Protect Your Adventure: Navigating the Costs of Travel Insurance

costs of travel insurance

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Whether you missed your flight, lost your bags, or broke your ankle, travel insurance can help remedy all kinds of travel mishap and travel costs. If you must cancel your vacation for reasons stated in your policy, travel insurance will reimburse you for nonrefundable trip costs. Let’s discuss the costs of travel insurance.

If you injure yourself or must evacuate during a vacation, the  travel insurance can help pay for medical and escape services. Such coverage is beneficial for high-priced trips or if you are visiting a remote destination.

Let’s look at all you need to know about travel insurance and its costs.

  • What Is Travel Insurance?
  • How Travel Insurance Works
  • Primary and Secondary Coverage
  • Cost of Travel Insurance Based on Coverage Type
  • Factors That Determine Travel Insurance Cost
  • What To Consider Before Buying Travel Insurance

What Is Travel Insurance?

Travel insurance is a type of insurance that covers financial losses or financial protection associated with traveling, and it can be useful protection for domestic or international travel. Travel insurance provides a range of protection before and during your trip.

Travel insurance helps cover financial losses associated with surprise circumstances that could ruin a trip, including illness, injury, accidents, flight or other transportation delays, and other factors or issues. This insurance costs 4%-10% of a trip’s price. So, for a $10,000 trip, the average travel insurance cost could be between $400 and $1,000.

Premiums or the price you pay for coverage are based on the coverage type, your age, destination, trip’s cost, and more. Specialized policy riders focus on the needs of business travelers, athletes, and expatriates. You may also already have travel insurance coverage from your homeowners or renters’ insurance or your credit cards. 

KEY TAKEAWAYS

  • Travel insurance rates can be gotten online, from your tour operator, or other sources.
  • The main categories of travel insurance include trip cancellation insurance coverage, baggage and personal effects coverage, rental property and rental car coverage, medical coverage, and accidental death coverage.
  • Coverage often includes 24/7 emergency services, such as replacing lost passports, cash wire assistance, and rebooking canceled flights. 
  • It’s important to understand what’s covered and what’s not, any limitations on coverage amounts, and coverage requirements.

How Travel Insurance Works

Travel insurance may be sold online by travel agents, travel suppliers (airlines, cruise lines), travel insurance company, private insurance companies, or insurance brokers when booking your flight, accommodations, or car.

Typically, you’ll purchase coverage shortly after initial bookings for lodging, flights or other transportation, activities, and rental cars. Some policies may require you to do so to retain full coverage. Here are some terms to know for travel insurance.

What are the Costs of Travel Insurance?

Travel insurance is not one-size-fits-all, so the price and conditions of a plan will vary. However, it may be useful to understand pricing guidelines to plan your travel insurance purchase. However, travel insurance typically cost anywhere from 4%-10% of your total prepaid, nonrefundable trip cost.

For example, if you purchased a trip with a total of $5,000, travel insurance policies available to you will likely range in price from $250-$500, depending on variables.

As with most insurance, comparing policies from different travel insurance companies can potentially save you hundreds of dollars. Travel insurance policies often include most of the same benefits, but the price and coverage amounts can vary considerably by policy.

How to Get Travel Insurance

Travel insurance varies in cost, exclusions, and coverage. Coverage is available for single, multiple, and yearly trips. To get travel insurance, you fill out an insurance company’s application about your trip, including the following:

  • Travelers going
  • Cost of travel insurance
  • Destination
  • Travel dates
  • Date of first payment toward your trip

Most travel insurance companies review the information using underwriting guidelines to guide issuing a policy and the rate. If it accepts your application, the travel insurance companies will issue a policy covering your trip.

