7 Things to Know Before You Buy Travel Insurance

Things to Know Before You Buy Travel Insurance
Image Credit: Clark.com

THE LATEST: Because many travelers are concerned about coronavirus, we have updated this article to include information on how you should consider handling your travel plans in light of the outbreak.

Clark.com also talked to a representative from InsureMyTrip for the latest information about buying a “cancel for any reason” policy. See below for details.

If you’re thinking about taking a trip, travel insurance is a great way to protect yourself. This kind of insurance gives travelers a way to get their money back in the event their plans are canceled or interrupted.

But before you purchase travel insurance, there are some things you should know.

This article covers the basics of travel insurance, including when and where to buy it and how to make sure it covers your particular circumstances.

We’re also going to tell you what you need to know about a supplemental “cancel for any reason” travel insurance policy.

Travel Insurance: Everything You Need to Know

Money expert Clark Howard, who once owned his own travel agency, says that nearly everyone should consider buying travel insurance.

“I never like for people to buy narrow insurance. That’s why I advise people not to buy appliance warranties. Trip insurance is an exception and the reason why is because trips can be incredibly expensive and fully non-refundable.”

Let’s get into some questions and answers about travel insurance, as well as the cancel for any reason option.

Quick Links

  1. What Is Travel Insurance?
  2. When Do You Need Travel Insurance?
  3. What Does Travel Insurance Cover?
  4. How Much Does Travel Insurance Cost?
  5. Where Should You Buy Travel Insurance?
  6. When Do You Need a Cancel for Any Reason Policy?
  7. Do You Also Need Travel Medical Insurance?

1. What Is Travel Insurance?

Travel insurance is a policy that provides a full or partial refund in the case of illness or death of a member of the traveling party or close relative.


It can also provide coverage if a tour operator or airline defaults, and in several other cases depending on the policy.

2. When Do You Need Travel Insurance?

Clark says these policies should always be purchased when you are:

  • Taking a cruise
  • Booking special tours as part of your trip
  • Traveling on an itinerary that requires prepayment of thousands of dollars

“If you book a tour or you book a cruise — those two in particular — if you’re going to lose all your money regardless of why you can’t come, then you need to get insurance,” Clark says.

Cases when you may not need travel insurance include when your trip consists of flights and hotel stays that are fully refundable or if the cost of making changes to your itinerary is less than it would cost to re-book your trip.

3. What Does Travel Insurance Cover?

Travel Insurance Review lays out some of the most common things that might be covered by trip insurance:

  • Injury or illness of insured, travel companion, family member, or business partner
  • Hurricane or natural disaster strikes destination
  • Bankruptcy or financial default of travel company
  • Terrorism or mandatory evacuation at destination
  • Death or hospitalization of destination host
  • Home or business damaged, vandalized, or burglarized
  • Jury duty, a required court appearance, or military redeployment
  • Required to work, terminated, or transferred
  • Victim of felonious assault prior to trip
  • Traffic accident prior to trip
  • Theft of passport or visa prior to trip
  • Legal separation or divorce
  • Loss of accommodations abroad due to an illness or death of host family or friends

Of course, policies will vary, so be sure you check the fine print of any policy you are considering before you buy it.

4. How Much Does Travel Insurance Cost?

Travel insurance policies generally cost anywhere between 4-10% of the total trip cost.

For example, if you are booking a trip that costs a total of $2,000, you can expect to pay around $80-$200 for a travel insurance policy.

But, this is important: Never purchase the travel protection plan from the trip organizer or online travel agent. They are designed to protect the company and not the consumer, Clark says. This includes when you are booking on a site like Expedia or Travelocity.

5. Where Should You Get Travel Insurance?

If you’re not supposed to buy travel insurance from the place where you book the trip, where should you buy it?

Clark recommends that you comparison shop for travel insurance that suits your needs at InsureMyTrip.


