How Travel Insurance Works

Travel insurance is a form of insurance that provides coverage for various financial losses that may occur during travel. Whether you encounter issues such as missing a flight to Florida, losing your luggage in Berlin, or even suffering an injury like a broken ankle in Ankara, travel insurance can help alleviate the associated costs. It serves as a valuable form of protection for both domestic and international travel situations.

What Is Travel Insurance?

Travel insurance provides coverage for unexpected events that can disrupt a trip, such as illnesses, injuries, accidents, flight delays, and various other issues. The cost of travel insurance typically ranges from 4% to 10% of the total trip price. For instance, if your trip costs $10,000, travel insurance could cost you anywhere between $400 and $1,000.

The premiums, which determine the price of coverage, are influenced by factors such as the type of coverage you choose, your age, the destination you’re traveling to, the overall cost of your trip, and other relevant factors. Additionally, specialized policy riders cater to the specific needs of various types of travelers, including business travelers, athletes, and expatriates.

How Travel Insurance Works

Travel insurance can be conveniently purchased through various channels, including online platforms offered by travel agents, travel suppliers such as airlines and cruise lines, private insurance companies, or insurance brokers. When you book your flight, accommodations, or car, these providers often offer travel insurance as an additional option.

There are several reputable travel insurance companies in the market, such as AIG Travel, Berkshire Hathaway Travel Protection, Generali Global Assistance, GeoBlue, Nationwide, and many others. These companies specialize in offering comprehensive travel insurance coverage to cater to the diverse needs of travelers.

enerally, it is advisable to purchase travel insurance shortly after making your initial bookings for accommodations, flights or other modes of transportation, activities, and rental cars. Some insurance policies may even require you to do so in order to ensure that you are eligible for full coverage.

To help you navigate the world of travel insurance, here are some important terms to be familiar with:

  1. Deductible: The amount you are responsible for paying before the insurance coverage kicks in.
  2. Coverage limits: The maximum amount the insurance company will reimburse for specific expenses or losses.
  3. Pre-existing condition: A medical condition that you had prior to purchasing the travel insurance policy, which may impact coverage eligibility or exclusions.
  4. Trip cancellation/interruption: Coverage for cancelling or cutting short your trip due to unforeseen circumstances, such as illness, injury, or other covered events.
  5. Medical expenses: Coverage for medical treatment and related costs incurred during your trip, including emergency medical evacuation if needed.
  6. Baggage loss/delay: Reimbursement for lost, stolen, or delayed baggage, including coverage for essential items purchased due to baggage delay.
  7. 24/7 assistance: Access to a helpline for emergency assistance, travel advice, and other support services while you are traveling.

Understanding these terms can help you make informed decisions when selecting the right travel insurance policy for your needs.

Primary and Secondary Coverage

When you purchase travel insurance, it is possible to have concurrent insurance coverage, which means you are covered by multiple policies. The primary coverage refers to the travel insurance policy that reimburses you first, without requiring you to make a claim through another insurance provider. This primary coverage can be beneficial as it avoids potential increases in policy rates.

On the other hand, if your travel insurance coverage is secondary, you will need to first attempt to file a claim with any other applicable coverage you have. For example, if you experience lost baggage, you may need to file a claim with the airline, or if your rental car is damaged, you may need to contact your own auto insurance provider. Only after exhausting these options can you then file a claim with your secondary travel insurance policy.

Understanding whether your travel insurance coverage is primary or secondary is important to ensure you follow the appropriate claims process and maximize your coverage benefits.

Coverage Requirements

In order to qualify for coverage under travel insurance, there are typically specific stipulations that need to be met. Your claim must align with the types of coverage provided by the policy. For instance, if you are filing a claim for lost baggage, the insurance coverage might include reimbursement for personal items, prescriptions, credit cards, as well as your passport or visa.

It’s important to note that additional steps may be required to qualify for coverage. For example, if you experience a loss or theft, you may need to report the incident to the police and obtain a police report as part of the claims process. These extra steps help verify the validity of your claim and ensure that you meet the necessary requirements outlined by the insurance policy.

Policy Coverage Limits

The maximum amount you can receive for a claim under travel insurance is often defined by the policy’s coverage limits. For instance, you might be entitled to receive a maximum of $500 per bag for lost or damaged luggage. It’s important to note that certain high-value items like jewelry or electronic devices may not be fully covered, and the reimbursement may be limited.

