How travel insurance can—and can’t—help when plans change

Trips can get canceled any time. But recently, vacation-killing issues have seemed a lot more likely. Wild weather, a global tech outage, and various other complications have prevented many journeys from going according to plan this summer. So does this mean everyone should buy travel insurance?

According to the U.S. Travel Insurance Association, Americans spent $5.56 billion annually on travel protection in 2024, up from $2.8 billion in 2016. Unfortunately, many of travelers learn the hard way that they’ve misunderstood the coverage they’re getting. Here’s a primer on what you should know.

What if travel seems like a bad idea?

There are standard problems that travel insurance typically covers, so if you’re sick or there’s a natural disaster, you’re probably getting your money back. There are also a ton of scenarios that aren’t.

“Fear is never covered,” explains Helen Maley, a Long Island travel agent. So, if you want to bail on a trip because you think you could potentially get sick or there’s a possibility of a terrorist attack, you’d better have a Cancel For Any Reason (CFAR) policy. 

While the cost of a standard policy usually starts at about five percent of your total trip cost, a CFAR policy tends to push that up by about 50 percent. To insure your $6,000 summer trip to Norway would cost as little as $300 without CFAR but would likely be upwards of $450 with it. In exchange, holders can recoup up to 75 percent of their losses if they cancel their trip at least two days before departure.

Stan Sandberg, co-founder of Travelinsurance.com, says another similar option is Interruption for Any Reason (IFAR), which kicks in 72 hours after you’ve departed on your trip. It might come in handy just because you’re having a bad time, like maybe you’re at the beach and it’s raining nonstop. Or, Sandberg says, it can make it easier to get out of an uncomfortable situation that isn’t quite considered dangerous enough by a standard policy. “IFAR eliminates any ambiguity,” he explains. 

These super-flexible policies make sense to Consumer Federation of America insurance expert Doug Heller. “A consumer can understand them,” he says, noting he’s purchased a CFAR policy when buying plane tickets to a meeting that seemed likely to get canceled. Want to find a regular policy that otherwise covers such a commonplace issue? Good luck. “My problem with travel insurance is that usually, it’s not worth it because of the narrowness of the coverage,” he explains. 

How insurance can—and can’t—help

Calculating whether to shell out for any insurance depends on both how much the trip costs and the value you place on your peace of mind, notes Maley. She tells clients that if they can afford to lose everything they paid for their trip and foot the cost for hospital bills in another country, then they don’t need insurance.

The biggest reason people rely on their policies is due to illness, Maley says. The problem might arise beforehand, say, breaking an ankle the day before a big ski vacation.

But Maley’s most dramatic client stories come from incidents when folks need to rely on medical coverage. One man was involved in a moped accident in Bermuda and racked up thousands of dollars in bills. Another client ended up in a hospital in the Dominican Republic for parasites. In situations like these, she says, having no international health coverage is a major problem. And that’s common for Americans. (For example, Medicare covers very little abroad.)

An American couple on a cruise in Mexico made headlines in 2019 when their trip to the emergency room left them trapped until they could pay $14,000. Filmmaker Tyler Perry came forward and covered their bill, and they came home. But in case you don’t want to depend on a celebrity intervention, a travel insurance policy could also do the trick.

Even if your health insurance covers costs abroad, Cronin notes that a special travel policy can offer more handholding. When he got sick in Madrid a year ago, he was able to get advice from his travel insurance company, which directed him to a doctor he could walk to from his hotel. 

Comparing costs and benefits

The key? Read the fine print, says Sandberg. Travelinsurance.com — like Squaremouth.com and insuremytrip.com — allows customers to compare policies from multiple providers. Type in your destination, travel dates, total cost, and age of travelers, and these sites offer policy options at various price points. (You’ll notice prices shoot up for those over age 70.) 

Policies greatly differ by how much protection they offer, Sandberg says, so it’s important to do your research—and do it early. To nab a CFAR policy, for example, you need to lock it in within a certain number of days after the initial trip deposit date. If you have health problems, you’ll likely want a policy with a pre-existing condition waiver. Traveling to a remote corner of the world? Make sure the emergency evacuation coverage is high.

Trip cancellation tends to be the most expensive part of travel insurance, Sandberg says. If you want a cheaper option that just covers medical care and evacuation, enter a trip cost of $0 when you calculate or purchase a policy.

Annual subscription options are available for frequent travelers, including students studying abroad and digital nomads. Some companies specialize in emergencies, such as Medjet and Global Rescue. “They’ll come and evacuate you back to the hospital of your choice,” says Sandberg, who thinks that’s worth it for anyone traveling at least four times a year. “I like surfing in Costa Rica. I also like knowing I’m a phone call away from my home hospital.” 

Doing such a deep-dive analysis isn’t likely when you’re clicking a yes/no box after buying a plane ticket, says Heller, who notes that online travel websites often steer customers to a particular insurance plan and policy. “It’s bought without shopping most of the time,” he says. “The reason those companies get on the website for Expedia is they’re paying—call it ‘commissions’ or ‘kickbacks.’” 

Why your credit cards might insure your trip 

If you do your homework on insurance, you may find you’re already covered by your credit cards. Some of them pay out for trip cancellation and interruption, delayed and lost baggage, rental car collision damage, travel accidents, and more. 

Heller says he reviews his contracts before a trip so he knows exactly what each card can offer in a specific situation. That way, he knows which card offers the best protection for car rentals, flight cancellations, or whatever. “It’s worth educating yourself on the phone. It’s hard to read these policies even for someone who knows the industry,” he says.

But don’t just assume your card has enough coverage, warns Maley. She had a client planning a $14,000 cruise who insisted her credit card would protect the trip no matter what happened. Then Maley checked her policy. It had a cap of $3,500. The client purchased travel insurance, which turned out to be a smart choice when her husband developed pneumonia right before the trip.