Do I need travel insurance and what kinds are available?
I have plans to visit a friend in Spain this fall. From what I’ve heard, travel insurance policies don’t always cover cancellation due a pandemic or other potential health scares. What should I do?
—Jason S., Frisco, Texas
The Covid-19 pandemic revealed just how interconnected our world has become—for good or for ill. In addition to the tragic human toll, the virus caused the cancellations or postponements of innumerable conferences, festivals, and major global sporting events.
Anxious tourists-to-be these days book their plans with another public health disruption possibly around the corner, so it’s natural to explore travel insurance as an escape hatch from pricey plans. Indeed, Forbes Advisor found that two-thirds of Americans say they are more likely to buy travel insurance now than they were prior to the pandemic. Half of those surveyed canceled a trip due to Covid, and, of those, eight in 10 consequently lost money.
Travel insurance policies protect your vacation investment in the event that you need to cancel, delay, or interrupt your trip. If you’ve ever purchased a flight online, you’ve been prompted to buy one, but you may not have understood the terms. And you might not know there are many breeds of travel insurance. Here’s what you need to know before you book.
What kind of travel insurance is available?
- Trip cancellation, interruption, or delay coverage. This standard coverage accounts for common scenarios, like extreme weather or the bankruptcy of your travel provider. You would also get money back if you or a loved one fall ill and you’re unable to travel, or if you get quarantined while abroad. But many other events are not covered, including war and “emotional trauma.” Also excluded from standard coverage: fear of getting sick.
- “Cancel For Any Reason” (CFAR) coverage. This more comprehensive option, available as an add-on to standard policies, is the only way to make sure you get money back if you cancel your trip for literally any reason, including coronavirus-related fear of getting sick. Not surprisingly, experts saw a significant increase in CFAR policies purchased by Americans traveling internationally during the pandemic. Cancel For Any Reason coverage won’t get you a full refund, however. Depending on the policy, it reimburses only 50% to 75% of the entire trip cost, including airfare and any other prepaid expenses such as accommodations, rental cars, and excursions. And you can’t cancel your trip at the very last minute. You may only cancel up to 48 hours prior to travel.
How much does travel insurance cost?
A typical standard travel insurance policy costs 4% to 10% of the price of your trip. The CFAR benefit will cost you at least 40% more on top of that. Do you want real numbers? Here’s a quote from InsureMyTrip.com: A U.S. couple flying to Aruba at a cost of $5,000 would pay $200 for standard travel insurance, plus an additional $200 to add a CFAR benefit. One thing to consider: Standard travel insurance (without CFAR) is a common credit card benefit if you put your vacation expenses on a card, so check with your card issuer before you buy a policy. Travel insurance comparison sites like Squaremouth.com and InsureMyTrip.com sell Cancel For Any Reason policies.
Is a CFAR policy worth it?
Maybe. Before you buy, do a gut check. If you’re nervous now and are already thinking of canceling, either don’t purchase the tickets, or buy them and get travel insurance with a CFAR benefit. Before opting in, however, compare the cost of buying more-expensive refundable tickets against the cost of buying nonrefundable tickets (which most people buy) with the CFAR add-on.
If you’re only worried about the worst-case scenario, such as the airline canceling your flight due to a worsening global health situation or a government travel ban, don’t bother with a CFAR policy. You’ll likely be covered by a standard trip cancellation policy, such as the one provided by your credit card.
But what if I already booked?
Insurers require you to add CFAR within a month of purchasing your trip—sometimes less. If you’re still able to add CFAR retroactively and the calculation makes sense for you (see above), go ahead.
A final note
It’s important to have health coverage while you’re abroad. Some credit cards provide limited travel medical coverage, so check with your issuer. Also check in with your domestic health insurance company to see what may be covered internationally (e.g., reimbursement for a visit to an emergency room). To cover any gaps, you may want to buy travel medical insurance. Check Squaremouth and InsureMyTrip for options.