In some cases, you might be required to provide receipts for items that exceed a certain value in order to be eligible for full reimbursement. If you don’t have receipts, the insurer may only cover the cost of repairs rather than replacing the item entirely.

Additionally, certain types of coverage may involve a deductible, which is a fixed amount you need to pay out of pocket before the insurance coverage kicks in. Once you meet the deductible, the insurer will cover the remaining portion of your claim up to the specified limit.

Understanding the coverage limits, documentation requirements, and deductible terms of your travel insurance policy is crucial to ensure you have a clear understanding of what will be covered and the potential out-of-pocket expenses you may need to bear.


It is important to be aware of the conditions that may result in your coverage being denied under a travel insurance policy. These conditions can vary between policies. For instance, your baggage damage coverage may not extend to losses caused by animals. Additionally, certain items such as bicycles, hearing aids or other medical devices, keys and tickets, or items seized by government or customs officials may be excluded from coverage.

When it comes to travel medical insurance, pre-existing conditions may not be covered or may only be covered if you purchase a travel insurance plan within a specific timeframe, typically within 1-2 weeks of booking your trip. It is essential to carefully review the terms and conditions of your travel insurance policy to understand any exclusions or limitations that may apply.

Understanding these conditions and exclusions is crucial in order to have realistic expectations of what will and will not be covered by your travel insurance policy.

Comprehensive Travel Insurance

Comprehensive travel insurance is a type of insurance plan that combines multiple coverage types into a single package. It typically includes the following coverage:

  1. 24-hour assistance line: This provides access to a helpline that can assist you in emergencies, help you find doctors or medical facilities, and provide general travel assistance.
  2. Trip cancellation, interruption, and delay coverage: This reimburses you for non-refundable expenses if you need to cancel or interrupt your trip due to covered reasons, such as illness, injury, or unforeseen circumstances. It also covers additional expenses incurred due to travel delays.
  3. Baggage loss or delay coverage: This provides reimbursement for lost, stolen, or damaged baggage, as well as coverage for essential items purchased due to baggage delay.
  4. Medical expense coverage: This covers medical treatment expenses incurred during your trip, including hospital stays, doctor visits, and prescription medications.
  5. Medical evacuation coverage: This covers the cost of emergency medical evacuation or repatriation to your home country in the event of a serious illness or injury.

Alternatively, if you already have coverage through other insurance policies or can afford to cover potential losses in certain situations, you may choose to purchase each coverage type separately. This allows you to tailor your insurance coverage to your specific needs and avoid duplicating coverage you already have.

Trip Cancellation or Interruption Coverage

This type of insurance provides reimbursement for prepaid, nonrefundable travel expenses and is available in various forms, including:

  1. Trip Cancellation: This coverage reimburses you for the paid travel expenses if you are unable to travel for a preapproved reason, such as illness, a death in the immediate family, or sudden business conflicts.
  2. Travel Delay: If your travel is delayed, this coverage reimburses you for expenses incurred during the delay, such as accommodations or meals.
  3. Trip Interruption: If your trip is cut short due to a covered reason, this coverage reimburses you for the travel costs that you have already paid.
  4. Cancel For Any Reason (CFAR): CFAR coverage reimburses you for a portion of the costs if you choose to cancel your trip for any reason. It is important to note that CFAR coverage is typically more expensive than other types of coverage.

The acceptable cancellation and interruption causes, as well as the reimbursement amounts, can vary depending on the insurance provider. Some common acceptable reasons for a claim include your own illness, illness or death in your immediate family, sudden business conflicts, weather-related issues, legal obligations like jury duty, or bankruptcy.

For specific situations such as cancellation due to financial default, terrorism in your destination city, or work-related reasons, you may need to pay additional premiums or meet specific requirements to file a claim.

It is important to review the terms and conditions of your travel insurance policy to understand the covered reasons and requirements for filing a claim for cancellation or interruption.

Damage and Baggage Losses Coverage

Losing, having your baggage stolen, or experiencing damage to personal belongings is a common problem during travel and can significantly impact your trip as you’ll need to replace those items. Baggage and personal effects coverage is designed to protect your belongings in the event of loss, theft, or damage while traveling to, within, or from a destination.

However, it’s important to note that many travel insurance policies require you to first exhaust all other available claims before they provide reimbursement for your belongings. Baggage coverage often comes with various restrictions and exclusions, such as limits on the amount covered, such as up to $500 per item and $250 for each additional item. These coverage limits can usually be adjusted by paying additional premiums or by shopping around for coverage options.

