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With vaccines rolling out and summer approaching, many people are starting to think about making travel plans. However, before you book that trip, consider whether purchasing travel insurance makes sense for you.
Here, we break down why having travel insurance could be a smart move for your summer 2021 vacation, plus a few scenarios when it wouldn't.
What is travel insurance, and what does it cover?
A travel insurance policy protects you from financial losses that can happen before and while you’re traveling. From an expensive event like a medical emergency to a minor event like delayed baggage, travel insurance has you covered.
It also provides access to 24/7 assistance for help with any services while on your trip. Simply put, travel insurance provides a safety net so that you can go on your trip with peace of mind. If something goes wrong, you'll have backup. Given all the uncertainty of traveling during the pandemic, having that extra protection can be crucial.
As part of NerdWallet’s Best-Of Awards, we analyzed various travel insurance policies to help you choose the plan that best aligns with your travel goals. Check out our results here: Best Travel Insurance of 2021.
» Learn more: Does travel insurance cover award flights?
A note about COVID-related cancellations
Because many insurers treat COVID-19 as a “known event,” trip cancellation coverage will not apply if the country you’re planning to visit closes its borders due to the virus.
Here are two possible scenarios for your summer 2021 travels:
You plan a trip to a country whose borders are currently open to U.S. travelers. But should something happen and its borders suddenly close to Americans, your basic travel insurance won't be able to help you.
You plan a trip to a country whose borders are currently closed to U.S. travelers in the hopes they will reopen before you go. If those borders remain closed as your trip dates arrive, your basic travel insurance still won't be able to help you.
If you’re concerned that you won't be able to enter a country this summer due to border closures, be sure to purchase cancel-for-any-reason insurance — an optional add-on to standalone travel insurance policies. CFAR will allow you to cancel a trip for any reason and get a portion (usually 50%-75%) of your prepaid nonrefundable deposit back (so long as you cancel the trip at least two days before departure).
» Learn more: Does my travel insurance cover the coronavirus?
Reasons to get travel insurance for this summer
One of the most important benefits of travel insurance is trip cancellation coverage, which covers any prepaid nonrefundable reservations (e.g., flight, hotel, excursions, etc.) if your trip is canceled due to an unforeseen event.
Consider the following scenario: You book a trip now for travel in July. The trip includes nonrefundable flights, a nonrefundable hotel stay and prepaid excursions. A week before the trip, you become ill and cannot travel (this generally includes COVID-related illness). Because you purchased a travel insurance policy the day after you booked your vacation, you’ll be able to cancel your trip and get a refund for all of your nonrefundable trip plans, rather than letting that money go to waste.
If you didn’t have travel insurance, you’d be liable for all of these prepaid reservations and need to take up your refund request with the airline, hotel and tour operator individually. If you have travel insurance, you may still be required to make an initial attempt for a refund with the individual companies; however, if you’re unsuccessful, travel insurance will reimburse you.
In the above example, you were covered for your illness because you already had travel insurance when you got sick. If, instead, you were planning to buy a policy the day before you left for your July trip, it would have been too late. Your illness would have occurred before the policy start date, and you would not be covered.
Unexpected medical emergencies
Comprehensive travel insurance policies include several important medical protections, such as reimbursement for emergency medical expenses, evacuation and repatriation.
Imagine you’re on a two-week hiking trip in the mountains of Argentina, and on the third day of your trip, you fall and break your leg. You need to be airlifted to the nearest hospital, which is in another town. If you have travel insurance coverage, the insurer will organize your emergency medical transport to get you taken to the hospital.
Any medical bills incurred in the emergency will be reimbursed by the travel insurance provider. If you then need to be evacuated back to your home country, the evacuation and repatriation benefits will kick in.
If you didn’t have travel insurance, you’d be on the hook for the emergency transportation, medical care abroad and travel back home. Though this is an extreme scenario, it illustrates how important travel insurance can be in an emergency situation.
Trip interruption coverage is also included in a comprehensive travel insurance policy, and provides a reimbursement for the unused portion of your trip if you need to return home earlier than expected.
Consider the two-week hiking trip to Argentina mentioned above. You broke your leg on the third day of the trip, and had to be evacuated home after receiving medical care. Trip interruption insurance will reimburse you for the unused portion of the trip, which could include your hotel stay, your original return flight home and any other nonrefundable trip plans already booked.
If you didn’t have trip interruption insurance, you’d be on the hook for the entire hotel stay — even if you departed early due to an emergency. Similarly, any nonrefundable excursions you paid for in advance would likely be a loss.
Why you may not need it
Your trip is refundable
In response to COVID-19, many airlines and hotels have loosened their change and cancellation policies. Before you purchase a travel insurance policy, check to see if your trip plans have flexible change or cancellation policies. (Don’t pay for coverage you don't need.)
Simply put, travel insurance protects your nonrefundable deposit. If your trip doesn’t include nonrefundable reservations, you may be fine without a comprehensive plan.
» Learn more: Which hotels have handled COVID-19 the best?
Your credit card offers you similar protections already
Some premium travel rewards credit cards offer free travel insurance. If you have one of these cards, check which insurance benefits you already have, as the limits may be sufficient to cover your trip. To ensure you’re covered, you need to charge the entire trip on the credit card, whether you pay with cash or points.
The bottom line
Deciding whether you should buy travel insurance for your summer trip is a personal choice and depends on many factors. If your trip plans are inexpensive, don't include any nonrefundable reservations or you can book your trip with a premium travel credit card that offers travel insurance, you could be fine without a standalone policy.
However, if the travel insurance limits on your credit card are insufficient or your summer trip includes expensive, nonrefundable reservations, a comprehensive policy could be the right choice.
How to Maximize Your Rewards
You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2021, including those best for:
Flexibility, point transfers and a large bonus: Chase Sapphire Preferred® Card
No annual fee: Bank of America® Travel Rewards credit card
Flat-rate travel rewards: Capital One Venture Rewards Credit Card
Bonus travel rewards and high-end perks: Chase Sapphire Reserve®
Luxury perks: The Platinum Card® from American Express
Business travelers: Ink Business Preferred® Credit Card