Editor’s note: This post has been updated with additional content, including new analysis and different viewpoints. It was originally published on Feb. 24, 2018.
I first wrote this guide for The Points Guy nearly two years ago, back when all of the information in this guide was merely theoretical. I had purchased an annual travel insurance plan and believed enough in my research to commit to my investment, although I’d been pretty lucky in my travels for several years.
My faith in travel insurance paid off just four short months later, when I left for a three-week trip to Italy in the summer of 2018. Thunderstorms in Chicago delayed my inbound flight, which meant I was rerouted onto another plane with just two hours to spare. As you might imagine, I eventually made it to Venice — but my checked luggage did not — for an additional five days.
Since I was attending a photography workshop, I had packed my suitcase full of fancy dresses for the models to wear, all of which had to be replaced on the spot during the height of peak tourist season. I also ended up having to pay out of pocket for additional basics like extra socks, rain gear and alternative transportation.
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Fortunately, I knew I could float the unexpected purchases on credit cards for a few weeks. And even better, I knew that my travel insurance plan would cover additional expenses associated with my flight delay, including coverage for my alternative transportation within Venice. While my Chase Sapphire Reserve also includes trip protection, the $500 total coverage for delayed baggage expenses wouldn’t have been sufficient to cover the cost of the clothing I had to purchase for the workshop. And since I personally wasn’t delayed for more than six hours, I also wouldn’t have been able to claim credit card insurance coverage for my rebooked transportation.
In contrast to my credit card trip protection, my travel insurance plan covered all of my costs — every last red cent.
As Murphy’s Law would have it, Lufthansa finally delivered my lost luggage to me — but not until the morning after the workshop had ended.
In total, I claimed $1,296.55 in expenses for the five and a half days I spent without my luggage, between the cost of replacement clothing, the formal dresses, a replacement suitcase to carry everything back and forth on the cobblestones of Venice, a canceled Airbnb in Florence and the rebooked water taxi. And if I hadn’t been sharing an Airbnb with friends, my housing costs very well could have added to that total, since I had to stay on in Venice for a couple of extra days to wait for my bag. But my AIG insurance plan covered every penny.
The claims process was complicated and involved, and I had to save all of my Italian receipts and convert euros to U.S. dollars for every line item. But once I finally buckled down and submitted all my paperwork, I received a check within seven business days of final confirmation. And other than all the extra luggage I ended up having to haul all over the land of pasta, all’s well that ends well, right?
What exactly is independent travel insurance, and when do I need it?
More than ever, travelers need to be prepared for times when travel plans go awry, like I experienced last summer. Yet terms like travel insurance, trip protection and cancellation insurance are often used interchangeably, and it can be difficult to tell if your credit card benefits offer sufficient peace of mind for big or complex trips.
Coverage can provide peace of mind, especially for your more adventurous trips. (Photo by @tomkahler/Twenty20.)
A travel insurance plan buys you peace of mind
In a nutshell, travel insurance protects your financial investment in your trip: If your flight is delayed, a service like Freebird can help you get on another flight, sometimes even through another airline. But you won’t be reimbursed for other consequences of your flight delay; for instance, you usually can’t get your money back for a missed hotel stay resulting from your delayed flight.
In my Italy situation, my Chase Sapphire Reserve benefits wouldn’t have covered the cost of my water taxi from the airport, because it wasn’t tied to my actual flight expense. But my travel insurance plan recognized that I missed my original pick-up because of the delayed flight, and comped the expense on my behalf.
Your premium credit card benefits usually offer plenty of protection for your average domestic weekend getaway. But while card benefits vary, many only cover transportation-related cancellation or interruption costs in the event of illness, injury or death. Furthermore, most credit card-based benefits only cover expenses and activities paid with that particular credit card. Finally, credit card terms and conditions may limit you to a certain number of claims or maximum reimbursement amount within a 12-month period.
That’s where independent travel insurance comes into play. You can purchase a third-party plan for pretty much any kind of trip, which will cover every aspect of your travel from the transportation and hotel stays to the tours and excursions — even emergency and medical coverage. Or you could purchase a bare-bones plan that just offers catastrophic coverage in the event of something truly disastrous. At a minimum, a good travel insurance plan should cover your costs in the event of canceled, delayed or interrupted transportation; any medical expenses and emergency evacuations; as well as any costs associated with lost or delayed luggage.
