travel insurance

When Is Travel Insurance Worth It?

Know when you need coverage and when you can skip it.

Now that Americans returning to the U.S. from abroad are no longer required to test for COVID-19 before boarding a plane, you might be wondering whether to pay up to insure your trip. Travel insurance often seems like an unnecessary cost, particularly when fares are refundable or you don’t have to pay a change fee. But there are situations when you must have it, as well as times when it’s not required but is worth paying for.

What Travel Insurance Covers

Some credit cards provide insurance, but the coverage is limited. By contrast, comprehensive travel insurance policies cover a wide range of expenses. A comprehensive travel policy typically covers damage to rental cars, trip cancellation, lost baggage and medical expenses when you’re abroad.

Most comprehensive travel insurance policies now also include cancellation and medical benefits related to contracting COVID-19. But for other COVID-related concerns, such as border closures, quarantine restrictions or fear of contracting coronavirus, you’ll likely have to pay for what’s called a “cancel for any reason,” or CFAR, upgrade. CFAR travel insurance can tack on an additional 50% to the cost of travel insurance, but it offers better protection for travelers facing the kinds of interruptions that the pandemic has made commonplace.

Some plans with quarantine coverage will also pay some expenses if you have to stay in place for additional days. Coverage is typically limited; for example, you might be reimbursed $200 per day for two additional days of lodging if you’re required to quarantine abroad.

How Much Travel Insurance Costs

On average, a travel insurance policy costs $248, according to data from SquareMouth, a travel insurance comparison site. But the amount you pay for a policy depends on a number of factors—the length of your trip, the number of travelers you need to insure, and even how old you are. A better estimate is 4% to 11% of the total cost of a trip, experts say. You can compare plans at SquareMouth or TravelInsurance. Choose coverages that make sense for your trip, and be sure to read the fine print of any policy you consider.

Travel insurance policies generally fall into one of three tiers: basic, middle-tier and comprehensive coverage. Although basic is often the most affordable option and includes benefits such as trip cancellation and lost baggage coverage, it may require that you pay a deductible in the event of sickness or injury. Middle-tier coverage typically includes the same benefits as basic policies but adds a health insurance benefit. A more expensive, comprehensive policy may include the benefits of basic or middle-tier policies, but with a higher claim limit. Basic coverage rates average about $105, while middle-tier and comprehensive coverage average about $130 and $164, respectively, according to data from BankRate, a financial website. If you want a CFAR policy, too, that’ll be on top of those costs.

Because older travelers are generally at higher risk of health problems, policies tend to be more expensive the older you are. A 2021 analysis conducted by AdvisorSmith, a small business resource website, estimated that average prices differed from a low of $92 for a young child to a high of $805 for a 100-year-old person. The difference between a 40-year-old’s and 70-year-old’s average cost of travel insurance may come to about $100. But that doesn’t mean older folks can’t find affordable policies; shopping around and comparing plans is key.

When to Buy Travel Insurance

As of June 12, 2022, travelers returning to the U.S. no longer need to test negative for COVID in order to reenter the country, alleviating fears of being stuck in a foreign country longer than planned. But the Centers for Disease Control and Prevention advises anyone experiencing COVID-like symptoms not to travel. And there are other times when opting for travel insurance is worth the cost.

If you are concerned about severe weather upending your trip, about a possible unexpected health incident involving you or a family member, a terrorist attack, or even losing your job, travel insurance policies with basic trip cancellation coverage often cover those reasons for cancelling.

If you are traveling to a destination that has a history of more stringent COVID-related travel restrictions or has had other COVID-related concerns, consider a cancel-for-any-reason policy. Be sure to check the travel restrictions for any countries you are traveling to regularly; some countries are still requiring travel insurance in order to visit.

Plus, there’s no guarantee that the U.S. waiver of COVID testing for air travelers returning from abroad is permanent. The testing requirement is set to be reviewed again on September 10, 90 days after it was lifted. It could be reinstated if there is a new COVID variant of concern—and the highly transmissible BA.5 subvariant of the virus has been a growing threat.

When to Skip Travel Insurance

Whether to pay for a travel insurance policy and what level of coverage you get depends on your personal risk tolerance, of course. But it also depends on whether you’ll have to pay a lot out of pocket if you have to cancel or postpone your plans.

If you’re mainly worried about losing money on costly international flights, for instance, think again before you pay to insure them. That also goes for travel insurance plans offered at checkout when purchasing a plane or train ticket. Although it may seem like a small expense in exchange for the added flexibility, keep in mind that most airfares already have built-in flexibility.

Major U.S. airlines made permanent changes during the pandemic, allowing flexible bookings for most tickets. That means you won’t have to pay a fee if you need to change your flight—as long as you don’t buy the cheapest fares (Southwest allows free changes for all tickets). Also, some travel providers offer flexibility on bookings made within a certain time. For instance, the major airlines and Amtrak offer a refund in the first 24 hours after a booking if you have to cancel or change your itinerary.

Also, when an airline cancels your trip—as long as the flight is arriving at and/or departing from a U.S. airport—you are legally entitled to a refund, per U.S. Department of Transportation regulations. An airline will often automatically issue a credit or voucher for a cancelled flight, but be sure to request a refund if that is what you would prefer, as is your right. Also, if there has been a substantial schedule change (typically of two hours or more) and you decide not to take that flight, you are entitled to a refund of your fare.

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