If the company rejects your application, you can apply with another insurer. When you receive your policy, you’ll typically get a 10- to 15-day review period to review the contract’s fine details. If you don’t like the policy, you can return it for a refund. and it covers:

  • Emergency medical care and transport back to the U.S.
  • High enough limits to cover your costs or damages.
  • Regions you’re traveling to
  • Your trip duration or number of trips
  • All activities you plan to enjoy.
  • Pre existing conditions and age

Primary and Secondary Coverage

If you buy travel insurance, you may have concurrent insurance coverage, meaning you’re covered under more than one policy. When the travel coverage is primary, travel insurance reimburses you first without needing to make a claim through another company and sparing you potentially increased policy rates. If the cost of travel insurance coverage is secondary, you’ll first need to attempt to file a claim with other coverage, such as an airline (lost baggage) or your own auto insurance (damaged car).

Coverage Requirements

There are usually stipulations spelled out how you qualify for coverage. Your claim must fall under the types of coverage offered. For example, lost baggage travel insurance costs might include coverage for personal items, prescriptions, credit cards, and your passport or visa. You may also need to take extra steps to qualify for coverage, such as reporting the loss or theft to the police.

Policy Coverage Limits

This is the maximum amount you can receive for the claim. For example, you might only receive $500 per bag. You may not even receive more for expensive items such as jewelry or electronic devices. You might need to provide receipts for items over a certain amount. Without receipts, the insurer may only pay for repairs. Some coverage might require you to pay a deductible, or flat amount, before covering the remainder of your claim up to the limit.

Exclusions

These are the conditions under which your coverage will not cover the loss. Each policy differs. For example, your baggage damage coverage may not cover losses caused by animals. It may exclude coverage of bicycles, hearing aids or other medical devices, keys and tickets, or seizure by a government or customs official. already existing conditions may not be covered by travel medical insurance or may only be covered if you buy travel insurance plan within 1-2 weeks of booking your trip.

Comprehensive cost of travel insurance

Comprehensive cost of travel insurance includes many types of coverage listed below, bundled into one plan. Most commonly, comprehensive cost of  travel insurance, bundles a 24-hour assistance line to help find doctors or get assistance in an emergency, reimburse you for canceling your trip, interruption and delay, baggage loss or delay, and medical expense coverage. Alternatively, you can purchase each coverage type separately. This may be wise if you already have coverage through other insurance or can cover your losses in many cases.

Trip Cancellation insurance or Interruption Coverage

This travel insurance costs reimburses a traveler for some or all prepaid, nonrefundable travel expenses, and comes in the following forms:

Trip Cancellation: Reimburses you for paid travel expenses if you can’t travel for a preapproved reason.

Travel Delay: Reimburses you for expenses if you can’t travel because of a delay.

Trip Interruption: Reimburses you for travel costs if your trip is cut short.

Cancel For Any Reason (CFAR): Reimburses you for a portion of costs if you cancel the trip for any reason; typically, more expensive than the other types listed above. With most of the above, acceptable cancellation and interruption causes and reimbursement amounts vary by provider. Acceptable reasons for a claim might include the following: 

  • Your illness
  • Illness or death in your immediate family
  • Sudden business conflicts
  • Weather-related issues
  • Legal obligations such as jury duty
  • Bankruptcy

Note: You may need to pay more or meet more requirements to file a claim for a cancellation due to financial default, terrorism in your destination city, or work reasons. When traveling, register your travel plans with the State Department through its free travel registration website, Smart Traveler Enrollment Program (STEP). The nearest embassy or consulate can contact you if there is a family, state, or national emergency.

Damage and Baggage Losses Coverage

costs of travel insurance

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Baggage and personal belongings being lost, stolen, or damaged is a frequent travel problem and can easily result in a family emergency or ruin a trip as you must shop for replacements. Baggage and personal effects coverage protects lost, stolen, or damaged belongings during travel to, in, and from a destination.

However, many travel insurance policies pay for belongings only after you exhaust all other available claims. Baggage coverage may have many restrictions and exclusions, such as only covering up to $500 per item and $250 for each additional item. You may be able to increase or decrease amounts, shop around for coverage, or increase limits by paying more.