Where should I shop for travel insurance?
Independent travel insurance plans can be purchased from underwriters such as Allianz and WorldNomads, and typically offer coverage that’s more comprehensive than the protection included with your credit card. You can expect your insurance plan to cost between 4-12% of your total trip expenses, depending on the plan you purchase. So if you spent $1,000 on your next vacation, for example, a robust plan will cost you anywhere between $40-120 in exchange for your peace of mind.
But not all plans and protection are created equal. Third-party travel insurance plans also differ from the trip protection add-on you can buy through your airline. Airline trip protection typically costs more and covers less than a travel policy purchased through a dedicated underwriter. Additionally, airline trip protection only covers the flight-related portion of your travel, and specifically targets delays or cancellations relevant to natural disasters, or dire circumstances such as a death in the family.
Not sure where to start your search for a plan? I’m a big fan of InsureMyTrip.com, which offers an easy, straightforward way to compare plans, prices, ratings and a number of other factors side by side. You can either purchase insurance that cover specific trip dates, or look into plans that cover various durations — three months, six months, even up to a year like I did. Usually, the basic requirement is that all coverage kicks in only if you are located more than 100 miles from the home address listed in your plan. You can’t, for instance, misplace your purse between your home and your local coffee shop and claim that as a “travel-related loss.”
Whatever you do, don’t buy the “travel insurance” offered on the airline checkout page when you’re purchasing your next flight. While the plan may be offered through a reputable underwriter such as AIG in the example below, you’ll pay about the same amount for a plan that isn’t offered through the airline, and thus have a lot more flexibility to select terms that make sense for you. Not sure what those would be? Keep reading…
What does each category of coverage offer?
Trip cancellation coverage targets any non-refundable portions of your trip, from transportation to excursions and hotel stays. Most hotels and tour groups have very strict rules regarding last-minute cancellations or missed travel, so you most likely will not be able to get a refund if a canceled or delayed flight prevents you from reaching your destination. If you’ve planned a full, expensive vacation, travel insurance is the best way to protect your investment.
Most underwriters offer comprehensive lists of individual excursions and activities they cover in each of your destinations. If you need complete peace of mind, you can opt for pricier “cancel for any reason” or “cancel for work reasons” plans which will offer the most flexibility.
Trip interruption coverage is very similar to cancellation coverage, differing only in the timeframe within which it kicks in. If you’re already partially through your trip and need to change your itinerary, head home early or reroute your plans, the plan will reimburse you for the unused portion of your trip, as well as additional costs for last-minute travel changes.
Medical expenses can cover anything from a saline-drip IV for heat exhaustion to serious injuries treated in the emergency room or a hospital overseas, as well as related expenses such as emergency helicopter airlifts. Most health insurance plans in the U.S. don’t cover international incidents or needs that arise, and a travel insurance plan can provide coverage for accidents and illnesses while abroad.
Emergency evacuation coverage can easily save you tens of thousands in out-of-pocket expenses if you need an unexpected helicopter airlift, medically equipped flights home or ambulance transportation to a local hospital.
Lost or delayed luggage, and delayed flights — Many credit cards now offer trip delay protection and lost baggage reimbursement, so this perk is one of the smaller side benefits of purchasing independent travel insurance. However, an independent travel insurance plan will not only reimburse you for expenses incurred as a result of a flight delay that causes you to miss your connection, but will also cover the cost of affected expenses such as a non-refundable hotel room for the missed night, or an excursion you booked for the day following a missed flight. Most credit card benefits only extend to the baggage and contents themselves.
Additional coverage options
If you need or want more robust insurance for peace of mind, underwriters also offer add-on options for:
Rental car collision
Note that death/dismemberment insurance and rental car coverage are frequently offered with many credit cards, so check your card benefits before purchasing these add-ons to avoid redundant coverage.
(Photo by @kvlvb/Twenty20.)