It’s worth mentioning that some travel insurance policies may not cover lost or damaged luggage if it’s due to the fault of the airline. Most carriers, such as airlines, have their own policies to reimburse travelers for lost or destroyed baggage caused by the airline’s error. However, these reimbursements may have limitations on the amount covered. Baggage and personal effects coverage provides an additional layer of protection to supplement such reimbursements and cover any gaps in coverage.

To ensure you have the appropriate coverage for your belongings, it’s essential to carefully review the terms and limitations of your travel insurance policy and consider any additional coverage options or increased limits that may be available to you.

Rental Insurance

Vacation rental insurance provides coverage for costs related to accidental damage that may occur to a vacation rental property. In addition, some plans also offer trip cancellation and interruption coverage to help reimburse expenses when you are unable to use your vacation rental. Here are some reasons for trip cancellation or interruption that may be covered:

  1. Lost or stolen keys: If you lose or have your keys stolen, resulting in your inability to access the vacation rental property.
  2. Unsanitary or unsafe vacation property: If the vacation rental property is deemed unsanitary or poses safety risks, making it uninhabitable.
  3. Vacation rental wasn’t as advertised: If the vacation rental property does not meet the advertised or promised conditions, amenities, or features.
  4. The company oversold your vacation rental: If the rental company has oversold the property, leading to your reservation being canceled or modified.

Rental car insurance, on the other hand, covers the damage or loss of a rental car while you are on a trip. It typically replaces the rental agency’s collision damage waiver (CDW) or can serve as a supplement to your regular car insurance policy. Coverage can vary, but it may include collisions, theft, vandalism, and other incidents. It’s important to note that rental car insurance is often secondary to your own car insurance, meaning your own policy would be primary in case of an accident. However, rental car insurance does not cover your liability or legal responsibility for damage or injury caused to others.

Understanding the specific terms and coverage details of vacation rental insurance and rental car insurance is important to ensure you have appropriate protection and know the limitations and exclusions of your policies.

Travel Health Insurance

Medical coverage in travel insurance can provide assistance with unexpected medical and dental expenses while traveling internationally. It can also offer support in finding doctors and healthcare facilities abroad. The coverage provided will vary depending on the price and the insurance provider you choose.

Foreign travel medical coverage is available for a range of durations, from as short as five days to one year or longer. These policies help cover the costs associated with illness and injuries that occur while traveling.

Medical evacuation coverage is another important aspect of travel insurance. It may cover the expenses of airlift travel to a medical facility or provide medical evacuation services to ensure you receive necessary care.

Before purchasing a travel insurance policy, it is advisable to consult with your current medical insurers to understand whether your existing coverage extends outside your home country. While most health insurance companies may cover “customary and reasonable” hospital costs for illnesses or injuries during travel, they generally do not cover medical evacuations.

It’s important to carefully review the provisions of any travel insurance policy you consider to understand the exclusions that may apply, particularly regarding preexisting medical conditions. Do not assume that the coverage provided by your existing medical plan will be mirrored in your travel insurance. Routine medical care is typically excluded unless you opt for a long-term medical plan designed for expatriates, missionaries, maritime crew members, or individuals staying abroad for extended periods.

It’s worth noting that the U.S. government does not provide insurance or pay for medical expenses incurred abroad. Therefore, having appropriate travel medical coverage is crucial when traveling internationally.

Accidental Death and Dismembership (AD&D) Coverage

Accidental Death and Dismemberment (AD&D) insurance provides coverage in the event of death or serious injury resulting from an accident. This type of insurance typically consists of three parts, offering coverage for accidents and fatalities in different scenarios:

  1. Flight accident insurance: Covers accidents that occur during flights on licensed commercial airlines.
  2. Common carrier coverage: Provides protection for accidents that happen while using public transportation such as trains, ferries, or buses.
  3. General travel coverage: Offers coverage for accidents that occur at any point during a trip, regardless of the mode of transportation.

There are certain exclusions that may apply to AD&D policies. For example, death caused by a drug overdose or illness may not be covered. Additionally, coverage for injuries is often limited to specific areas such as the hands, feet, limbs, or eyesight. There are typically stated limits on the amount of coverage provided for each injury.