For example, travel insurance may not pay for lost and damaged luggage due to airline fault. Most insurance carriers, such as airlines, reimburse travelers if baggage is lost or destroyed due to the airline’s error. However, there may be limitations on reimbursement amounts, so baggage and personal effects coverage provides an additional layer of protection.

Travel Insurance cost Based on Coverage Type

The cost of the travel insurance coverage type you select plays a role in your policy cost. Basic trip insurance that does not include medical expenses will cost less than a comprehensive policy with medical emergency evacuation and medical coverage.

In addition, purchasing coverage add-ons such as pre-existing condition waivers and rental car insurance increases policy costs. Due to the many options and variables, it’s best to consider your travel needs and budget when choosing your travel insurance.

Travel Insurance cost Based on Trip Price

The main factor that affects travel insurance costs is the total price of your trip. The more your trip costs, the more a travel insurance company will have to pay should you file a claim. For example, a policy that covers a $3,000 trip to Cancun will cost less than a $10,000 trip to Europe.

According to the U.S. Travel Insurance Association, a national organization that informs consumers and fosters fair business practices within the industry, average costs of travel insurance ranges from 4% to 8% of your total trip cost.

Why does the trip cost impact the price you pay for travel insurance? As the price of your trip increases, so does the amount an insurance provider may need to pay if you suffer a covered loss. For example, if you plan a seven day trip to Japan, you’re likely to spend thousands on flights, accommodations and even visas to enter the country.

Your insurance provider will need to reimburse you for all these costs if your flight gets delayed, you suddenly get sick or experience another covered loss. On the other hand, if you’re planning a cheaper vacation, your plans will come at a lower cost.

If you opt for a short trip to the Bahamas, it might cost $1,000 or less. Compared to the example above, a travel insurance agency will incur less cost if it insures 100% of your trip expenses. However, expect to pay more if you’re going to a hard-to-reach destination because it will come with higher healthcare costs or evacuation costs.

Travel Insurance cost Based on Age

Age is another factor that affects plan costs. Younger travelers are less likely to file a claim than older travelers since they are generally healthier and have fewer pre-existing conditions. Due to the higher chance of insurance companies paying a claim for an older traveler, plan costs generally increase with age.

Travel Insurance cost Based on Number of Travelers

The number of travelers covered by your travel insurance policy or insurance laws also affects the cost. Travel insurance costs increase slightly depending on the number of people you include. Based on research, average costs of a travel insurance policy covering a group of four 20-year-old travelers is $82.01.

Our team did some secret shopping and discovered family travel insurance policies cost an average of $90.30, which is slightly more than group policies. Note; If you’re traveling with two or more people, you might want to search for a travel insurance provider that offers group coverage. 

Travel Insurance cost with Cancel for Any Reason (CFAR) Coverage

“Cancel for any reason” (CFAR) coverage is an add-on you can purchase with your travel insurance policy or insurance laws. Travel insurance typically costs and includes trip cancellation, trip interruption, baggage delay, trip delay insurance, medical evacuation, and medical insurance, so long as the reason is listed in your policy.

With CFAR coverage, however, you can cancel your trip for a reason not covered by your provider. Because CFAR coverage increases and poses a higher risk taken on by the insurance provider, it significantly increases the price you’ll pay for coverage. If you opt for the CFAR add-on, expect to pay between 40% and 60% more for your insurance premium. 

This pricing varies by insurance provider, with some insurers charging more as the date of your trip approaches. For example, we requested a quote from Travelex with and without the CFAR add-on. We received a price quote for $108 without the CFAR add-on and $202 with the CFAR option, representing an 87% increase in price.

If you do plan to buy CFAR add-on insurance, get a quote from multiple companies and providers to be sure you’re not overpaying. CFAR coverage typically reimburses 50% to 75% of your prepaid trip costs. Note that many companies reserve CFAR coverage for their more comprehensive plans. The table below outlines the cost difference between policies with CFAR coverage and those without.

An important note to keep in mind is that every travel insurance provider sets its own coverage and protections included when you buy a plan. Unlike health insurance or auto insurance, there is no defined set of coverages that all travel insurance providers must offer. Be sure to read the fine print and examine the exact coverage levels included with each plan before you choose one. In other words, don’t only look at the premium price in isolation.