“The reason I like InsureMytrip is because it’s like an aggregation service, or comparison site, and you can see all the different choices available,” he says.


When you visit InsureMyTrip, you’ll be asked for the following information:

  • Destination country
  • Dates of travel
  • Traveler age and residence information
  • Trip details (flights, hotels, accommodations, etc.)

The site will then recommend travel insurance plans for you and show you the cost, plan details and consumer ratings.

InsureMyTrip results

You can compare the available plans and select the one that best suits your needs.

In addition, Clark says, “There are a number of travel credit cards that include travel insurance with them if you use them to buy the travel.”

It’s likely that coverage from these cards is less comprehensive than you will find in many of the plans from InsureMyTrip, so make sure you’re comfortable with that before you decide to rely solely on the card coverage.

6. When Do You Need a Cancel for Any Reason Policy?

A cancel for any reason policy allows you to abort your travel plans for any reason without being too severely penalized.

Clark says this option is typically considered an upgrade to your travel insurance coverage, so it costs a little more. However, you should know that it won’t usually cover the full cost of your trip.

Cancel for any reason “gives about 50-75% of that trip cost back, depending on the plan you purchase,” says Ronni Kenoian, manager of marketing and e-commerce for InsureMyTrip.

To be eligible for cancel for any reason coverage, you’ll need to insure 100% of your prepaid non-refundable costs.


Here are three key things to know about a cancel for any reason policy:

Cancel for Any Reason Is a Time-Specific Benefit

A cancel for any reason policy is typically only available if it’s purchased within between 10 and 21 days of the first payment on your travel arrangements, according to Kenoian.

Not Available in New York State

Due to state insurance regulations, cancel for any reason insurance is not an option for residents of New York State, she says.

Check With Your Airline, Tour Operator or Cruise Line Before You Buy

“A lot of travel suppliers are taking [current events] into consideration,” Kenoian says, “so travelers need to contact them first, because you might not need to use travel insurance.”

“Generally, we know that people are scared, but they need to know that they do have options,” she says. “We’re asking them to please call their travel suppliers if they’ve already booked the trip to see what kinds of benefits they are being offered.”

Clark.com travel editor Clara Bosonetto also recommends calling your credit card company to learn about any refund options, in addition to the travel provider.

7. Do You Also Need Travel Medical Insurance?

You might also be wondering if you need any extra insurance like travel medical insurance or medical evacuation insurance.

Most travel insurance policies include various aspects of medical insurance and medical evacuation insurance but, again, it’s important to read the fine print to help you decide if that coverage alone will be enough should you have a medical emergency on your trip.

The Center for Disease Control and Prevention puts the cost of medical evacuation in excess of $100,000. If you’re traveling to a developing country, you might consider this kind of policy as a hedge against the possibility of a huge medical bill should you need to be airlifted to a nearby nation with better medical facilities.

Final Thought

To reiterate, travel insurance generally reimburses you if your trip is interrupted or canceled due to a variety of reasons that would typically be considered outside of your control.

Clara points out that travel insurance typically doesn’t cover the following:

  • Fear of travel
  • Travel advisories
  • Destinations that have become inaccessible due to illness

“Additionally, the uncertainty of a medical outbreak is not a claim covered by policies,” she says. “And some policies specifically exclude pandemics.”

The bottom line with travel insurance is to always know what you’re getting. That means taking some time to go over the different policies to find one that fits your needs.

Here are the two key steps you should take before purchasing travel insurance:

  • Check with your trip provider to see if they are making any accommodations in light of any current events
  • Although InsureMyTrip allows you to shop for coverage, take the time to speak to an insurance representative by phone to get your specific questions answered

Have an overseas trip coming up? Learn more about travel medical insurance here.

In the meantime, if you have further questions on trip insurance or any other consumer issue, contact our FREE Consumer Action Center helpline at 404-892-8227, Monday-Thursday 10 a.m. -7 p.m. ET and Friday 10 a.m.-4 p.m. ET.

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