If you already have a life insurance policy, you may question the necessity of AD&D coverage. While AD&D insurance may not be necessary, the benefits paid by your travel insurance policy could be in addition to those paid by your life insurance policy. This means that the coverage provided by your travel insurance can supplement your life insurance, potentially leaving more financial support for your beneficiaries.

It is essential to carefully review the terms and conditions of your AD&D insurance policy to understand the coverage provided, exclusions, and limitations. If you have concerns or uncertainties, consulting with an insurance professional can help you make an informed decision about the coverage that best suits your needs.

Other Travel Insurance Coverage

Depending on the specific plan or package you choose, you may have the option to add various types of additional coverage to your travel insurance. These additional coverage options can enhance your protection and cater to specific needs or activities. Here are some examples:

  1. Identity theft resolution services: Provides assistance in the event of identity theft while traveling.
  2. School activity coverage: Offers coverage for school-sponsored activities or trips, ensuring financial protection for students and their families.
  3. Destination wedding coverage: Specifically designed for weddings taking place at a travel destination, this coverage protects against unforeseen circumstances that could disrupt or cancel the wedding.
  4. Adventure sports coverage: Extends coverage to include participation in adventure sports or activities that may carry higher risks, such as skiing, scuba diving, or mountain climbing.
  5. Pet health as a reason for cancellation or delay: Covers cancellation or delay due to the illness or injury of your pet, allowing you to reschedule or cancel your trip.
  6. Hunting or fishing activities as a reason for cancellation or delay: Provides coverage for cancellation or delay resulting from hunting or fishing activities being affected by unforeseen circumstances.
  7. Missed flight connections: Offers coverage for expenses incurred due to missed flight connections, such as additional accommodation or transportation costs.

These additional coverage options can vary depending on the insurance provider and the specific policy or package you choose. It’s important to review the terms and conditions of your travel insurance and consider adding these types of coverage if they align with your needs and activities during your trip.

How to Get Travel Insurance

Travel insurance comes with variations in cost, coverage, and exclusions. It is available for single trips, multiple trips, or as an annual plan. To obtain travel insurance, you will need to complete an application provided by the insurance company. The application will require information about your trip, including:

  1. Number of travelers
  2. Trip cost
  3. Destination
  4. Travel dates
  5. Date of the first payment made toward your trip

The insurance company will review the information you provide based on their underwriting guidelines. If your application is accepted, they will issue a policy that covers your trip. In case your application is rejected, you have the option to apply with another insurer.

Upon receiving your policy, you will typically have a 10- to 15-day review period to carefully read through the contract and its fine details. If you are dissatisfied with the policy, you can return it for a refund. It is important to thoroughly review the document and ensure that the plan you purchased meets your needs without excessive loopholes. Specifically, you should check if the policy covers:

  1. Emergency medical care and transportation back to the U.S.
  2. Adequate limits to cover your costs or damages
  3. The regions you are traveling to
  4. The duration of your trip or the number of trips covered
  5. All the activities you plan to participate in
  6. Preexisting conditions and coverage for individuals of your age group

It is also essential to carefully review any exclusions outlined in the policy. For example, pay attention to what types of property are covered and how coverage applies to items lost or damaged by the airline.

Taking the time to thoroughly understand your travel insurance policy will help ensure that you have appropriate coverage for your trip and can make informed decisions about your insurance needs.

Do I Need Travel Insurance?

Travel insurance is a recommended option when you are unable to bear the financial burden of canceling and rebooking a costly or extended trip. Additionally, if your existing health insurance does not provide coverage for international expenses, it is advisable to consider travel health insurance. Alternatively, you can opt for easily cancellable vacation arrangements, such as hotels and car rentals with pay-later options, flexible cancellation policies, and the ability to rebook without incurring additional fees. This provides a flexible approach in case you need to make changes to your travel plans without incurring significant financial losses.

What Is Not Covered By Travel Insurance?

It is essential to carefully review your travel insurance policy to become familiar with the exclusions that may apply. According to the National Association of Insurance Commissioners (NAIC), common exclusions found in travel insurance policies include:

  1. Pre-existing health conditions of the traveler.
  2. Civil and political unrest occurring at the destination.
  3. Coverage for pregnancy and childbirth.
  4. Coverage limitations for individuals engaging in adventure or dangerous activities.

By understanding these exclusions, you can make informed decisions and ensure that your travel insurance coverage aligns with your specific needs and circumstances.