Travel insurance provides a variety of reimbursements for travel incidents and can repay you for costs that you’ve incurred. But how much is travel insurance? And how much can it cover your upfront travel expenses, like flights and hotels?
If you are planning on traveling anytime soon or you’re knee-deep in hotel reservations, flight tickets and tour bookings, you may be experiencing a little sticker shock at the amount of money you’ve been spending. While vacations can be exciting, they can also be expensive.
And if something goes awry, you may not be able to get your money back.
What is travel insurance?
Travel insurance helps cover financial losses associated with surprise circumstances that could ruin a trip, including illness, injury, accidents, flight or other transportation delays, and other issues. This insurance costs 4%-10% of a trip’s price.
This means that, for a $10,000 trip, trip insurance could cost between $400 and $1,000.
Premiums — or the price you pay for coverage — are based on the coverage type, your age, destination, trip cost, and more. Specialized policy riders focus on the needs of business travelers, athletes, and expatriates.
Travel insurance may be sold online by travel agents, travel suppliers (airlines, cruise lines), private insurance companies, or insurance brokers when booking your flight, car or accommodations. Typically, you’ll purchase coverage shortly after initial bookings for lodging, flights or other transportation, activities, and rental cars. Some policies may require you to do so to retain full coverage.
Here are some terms to know for travel insurance.
Primary and secondary coverage
If you buy travel insurance, you may have concurrent insurance coverage, meaning you’re covered under more than one policy. When the travel coverage is primary, the travel insurance reimburses you first without needing to make a claim through another company—and sparing you potentially increased policy rates.
If the travel insurance coverage is secondary, you’ll first need to attempt to file a claim with other coverage, such as an airline (lost baggage) or your own auto insurance (damaged car).
Coverage requirements
There are usually stipulations spelled out on how you qualify for coverage. Your claim must fall under the types of coverage offered. For example, lost baggage insurance might include coverage for personal items, prescriptions, credit cards, and your passport or visa.
Also, you may need to take extra steps to qualify for coverage, such as reporting the loss or theft to the police.
Policy coverage limits
This is the maximum amount you can receive for the claim. For example, you might only receive $500 per bag. You may not even receive more for expensive items such as jewelry or electronic devices. You might need to provide receipts for items over a certain amount. Without receipts, the insurer may only pay for repairs.
Some coverage might require you to pay a deductible, or flat amount, before covering the remainder of your claim up to the limit.
Exclusions
These are the conditions under which your coverage will not cover the loss. Each policy differs. For example, your baggage damage coverage may not cover losses caused by animals. It may exclude coverage of bicycles, hearing aids or other medical devices, keys and tickets, or seizure by a government or customs official.
Pre-existing conditions may not be covered by travel medical insurance, or may only be covered if you buy a travel insurance plan within 1-2 weeks of booking your trip.
Types of travel insurance
In addition to the cost of travel insurance, we also need to talk about the different types of travel insurance. This is because the price you’ll pay will depend on the insurance you choose. Some policies — like those that allow you to cancel for any reason — can be more expensive than other, more limited, policies.
Common types of travel insurance include:
- Lost luggage insurance.
- Trip interruption insurance.
- Trip cancellation insurance.
- Rental car insurance.
- Cancel For Any Reason insurance.
- Health insurance.
- Accidental death insurance.
- Emergency evacuation insurance.
Different types of insurance will cover various things. Trip cancellation insurance, for example, will allow you to recoup a portion of nonrefundable costs when you’re forced to cancel your trip for a covered reason.
Cost of travel insurance
Average cost by trip
The cost of your trip is a primary rating factor for travel insurance companies. The more you spend on your trip, the higher the potential claim payout is for the travel insurance company.
Forbes Advisor analyzed travel insurance plans at various price points for a 30-year-old female traveling from California to Mexico for a 14-day trip. The analysis of trips costing $1,000 to $50,000 found that the average travel insurance cost is usually 5% to 6% of the trip cost, with 6% the average.
| Trip cost | Average travel insurance cost | Travel insurance cost as % of trip cost |
|---|---|---|
| $1,000 | $61 | 6% |
| $2,500 | $120 | 5% |
| $5,000 | $228 | 5% |
| $10,000 | $512 | 5% |
| $20,000 | $1,204 | 6% |
| $30,000 | $1,848 | 6% |
| $50,000 | $3,091 | 6% |
The range of insurance costs varies greatly depending on the policy’s level of benefits. For example, in the review of travel insurance plans for a $2,500 trip, the average cost is $120. However, rates range from $76 for a basic policy to $240 for a policy with more perks and protections.
Average cost by age
Your age matters to travel insurance companies, but age tends to affect the rates of those aged 60 and older the most. Analysis reveals the average travel insurance cost for someone aged 80 is $683 more than the average cost for a 20-year-old.
If you’re a senior planning a trip, you’ll need to budget, on average, an additional 8% to 18% of your trip cost to cover a senior travel insurance policy.
| Age of traveler | Average travel insurance cost | Travel insurance cost as a % of trip cost | $ difference from age 20 |
|---|---|---|---|
| 20 | $224 | 4% | |
| 30 | $228 | 5% | $4 |
| 40 | $294 | 6% | $50 |
| 50 | $310 | 6% | $86 |
| 60 | $420 | 8% | $196 |
| 70 | $555 | 11% | $331 |
| 80 | $907 | 18% | $683 |
For the 60-year-old traveler, average rates range from $270 for a basic policy to $724 for a plan with more generous benefits.
