Travel insurance is a valuable investment that provides peace of mind while traveling. But, you need to know what it does and does not cover so that you won't be surprised in case of emergency.
In this article, we'll review what travel insurance typically covers — as well as what it doesn't — plus how to pick the right policy.
What does typical travel insurance cover?
Travel insurance covers a variety of issues that can impact your travel plans, but the particulars will vary based on the type of policy that you buy. In general, the more that you spend, the more benefits you will receive. Typical benefits include:
Trip cancellation benefits reimburse you for prepaid, nonrefundable expenses if your trip is canceled for a covered reason. Eligible reasons usually include an unexpected injury to you or a traveling companion, hospitalization of a non-traveling family member, unforeseen natural disasters or a legal obligation.
If you have to return home in the middle of your trip due to a covered reason, trip interruption coverage reimburses you for the unused, nonrefundable portion of your trip. Additionally, it covers the increased transportation costs for returning home on short notice.
This benefit covers medical and dental emergencies that occur during your trip. Be aware that dental benefits may be substantially lower than the amount of medical coverage. Usually, this is for trips outside the U.S. where your domestic health insurance plans are not valid.
Emergency medical transportation
If you have a covered illness or injury, the nearest medical facility might not be able to provide the care that you need. The emergency medical transportation benefit provides for medically necessary transportation to the nearest hospital or appropriate medical facility.
» Learn more: The best credit cards for travel insurance benefits
Lost or damaged baggage
When your luggage is lost, damaged or stolen during your trip, you'll be reimbursed for replacing those items through your baggage insurance benefits.
Travelers whose bags are delayed by a certain number of hours are reimbursed for the purchase of essential items.
This benefit reimburses you for additional travel or lost prepaid expenses when your trip is delayed for a covered reason. The minimum length of the delay for the coverage to kick in will be spelled out in your policy details.
Change fee coverage
If you must change the date of your flight due to a covered reason, this benefit will reimburse fees that the airline may charge. However, with recent airline policy changes, you have a lot more flexibility when booking airfare.
Loyalty program redeposit fee coverage
This benefit compensates you when the airline charges a fee to redeposit your airline miles after canceling a reservation due to a covered reason.
» Learn more: Does travel insurance cover award flights?
Rental car damage protection
When your rental car is damaged, this benefit offers primary or secondary coverage for the vehicle. Many travel credit cards, like the Chase Sapphire Preferred® Card, already include this protection; in those cases, there's no need to pay extra for it.
Pre-existing medical condition waiver (sometimes)
When you have pre-existing medical conditions, medical treatment for them may not be covered by a travel insurance policy. However, if you meet certain conditions, like purchasing your insurance shortly after booking your trip, then those pre-existing conditions are covered by your policy.
» Learn more: Best travel insurance of 2021
Nerdy tip: Not all travel insurance policies include each of these benefits. Additionally, depending on the provider and the level of policy that you buy, the coverage amounts for each benefit may also vary. When comparing coverage limits, some benefits are per person or per day while others are a total amount.
What does typical travel insurance not cover?
Travel insurance covers many of the most common issues that can occur. However, there are some circumstances that are not covered by regular travel insurance, like:
Cancel for any reason. Most travel insurance policies do not allow you to cancel for any reason. Unless you pay extra for this benefit, you cannot just change your mind and expect a refund. In order for benefits to apply, your cancellation request must be for a covered event.
Fear of traveling. Traveling to new destinations can be scary. If you get scared and want to cancel your trip, that is not covered.
A named storm. Travel insurance does protect against sudden and unforeseen weather events. However, you cannot buy travel insurance and expect coverage when a storm has already been named, or when the National Oceanic and Atmospheric Administration has already issued a warning.
Pregnancy. When you're pregnant, complications can happen while traveling. Travel insurance does not normally cover expenses relating to your pregnancy during a covered trip.
Medical tourism. If you're traveling to another country for a medical procedure, your travel insurance policy will likely not cover you in the case that something goes wrong.
Refundable reservations. Travel insurance covers the costs related to prepaid, nonrefundable reservations. Reservations that can be canceled without penalty are not covered.
Adventure sports. Participating in adventure sports while traveling where the chance of injury is high is not covered by standard plans. If you need such additions, you’ll want to consider a policy from a company like World Nomads, which has specialized coverage options.
How to pick the right policy for your trip
When comparing different travel insurance policies, there are several variables to choose from. The primary variables are the length of coverage, the level of benefits that are right for you and who is covered.
Single trip vs. annual plan
If you travel frequently, consider purchasing an annual plan. Multiple policies for single trips could easily cost more than one annual plan. Plus, you'll be covered for any last-minute trips that you book.
Level of benefits
Review benefit options to determine what's most important to you. You can save money by purchasing lower coverage levels or fewer benefits. With many travel credit cards offering trip cancellation, baggage protection and rental car coverage, purchasing a medical-only travel insurance plan is a way to avoid paying for benefits you already have.
Individual vs. family plan
For families traveling together, it is often more economical to purchase a family plan instead of individual plans for each person. Some plans include children at no extra cost.
The bottom line
Travel insurance covers you in case of trouble while on a trip, but coverage can vary, so be sure to shop around and read the fine print. It usually provides emergency medical coverage, protects prepaid reservations and includes other benefits that make it a worthwhile investment. However, it pays to know what travel insurance doesn't cover (so that you won't be disappointed when filing a claim).
Now that you understand what travel insurance does and does not cover, you'll be more confident in deciding whether or not it is right for your upcoming trip.
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:
Airline miles and a large bonus: Chase Sapphire Preferred® Card
No annual fee: Wells Fargo Propel American Express® card
Flat-rate rewards with no annual fee: Bank of America® Travel Rewards credit card
Premium travel rewards: Chase Sapphire Reserve®
Luxury perks: The Platinum Card® from American Express
Business travelers: Ink Business Preferred® Credit Card