip cancellation can return your pre-paid, non-refundable trip costs,” Cheng explains. (We’ll talk more about “covered reasons” below.) This policy coverage is helpful when you’ve spent a lot of money upfront—like on that pricey, prepaid Disney vacation.
- Trip interruption and travel delay. When illness, weather, or airline mix-ups interrupt or delay your trip, travel insurance will usually reimburse at least some of those costs. Say you get sick halfway through a trip: the insurance company will typically reimburse you for costs you’ve had to forfeit (like the days left in a nonrefundable hotel room) as well as an economy ticket home. They’ll also pay for basic costs you incur because of a delay, like a hotel room and meals while you wait for your flight.
Some policies also offer a financial safety net if your baggage or other belongings are lost, damaged or stolen.
There are Significant Limits
Just because you have travel insurance doesn’t mean you’re covered in all circumstances—or for 100% of your spending.
For starters, travel insurance usually won’t cover you for pre-existing medical conditions, childbirth, mental health disorders or suicide. If you engage in extreme sports such as skydiving, base-jumping, or heli-skiing, you’re also out of luck.
Insurers generally won’t protect you in some of the most dramatic situations, either. That includes civil disorder, a natural disaster or a terrorist attack. (Allianz Travel has a helpful primer on all this.)
There may also be caps on coverage. If your insurance will pay for $50,000 worth of medical evacuation costs and the actual cost is $40,000, that’s great. But if the bill comes to $75,000, you’ll be paying out of pocket.
Cancel For Any Reason (CFAR) coverage can seem like a very appealing option. You can call off a trip for issues that wouldn’t otherwise fly with your insurance company—like rising Covid rates in your destination. But there are a couple of important catches: Companies will only cover up to 50% or 75% of your nonrefundable costs. And you have to cancel a certain amount of time in advance, often at least two days.
Remember too, that if you only purchase travel insurance for the adults in your family, kids’ expenses won’t be covered.
Finally, some policies won’t cover your losses due to bankruptcy/insolvency of a tour provider or airline—and that’s a big if in these uncertain times.
It’s Not That Expensive.
According to travel insurance broker InsureMyTrip, travel insurance typically costs 4 to 10% of the total cost of your trip. The rate will depend on how many people are traveling and for how long, where you’re going, and what activities you plan to undertake. So a white-water rafting trip or a safari in Kenya will probably cost more to insure than a 10-day trip to New England.
I’ve purchased travel insurance for my family of three for international trips of two to three weeks and paid between $150 and $200 each time. Even though we’ve never had to make a claim, the cost was acceptable to me—especially when we travelled to places where our health insurance didn’t cover us. Had the cost been much higher, say $350 or more, I might have been much more willing to go without insurance.
Covid is Covered—Sometimes
Right now, Covid is one of the biggest concerns for travel-loving families. In 2020, countless trips were canceled or thrown into limbo because of the pandemic, and many people lost money as a result.
Covid may be covered by your insurance, but it depends on the insurer.
Cheng says that World Nomads covers “serious illnesses, such as Covid-19, or being placed under strict quarantine by a physician or government mandate, among other scenarios.”
But while most medical policies will kick in for a Covid-related hospitalization, some companies specifically exclude coverage for cancellations, delay and disruptions related to the pandemic.
Jhawar says there are also new “get me out of here with Covid” policies that families should consider. This is especially true if you’re traveling with unvaccinated kids or immune-compromised family members.
It Depends on Your Risk Tolerance
Most trips will go off without a hitch—or at least, very minor complications. But when things do go wrong, they can be very costly.
Only you know your own comfort with the cost of travel insurance versus the risks of going without. My take (albeit an as-yet-untested one) is that it’s worth the peace of mind to spend a little extra, file that policy confirmation away before your trip, and hopefully never have to think about it again.