Average cost by number of travelers
The number of people traveling and included on the insurance plan plays a part in what you’ll pay for travel insurance. The more people on the policy, the higher the rates will be, but our analysis finds it causes only a minor increase.
Forbes analyzed rates for a single traveler, a couple and a family of four leaving from California to Mexico on a 14-day trip with a cost of $5,000. The travel insurance costs didn’t substantially go up even as the number of travelers grew. Rates went up only around $30 for a family of four compared to a single traveler.
The review of average costs finds a single 40-year-old female traveler pays the least for travel insurance, while the two 40-year-old adults (one male, one female) pay not even $20 more for their plan. The family, consisting of two 40-year-old adults (one male, one female) with two children ages 8 and 10, pay only $12 more than the couple.
| Traveler type | Average travel insurance cost | $ difference compared to single adult |
|---|---|---|
| Single adult | $294 | |
| Two adults | $311 | $17 |
| Two adults and two children | $323 | $29 |
Average costs for “cancel for any reason” coverage
Trip cancellation insurance is included in comprehensive travel insurance plans. It will reimburse 100% of the non-refundable money you lose if you cancel your trip for a reason listed in the policy.
If you’re worried that you may want to cancel your trip for a reason not listed in the policy, “cancel for any reason” (CFAR) coverage can be an essential addition. “Cancel for any reason” coverage is an upgrade that allows you to get partial reimbursement (typically 50% or 75% of your prepaid trip costs) no matter the cause for the cancellation.
Analysis of 16 policies finds the average cost of a policy without CFAR is $225 and a travel plan with CFAR is $337, a difference of $112.
On average, CFAR raises the cost of a travel insurance plan by 50%.
| Travel insurance plan | Travel insurance cost without CFAR | Travel insurance cost with CFAR | $ difference with CFAR | % increase by adding CFAR |
|---|---|---|---|---|
| John Hancock Insurance Agency Bronze | $173 | $260 | $87 | 50% |
| GoReady Pandemic Plus | $174 | $261 | $87 | 50% |
| Tin Leg Gold | $191 | $287 | $96 | 50% |
| John Hancock Insurance Agency Silver | $194 | $291 | $97 | 50% |
| USI Affinity Ruby | $195 | $293 | $98 | 50% |
| Travelex Travel Select | $208 | $291 | $83 | 40% |
| Seven Corners RoundTrip Choice | $209 | $297 | $88 | 42% |
| Trawick Safe Travels Voyager | $222 | $377 | $155 | 70% |
| Tin Leg Luxury | $222 | $311 | $89 | 40% |
| HTH Travel TripProtector Preferred | $232 | $348 | $116 | 50% |
| USI Affinity Diamond | $238 | $369 | $131 | 55% |
| Travel Insured International Worldwide Trip Protector | $246 | $354 | $108 | 44% |
| Tin Leg Adventure | $252 | $341 | $89 | 35% |
| TravelSafe Classic | $265 | $496 | $231 | 87% |
| John Hancock Insurance Agency Gold | $274 | $411 | $137 | 50% |
| Berkshire Hathaway LuxuryCare | $298 | $411 | $113 | 38% |
Deciding whether “cancel for any reason” insurance is worth the cost will depend on your needs and risk tolerance. If you want the ability to call off your trip because you changed your mind and don’t want to go, but you still want some reimbursement, consider adding CFAR to your plan.
What determines cost of travel insurance?
Several factors go into the cost of travel insurance. The level of benefits inside the travel insurance plan is one. For example, one plan may offer up to $25,000 for travel medical insurance while another may provide up to $500,000. Also:
- Total trip cost: The amount you want to insure is also a main factor in your travel insurance cost. The amount you want to insure is the total cost of prepaid and non-refundable expenses, such as airfare, hotel, and excursions and special tours. Do not insure non-refundable costs, such as a refundable hotel room. You can’t make insurance claims for expenses that you can get refunded.
- Age of travelers: Generally, travel insurance becomes more expensive as you get older. This is because older travelers have a higher risk of getting sick or injured.
- Number of travelers: More people on your trip means more insurance to cover everyone, increasing travel insurance costs.
- Trip length: A longer trip can cost more to insure because it increases the likelihood that you may file a claim.
When do people buy travel insurance?
According to an AAA travel survey, 88% of travelers say that reimbursement after a trip cancellation is the most valuable benefit of trip insurance.
According to data gathered by SquareMouth, travelers tend to purchase trip cancellation travel insurance 53 days before their trip. Meanwhile, travelers without trip cancellation insurance will buy a policy approximately 16 days before their trip.
Regardless of when you buy, cancellation protection can kick in to protect you against the unexpected.
| Policy type | Average trip length (days) | Average cost of travel insurance |
| Cancellation | 13 | $411.30 |
| Non-cancellation | 20 | $98.25 |
Source: SquareMouth
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