When is travel insurance worth it?

Now that Americans returning to the US from abroad are no longer required to be tested for COVID-19 before boarding a plane, you may be wondering whether you should pay to insure your trip. Travel insurance often seems like an unnecessary expense, especially when fares are refundable or you don’t have to pay a change fee. But there are situations when you must have it, as well as times when it is not necessary, but it is worth paying for.

What does travel insurance cover?

Some credit cards provide insurance, but coverage is limited. In contrast, comprehensive travel insurance policies cover a wide range of expenses. A comprehensive travel policy usually covers damage to rental cars, trip cancellation, lost luggage and medical expenses when you’re abroad.

Most comprehensive travel insurance policies now also include cancellation and medical benefits related to contracting COVID-19. But for other concerns related to COVID, such as border closures, quarantine restrictions, or the fear of contracting the coronavirus, you’ll likely have to pay for what’s called a “cancellation for any reason,” or CFAR upgrade. CFAR travel insurance can add an extra 50% to the cost of travel insurance, but it offers better protection for travelers facing the kinds of disruptions that the pandemic has made commonplace.

Some plans with quarantine coverage will also pay some expenses if you need to stay in place for additional days. Coverage is usually limited; for example, you may be reimbursed $200 per day for two additional days of accommodation if you must be quarantined abroad.

How much does travel insurance cost?

The average travel insurance policy costs $248, according to data from SquareMouth, a travel insurance comparison site. But the amount you pay for a policy depends on a number of factors – the length of your trip, the number of passengers you need to insure and even how old you are. A better estimate is 4% to 11% of the total cost of a trip, experts say. You can compare plans at SquareMouth or TravelInsurance. Choose coverages that make sense for your trip, and be sure to read the fine print on any policy you’re considering.

Travel insurance policies generally fall into one of three tiers: basic, intermediate, and full coverage. Although basic is often the most affordable option and includes benefits such as trip cancellation and lost luggage cover, it may require you to pay an excess in the event of illness or injury. Intermediate coverage usually includes the same benefits as basic policies, but adds a health insurance benefit. A more expensive comprehensive policy may include the benefits of basic or intermediate policies, but with a higher claim limit. Basic coverage rates average about $105, while mid-levels and full coverage average about $130 and $164, respectively, according to data from BankRate, a financial website. If you also want a CFAR policy, this will be in addition to these costs.

Since older travelers are generally at higher risk of health problems, policies tend to be more expensive the older you are. A 2021 analysis by AdvisorSmith, a small business resource website, estimated that average prices varied from a low of $92 for a toddler to a high of $805 for a 100-year-old. The difference between the average cost of car insurance for a 40-year-old and a 70-year-old can be as much as $100. But that doesn’t mean older people can’t find affordable policies; shopping around and comparing plans is key.

When to buy travel insurance

As of June 12, 2022, travelers returning to the U.S. no longer need to test negative for COVID to re-enter the country, easing fears that they will stay in a foreign country longer than intended. But the Centers for Disease Control and Prevention advises anyone experiencing COVID-like symptoms not to travel. And there are other times when choosing travel insurance is worth the price.

If you are concerned about severe weather conditions ahead for your trip, a possible unexpected health incident involving you or a family member, a terrorist attack or even job loss, travel insurance policies with basic trip cancellation coverage often cover these causes of cancellation.

If you’re traveling to a destination that has a history of stricter travel restrictions related to COVID, or you’ve had other concerns related to COVID, consider a cancellation policy for any reason. Be sure to check travel restrictions for any countries you travel to regularly; some countries still require travel insurance to visit.

Additionally, there is no guarantee that the US denial of COVID testing for air travelers returning from overseas is permanent. The testing requirement is due to be reviewed again on September 10, 90 days after it was lifted. It could be reinstated if there is a new variant of COVID of concern, and the highly transmissible BA.5 subvariant of the virus is a growing threat.

When to skip travel insurance

Whether to pay for a travel insurance policy and what level of cover you get depends, of course, on your personal risk tolerance. But it also depends on whether you’ll have to pay a lot out of pocket if you have to cancel or postpone your plans.

If you’re mainly worried about losing money on expensive international flights, for example, think again before paying to insure them. This also applies to travel insurance plans offered at checkout when purchasing a plane or train ticket. While it may seem like a small expense in exchange for the added flexibility, keep in mind that most airline tickets already have flexibility built in.

Major US airlines have made permanent changes during the pandemic, allowing flexible bookings for most tickets. That means you won’t have to pay a fee if you need to change your flight—as long as you don’t buy the cheapest fares (Southwest allows free changes on all tickets). In addition, some travel providers offer flexibility for bookings made within a certain time frame. For example, major airlines and Amtrak offer refunds within the first 24 hours of booking if you need to cancel or change your itinerary.

Additionally, when an airline cancels your trip—as long as the flight arrives and/or departs from a US airport—you are legally entitled to a refund under US Department of Transportation regulations. The airline will often automatically issue a credit or voucher for a canceled flight, but be sure to ask for a refund if you prefer, as is your right. Also, if there has been a significant change in schedule (usually of two hours or more) and you decide not to take that flight, you are entitled to a refund of your fare.

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