Do you need Travel Insurance? What you should know.
After years of limited travel, people are making up for lost time, booking vacations and business trips they put off during the pandemic. Still, travel plans can change unexpectedly. For example, airlines cancel flights due to weather or staff shortages, or business meetings might shift to a virtual format. Illnesses and accidents can cut a trip short — and possibly lead to significant additional expenses too.
Travel insurance can be a smart and inexpensive way to protect you financially from cancellations, illness, and accidents — if you need it.
There are several types of travel-related insurance policies, so before purchasing a plan, make sure you're buying the coverage you want. That way, there are no surprises should you need to file a claim. Here are a few to types of travel-related insurance to consider.
Trip cancellation and interruption policies reimburse you for prepaid, non-refundable trip expenses if a trip is canceled or cut short for a covered reason, such as:
- An unexpected illness or injury of you or a traveling companion
- The hospitalization or death of a family member
- Unforeseen natural disasters
- Being called for jury duty or appearing as a witness in court
Trip cancellation and interruption coverage typically cost anywhere from 4% to 10% of your prepaid, non-refundable costs.1 However, prices vary depending on your age, health, trip duration, number of travelers, and trip cost.
So, is it worth it? That depends on how much money you'd lose if the trip were canceled or cut short. CNBC recommends buying trip cancellation coverage for international trips and cruises2 because they tend to last longer and be more expensive than domestic trips.
Travel medical insurance
Travel medical insurance helps cover the cost of emergency medical treatments and prescriptions if you have an unexpected illness or injury while traveling abroad.
Most U.S. health plans — including Medicare — don't cover you while traveling outside of the U.S. Those that do typically reimburse you for your expenses at an out-of-network rate,3 meaning your out-of-pocket costs are higher.
Before purchasing any kind of travel-related insurance, see if you're already covered by an existing insurance policy or credit card benefits.
Travel medical insurance typically ranges from $40 to $80 per trip.4 However, prices can vary depending on your health, coverage limits, deductible, and trip length.
Before you purchase a separate policy, check with your existing health insurance provider. Some domestic health insurance policies, including some Medicare supplement policies,5 offer worldwide emergency care. If yours doesn't, or the coverages and limits aren't enough, consider filling the gap with a stand-alone policy.
Accidental death and dismemberment
Accidental death and dismemberment (AD&D) travel insurance is similar to life insurance. If you have an accident during your trip that results in death or the loss of one or more limbs, the insurance company pays a designated amount to you or your beneficiary.
Most AD&D travel insurance policies pay out amounts ranging from $25,000 to $50,0006 if the policyholder dies, and a lesser percentage for the loss of a limb or eye in a covered accident.
These policies differ from life insurance because they pay a benefit if you suffer dismemberment, paralysis, or loss of eyesight or hearing. Life insurance, on the other hand, only pays out if you die.
You may not need AD&D travel insurance if you have life insurance, but it can be a good complement to it.
The cost depends on how much coverage you purchase and whether you add on any special riders, such as a Hazardous Activities rider7 that covers accidents while participating in a sport or other activity excluded by most travel insurance policies. For example, many AD&D policies don't cover accidents while participating in sporting events or recreational activities like skydiving, bungee jumping, or car racing.8
Before purchasing a separate policy, check to see whether you have coverage elsewhere. Many comprehensive trip insurance or travel medical insurance policies include AD&D coverage or allow you to add it for a small fee.
Rental car insurance
If you rent a car while traveling, you'll likely be offered rental car insurance. There are four main types of coverage the rental agent might offer:
- Liability insurance covers damage to other people and property due to an accident where you're at fault
- Loss-damage waiver coverage waives your responsibility to pay for damage or theft to the rental vehicle
- Personal accident coverage pays the medical bills of you and your passengers if you're involved in an accident, regardless of who is at fault
- Personal effects coverage pays for personal items stolen from a rental car
If you have an auto insurance policy on a vehicle you own, buying insurance from the rental car company might not be necessary. In most cases, the liability, medical payments, and comprehensive and collision coverage on your existing policy extends to a rental.9 Plus, your homeowner's or renter's insurance policy may cover personal items stolen from a rental car.10
There are some exceptions. For example, if you're renting a car while traveling abroad or for business, your existing auto insurance policy might not cover the claim. Contact your insurance provider to ensure you're covered before visiting the rental counter.
Keep in mind that some credit cards, including the Synovus Travel Rewards Visa Credit Card, include travel insurance and car rental coverage benefits when you book your trip using the card. So check out your card benefits. If you do decide to buy stand-alone travel insurance, be sure to read the fine print. This ensures you get the coverage you want without wasting money on a plan that doesn't cover everything you expect.
Important disclosure information
This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.
- The Canadian Association of Financial Institutions in Insurance, “Trip Cancellation and Trip Interruption Insurance," accessed September 19, 2022. Back
- Megan Leonhardt, “4 times you can skip travel insurance—and 3times you should buy it," CNBC, updated June 20, 2018, accessed September 19, 2022. Back
- Consumer Reports, “Will Your Health Insurance Cover You Overseas?" updated July 16, 2019, accessed September 19, 2022. Back
- Travelers, “How Much Medical Travel Insurance Do I Need?" accessed September 19, 2022. Back
- Medicare.gov, “Medigap & travel," accessed September 19, 2022. Back
- TravelInsurance.com, "Accidental Death & Dismemberment," accessed September 20, 2022. Back
- InsureMyTrip, “Accidental Death and Dismemberment," updated March 8, 2022, accessed September 19, 2022. Back
- Freeway Insurance, "Accidental Death and Dismemberment Insurance Explained," accessed September 20, 2022. Back
- Vanessa Young, “Should I Buy Rental Car Insurance?" AAA, published June 3, 2022, accessed September 19, 2022. Back
- MarketWatch, “Rental Car Insurance," published August 8, 2022, accessed September 19, 2022. Back
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