When travel insurance plans are a great idea
Still confused by everything? Here are a few scenarios in which travel insurance might make sense for you:
You’re traveling in a group, especially with small children
You may find yourself needing a lot of flexibility for last-minute changes if traveling with your family, or any time you book travel for multiple people at once. A few hundred dollars spent on a good policy can save you thousands in otherwise-sunk costs in the event of an emergency. When traveling with her niece or nephews overseas, Shannon O’Donnell of A Little Adrift purchased insurance plans that, amongst other protections, covered travel costs for a back-up guardian in case she became incapacitated for any reason — a scenario that doesn’t typically occur to most travelers.
You need medical protection overseas
If you plan to hike Machu Picchu, backpack your way through Southeast Asia or undertake any other equally adventurous trip, it can be a good idea to look into medical evacuation coverage against the unlikely scenario that you need to be airlifted to a hospital or treated for emergency surgery. Most credit card benefits don’t offer medical expense or evacuation coverage, so if you need that coverage for peace of mind, it’s only a few dollars more for comprehensive travel insurance. Medicare doesn’t offer any international assistance, and U.S.-based private health insurance plans offer little to no coverage for international travel. Countries with universal health care may offer some basic help, but they aren’t obligated to do so, especially if you aren’t a citizen.
You’re planning a complex trip with many moving parts
In 2015, Connie Wang quit her job to travel the world for 15 months by stringing together a series of shorter trips across 47 countries and six continents. Instead of purchasing one giant insurance plan for the full year, she was able to purchase individual plans for each leg of her travels through World Nomads as she went. Purchasing insurance this way lessened her upfront travel expenses, and simplified the stress of planning each activity months in advance.
When purchasing travel insurance may be unnecessary
On the flip side, there are plenty of trips where a separate insurance plan would be overkill. Here are a few examples:
You’re traveling on a domestic flight worth $300 or less, and staying with friends or family
Usually, a trip of this cost won’t be worth the additional cost of a travel insurance plan. In this situation, your credit card trip delay protection will most likely prove more than sufficient to cover any expenses incurred as a result of travel delays.
Your trip is refundable
If you book a flight through Southwest, for instance, a travel insurance underwriter may see that the airline-issued travel credit for the value of a canceled ticket, and refuse to further reimburse you for the travel costs. While many of us purchase non-refundable flights these days, this would also be the case if you purchase a fully-refundable premium-cabin flight in cash. For example, an underwriter may ask why you didn’t pursue a refund with the airline directly instead.
You’re traveling on award bookings
Insurance companies will only reimburse your actual spend, not the value of your seat. A round-trip Singapore Suites ticket may be worth $13,000, but when your underwriter sees that you only paid $203 in fees, your financial return on insurance investment will be very low. Instead, look into your airline’s policies regarding canceled or missed award travel.
In some cases, you may be eligible for a partial or full refund, although redeposit fees will often apply. Cards such as the Chase Sapphire Preferred are eligible for compensation on award redemptions.
You don’t often plan big, complicated or dangerous travel
Many cards limit protection claims under a certain dollar amount within a 12-month period. So if you’ve already filed a large insurance claim with your credit card company within the past year, independent travel insurance might be a wise purchase to consider for your next trip.
(Photo by bopardau/Getty Images.)
How to find and purchase travel insurance
Katie Warner, CEO of Lucid Routes, recommends travelers price-shop for insurance as soon as they make their initial trip payment so they can take full advantage of the maximum period for cancellation coverage.
The most important first step is to figure out your coverage priorities, and identify the most important criteria for your trip. For example, Shannon O’Donnell purchased a comprehensive plan in 2011 that would cover the cost of an emergency guardian for her 11-year-old niece in the event that she could no longer travel with her. You can determine the key coverages you need by browsing a list and selecting the top two or three; use them as filtering criteria when comparing insurance quotes.
Once you’ve established what you need in an insurance plan, utilize a reputable comparison site such as InsureMyTrip, which includes reviews for every insurance company plan it recommends. You can select the travel and activities for which you need insurance, using drop-down menus on the website to receive an instant quote. WorldNomads is probably the most popular underwriter among solo world travelers, endorsed by the likes of Lonely Planet and similar backpacker guides. However, you may find that AIG, Nationwide or Allianz offer more competitive prices for your bachelor cruise or family vacation to Disneyland.
How much will travel insurance cost me?
