Even with inflation running hotter than a summer day in the desert, you’ll still find airports, cruise ships, hotels, resorts and highways jam-packed these days with people determined to release their pent-up vacation energy.
But with COVID variants on the prowl, travelers are thinking hard about adding one more expense: travel insurance.
Millions learned the value of a travel insurance policy the hard way in the initial days of the pandemic. A Forbes Advisor survey in February found that half of Americans had been forced to cancel a trip because of the virus and that more than 80% of those people lost money.
With Americans anticipating they’ll spend an average of $2,644 on vacations this summer — a 30% increase from 2019, according to Allianz Partners USA — that’s a big potential loss to bear.
But it’s not always so obvious if you should plan to pack an insurance policy along with your beach reads and sunscreen. Here’s what you need to know when making that choice.
Too many Americans are still missing out on cheaper car insurance
A TikToker paid off $17,000 in credit card debt by 'cash stuffing' — can it work for you?
The World Bank president just warned that white-hot inflation could last for years — get creative to find strong returns
What travel insurance covers
Most travel insurance comes in a package that covers trip cancellation and delays, baggage, accidents, medical coverage and emergency evacuation if you need to be sent home for treatment. Policies also can cover damage and theft to property.
Typical trip cancellation policies cover you in the event of illness, injury or death of the traveler, a close family member or a traveling companion; military deployment or civil unrest; a serious family emergency and sometimes even unplanned jury duty.
Other acceptable reasons can include if your travel company stops offering services for 24 hours due to a natural disaster, severe weather or a strike, if you or someone in your party loses your job or if your home or destination becomes uninhabitable.
Of course, to get coverage, you’ll have to have already purchased a policy before any of those things happen.
There are also a host of options you can add to a policy, such as additional medical coverage, adventure sports coverage, coverage for pets, private security, weddings and even an “inconvenience” bundle offered by AIG that covers annoyances like attractions being closed, construction at your hotel or a rental car breakdown.
Is travel insurance worth it right now?
Before would-be travelers jump to buy insurance, they might want to consider whether they even need it at all. For trips where the only upfront cost is a plane ticket or a small deposit, the cost of insuring your trip could be more than your potential loss.
From there, you’ll want to review the cancellation policies offered by the specific airline, cruise line or resort you’ve chosen. The pandemic pushed companies in the travel industry to create better cancellation policies for consumers, which means in most cases, tickets can be rebooked for less than it costs to buy a travel policy.
Some airlines, like Southwest, don’t charge any change or cancellation fees. But you are on the hook for the price difference if your new ticket costs more than you originally paid. Delta, on the other hand, charges up to $500 on its nonrefundable tickets to make a change.
With JetBlue, expect to pay between $100 to $200, again depending on the route. And the company also charges you an extra $25 to make the change over the phone, but you can avoid that fee by completing the transaction online.
If you’re worried you might have to change your plan, upgrading your flight from a basic economy ticket to the main cabin fare often allows you to change or cancel a trip at no charge. Most airline cancellation policies don’t provide a refund, but typically involve a credit or a travel voucher for another flight that will be valid for a year.
Be warned, however: Cancellation policies are in flux as COVID waxes and wanes. In May, for example, Airbnb ended its “extenuating circumstances” policy of allowing travelers to cancel for virus-related reasons.
Your best bet will typically be to call and discuss the specifics with the travel provider to see whether you can get some leeway. And before buying any coverage make sure the policy will cover the specific risks that could keep you from making or completing a trip.
How to know when you need travel insurance
Travel insurance is best-suited for trips that involve substantial deposits and other payments that wouldn’t be refunded if you can’t make it to your destination.
You should consider the age and health of everyone in your party, along with the likelihood of other potential interruptions, like tight schedules that may cause you to miss a connection.
So that 30-day cruise with the grandkids that involves hefty deposits and prepaid shore excursions is a good bet for trip insurance. The three-day weekend in Vegas, not so much.
Travel experts recommend using an independent travel insurance company rather than buying coverage through a tour-operator or travel service. If the operator goes out of business and cancels a trip, the insurance will be worthless.
You’ll also want to make sure you’re buying actual travel insurance and not a lesser benefit called “trip protection” or “travel protection.” That option is limited to giving travelers a full or partial refund, or a credit for future travel.
Does travel insurance cover me if I get COVID?
At the start of the pandemic, travelers who canceled a trip because of COVID-19 were simply out of luck. Since then, trip insurers have changed policies to cover some aspects of the disease but not all.
If you contract COVID-19 during a trip, it’s treated like any other health problem. But if you’re required to quarantine, some policies may cover only seven days, not the full 10 days many countries require.
You should be able to find what your policy allows when it comes to COVID-19 in the fine print.
Insurers also offer additional COVID-19 policy upgrades that cover trip interruptions and provide a quarantine stipend.
Keep in mind that some countries require visitors to carry their own insurance in case they contract COVID-19 during their trip. That includes Aruba, the Bahamas and Fiji.
Jamaica requires visitors to purchase the “Jamaica Cares” program, which is mandatory travel insurance for any visitor, at a cost of $40 to $50 per person. And Laos requires its tourists to carry proof of their travel medical insurance with a minimum coverage of $50,000.
So before you start getting quotes for a policy, make sure they’ll meet the requirements of the country you’re planning to visit.
With all that settled, hopefully you’ll just be coming back from vacation with a tan — and not a big medical or cancellation bill.
What to read next
Get the latest personal finance news sent straight to your inbox with the MoneyWise newsletter
Your cash is trash: Here are 4 simple ways to protect your money against inflation (without being a stock market genius)
Bill Gates just won legal approval to buy 2,100 acres of North Dakota farmland worth $13.5M — and people are ‘livid’
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.