If you’re worried about losing money if something goes wrong while you’re traveling — especially as the Covid pandemic keeps everyone guessing — you may want to consider if travel insurance is right for you.
We’ve gathered travel-insurance tips from experts to help guide you through what type of insurance — if any — you should get.
WHAT IS TRAVEL INSURANCE?
Travel insurance is a hedge against anything going wrong before — or during — a trip, so you don’t lose all the money you’ve laid out for your journey. Most travel insurance policies cover lost or damaged luggage, cancelled flights, and medical coverage.
TRAVEL INSURANCE TYPES
There are several types of travel insurance that range in price and coverage, according to Kathy Kimmel, travel insurance expert with 10 years’ experience at InsureMyTrip, which provides travel insurance quotes, told Yahoo Money.
“Cancel For Any Reason (CFAR) insurance has become more popular over the last two years,” Kimmel said. “With this type of insurance, you can cancel up to two days before travel for most any reason and get back 75% of your trip’s cost.” s
CFAR insurance can cost 20% of a trip’s total cost and up, Kimmel said, “so it only really makes sense if there is a likely reason you will be cancelling.”
Similar in cost to CFAR is Interrupt for any Reason (IFAR) insurance, which “lets you cut your trip and head home for any reason,” Kimmel said.
Otherwise, a regular comprehensive trip-cancellation insurance plan generally costs 6% to 8% of your total trip cost, Kimmel said, with variables such as travelers’ ages, trip length, trip price, and destination affecting the price.
When do you need to purchase your coverage?
“As long as you buy a policy at least a day before your trip and don’t have any pre-existing conditions, you’re all set,” Kimmel said. “You can buy it on the insurance company’s website, and call them with any questions. On average, it only takes 5 to 10 minutes to secure your coverage.”
SHOULD I GET TRAVEL INSURANCE...
• If I’m worried about cancellations?
It depends if the flight is really canceled or just rescheduled, said Suzanne Morrow, vice president of business development of InsureMyTrip.
“When Southwest was canceling flights and people had to buy a more expensive flight to get to their destination, I was asked what sort of insurance to get. The answer is none,” Morrow said. “Insurance is to make you whole, no insurance covers a more expensive ticket if your flight is canceled and you get a refund or credit for a future ticket.”
• If I am taking my dream South American vacation?
What insurance you buy for this kind of trip depends on your financial cushion and risk tolerance, Morrow said, especially since hotels and airlines have been dialing back their more liberal cancellation policies seen earlier in the pandemic.
“If you are going to invest a lot into your trip, CFAR insurance may be a good choice,” Morrow said. “A regular comprehensive plan covers you from midnight the day you buy it; if tomorrow you get Covid, you file and get your money back.”
Morrow also suggested Interrupt for Any Reason (IFAR) insurance “if for whatever reason you want or need to return home from your trip early, it costs about 20% of the total price of your trip, and has the same time sensitivity as a CFAR policy.”
• If I’m taking a quick domestic flight to see my aunt in Florida?
“It all depends on the money you stand to lose; if you’re buying a $200 nonrefundable ticket, you probably don’t need travel insurance,” Morrow said.
Another consideration you should put into the calculation: Health insurance, said Steve Dasseos, founder of TripInsuranceStore.com.
“If you’re traveling domestically for the holidays, it’s not necessary to get travel insurance unless your health insurance is through the Affordable Care Act, which doesn’t cover you outside of your home state,” Dasseos said. “In that case, it might be worth getting medical insurance, especially if you have health issues that may flare up during your trip.”
A simple trip-cancellation plan should cover medical expenses, Dasseos said, and would cost about $36 for a $500 policy for a 50-year-old.
IS TRAVEL INSURANCE WORTH IT?
Compare other sources of travel insurance. For instance, airlines offer some types of travel insurance, but those may cover only very specific cases, Morrow said.
“Those plans you can buy before your trip at the airport, they cover you pre-departure or post-departure and cover things like trip delay, baggage loss or damage,” she said. If you want more robust coverage, you may want to consider buying from an insurance company.
Some elite credit cards also come with travel insurance when you book a trip on the card. For instance, the Capital One Venture Card provides travel accident insurance at no extra cost. The American Express Platinum Card covers rental car loss and damage insurance, as well as trip-delay and trip-cancellation insurance.
Even if you don’t have one of these cards, it’s a good idea to find out what your credit cards offer in the way of travel insurance and protections before buying a separate policy from an insurance company.
COVID AND TRAVEL INSURANCE
Travel insurance should cover Covid-related expenses as well, Morrow said.
“When it comes to Covid, it’s treated like any other illness or injury like breaking a leg. As long as you didn’t have Covid when you bought your ticket, it’ll be covered by a regular trip-cancellation plan,” Morrow said. “If you’re traveling on points, a post-departure plan covers medical.”
You also want to consider the potential costs of testing positive in your destination country, which could run into tens of thousands of dollars, according to Baruch Silvermann, personal finance expert and CEO of The Smart Investor.
Some countries outside the U.S. may not even allow entry if you don’t have travel insurance, including non-Covid-related medical insurance, Silvermann says. For example, New Zealand requires all visitors to have medical insurance, while the Bahamas require Covid medical insurance.
“For many of us, travel insurance was considered an optional purchase whenever we booked a trip,” Silvermann said. “However, with the COVID-19 pandemic, the value of travel insurance became more apparent. Many people who opted for basic coverage found themselves getting stung with flight cancellations and other disruptions to their travel plans.”