Depending on the package you select, expect to pay between 4 to 8% of your total prepaid, non-refundable trip expenses. Basic plans for peace of mind can cost less than 4%, while premium vacation plans that cover just about any conceivable issue can cost more than 12% of your total trip expenses. Travel medical insurance is sold based on the duration of your travels, and can be as low as a few dollars per day.
All reputable insurance companies will offer a “free-look period” during which you can receive a 100% refund on your premium. This allows you to review the policy you’ve selected and return it for any reason within the time period allotted — usually for a small administration fee under $10.
For the most part, you don’t need purchase a “cancel for any reason” policy unless you really need the flexibility — you’ll overpay when most accepted reasons are plenty sufficient.
You can receive a quote and purchase a policy online in minutes with any credit card. Note that, although you may think travel insurance should count as travel and be eligible for bonus rewards on cards like the Chase Sapphire Reserve, your earnings will depend on the individual underwriter’s merchant code. When in doubt, expect that the purchase will fall under the insurance category for earnings.
Here’s a sample insurance price comparison I generated for a planned vacation, valued at a total travel cost of $2,500. My quoted rates for a solo traveler to Dubai over New Year’s Eve, including coverage for a skydiving session, varied slightly in price range and cancellation payouts, but offered pretty drastic differences in actual compensation for medical coverage. When looking at medical limits for comprehensive plan comparison, Nationwide came out as the clear winner at a much lower price than I would have expected.
What if I don’t live in the United States?
If you’re a permanent resident somewhere outside of the U.S., you may find that your quoted costs are drastically higher if you use an international address, so make sure you shop around for the best coverage options. Many U.S.-based companies will not offer the best rates for expatriates; for example, researcher and writer Laine Munir discovered that using her South Korea address for insurance bids generated quotes almost double the cost of the same plans quoted using her family’s address in Washington.
BridgesandBalloons blogger Victoria Watts Kennedy offers a comprehensive guide to travel insurance for British and European travelers.
How do I make a claim?
Ideally, you’ll never need to make good on your insurance investment. But if you do, like I did, here are some easy tips to keep in mind when filing a claim. Best-case scenario, you’ll have your reimbursement back in hand in no time; worst-case scenario, you can avoid the disappointment of a rejected claim.
Here are a couple of most common reasons why insurance companies might deny your claim — and how to avoid them.
You’re trying to claim coverage on an activity or event that isn’t covered on your plan
Make sure you read the fine print on your contract very carefully, both when you purchase your plan and when you begin filing your claim. Many plans will not insure property losses incurred during bungee jumping, for example.
You haven’t filed a claim through your primary insurance yet
Travel insurance is considered secondary insurance, meaning that your underwriters will ask you to reach out to your home insurance or medical insurance provider before paying the difference on your expenses. So in the case of stolen luggage, you’ll have to file a claim with the airline first, and show proof of either denial or resolution before your travel insurance company will pay out your lost items.
Or if you get sick in the U.S. and your health insurance covers you for any domestic doctor visit, you’ll have to file your insurance claim there rather than through your travel insurance company. If you incur additional expenses that aren’t covered by your health insurance, such as an ambulance or medical evacuation, that’s where your travel insurance kicks in.
Your documentation is incomplete or inaccurate
Hang on to your receipts! Your insurance underwriter will require, at minimum, all paperwork related to your property loss or medical expenses, such as a police report or hospital discharge papers. The faster you can get written proof or documentation for an issue, the quicker your claim can be processed. It’s crucial to remember that travel cancellations must be recommended by a doctor, in writing; unless you purchased a “cancel for any reason” policy, it will not be sufficient to expect reimbursement just because, say, your child developed a cough that you believe is a precursor to bronchitis.
Purchasing travel insurance after an incident has already occurred
I hate to play Captain Obvious here, but travel insurance can’t be purchased after a hurricane has already been named, or after your illness has already set in. Again, this is why it’s important to purchase travel insurance as soon as you’ve made a payment on your trip bookings.
Independent travel insurance isn’t for everyone — or even for every trip. But if you constantly find yourself on the road, or frequently book complicated travel, independent travel insurance may be just what you need to bring your peace of mind with you, everywhere you go.
Featured photo by Jake Ingle/Unsplash.
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