Factors That Determine Travel Insurance Cost

Travel insurance is not one-size-fits-all, so the price and conditions of a plan will vary. However, it may be useful to understand pricing guidelines to plan your travel insurance purchase. however, you should expect a plan will cost anywhere from 4%-10% of your total prepaid, nonrefundable trip cost. For example, if you purchased a trip with a total cost of $5,000, travel insurance policies available to you will likely range in price from $250-$500, depending on variables.

Each travel insurance provider uses its own formula and underwriting process to price its travel insurance policies. several factors primarily influence the price you’ll pay for coverage include:

  • Trip cost: Most insurance providers offer 100% reimbursement for trip cancellation insurance and 150% reimbursement for trip disturbance. The more expensive your trip, the more expensive your premium.
  • Coverages included: If you choose a travel insurance policy with multiple protections and higher coverage limits, expect to pay more for coverage.
  • Your destination: Some destinations, notably remote areas, have fewer medical infrastructures, increasing the likelihood of an evacuation. Expect to pay more for travel insurance if you go to a remote destination.
  • Age of guests: Older men and women are more likely to have medical conditions that have a significant impact on travel plans, increasing the price of insurance. Older travelers may also have more complicated medical needs, leading to higher medical expenses abroad.
  • When you paid for your trip: The date when you paid for your travel can also affect your premium and the type of add-ons available. Expect to pay more insurance for coverage if you paid for your trip weeks or months before shopping for insurance.

    If you want CFAR coverage, providers may implement timelines as to when you must purchase a policy. Minimize premium costs by purchasing travel insurance shortly after your trip plans.

What To Consider Before Buying Travel Insurance Plans

Your individual travel needs are unique. To ensure you select the best travel insurance policy, there are several factors you should consider. These include:

  • Coverage needs: Consider the type of protection you need while traveling. If your trip length spans a few days, you may only need basic trip cancellation coverage, whereas a month long trip or trip length may warrant additional medical care coverage.

    Consider your health condition, as many domestic health insurance policies don’t cover health care outside U.S. borders. Also, think about any add-on coverage you may need. 
  • Budget: The total cost of a travel insurance policy varies greatly by the provider, trip cost and more. The best travel insurance policy is one that fulfills your coverage needs, regardless of cost.
  • Coverage exclusions: With any policy you consider, read the fine print to understand any unique exclusions and limits. Most providers exclude coverage for pre-existing medical conditions, for example. Being aware of those exclusions can save you from surprises later.
  • Coverage limits: Keep in mind that commonly covered items, such as accidental death and dismemberment, will have varied coverage limits based on the provider.

Claims process: Consider how a provider handles claims. Can you, as the policyholder, file a claim multiple ways? How quickly does the provider issue reimbursements? 

Some providers allow you to upload required claim documents online, whereas others require you to mail them in. We recommend speaking to insurance representatives directly to learn more.

Is Travel Insurance Worth the Cost?

Travel insurance can provide peace of mind when planning a vacation. But some travelers still ask if the insurance is worth the price. The cost of travel insurance goes about 6% of the entire cost of your trip, meaning you could pay as little as $75 to fully protect a $1,500 vacation. We recommend getting a quote from multiple travel insurance providers before booking to ensure you’re not overpaying for coverage.

Cost of travel insurance recap

It can make sense to meet the cost of travel insurance, especially if you’re unsure about your vacation or worried about incurring expenses you can’t afford. Before you buy a travel insurance policy, you’ll first want to decide what type of insurance you’re looking to buy; some types of coverage cost much more than others.

You’ll also want to check to see if your credit card already provides complimentary travel insurance. Many popular travel cards offer this feature, though the limits may be lower than you might prefer. Finally, do your homework before buying a policy. Gather quotes from multiple companies before deciding and remember the average price of trip insurance ranges from 4% to 8% of your total vacation costs.