Travel Insurance: What It Covers and When to Buy It

In the wake of Covid, travel insurance sales have spiked with the rebound in travel as people seek to protect their investments against flight delays and cancellations, extreme weather events and the persistence of the virus. But travel insurance is complicated with a range of benefits, inclusions and prices. Here’s what you need to know before you buy.

Know what’s covered

Generally speaking, travel insurance covers unforeseen events, like an illness in the family, the loss of a job or a natural disaster, that force you to cancel or interrupt a trip. It can also apply in the event of a strike at a transportation company, a terrorist attack in your destination or when your travel provider goes bankrupt. These are known as covered reasons. Most polices also include medical coverage, which is useful abroad where your health insurance may not cover you.

While policy prices vary based on age, length of travel and type of coverage, expect to pay between 4 to 10 percent of your entire trip cost to get insured.

Insure nonrefundable expenses

Travel insurance was designed to protect expenses you can’t get back any other way when things go wrong. Think of nonrefundable Airbnb reservations or the cost of a cruise to the Galápagos.

If your hotel is refundable and you can get the value of your flights back in credits, you can skip travel insurance.

Buy close to booking

Travel insurers say the best time to buy travel insurance — which usually takes effect within a day of purchase — is just after making your travel plans to have the largest possible coverage window. A lot can happen between booking a Christmas market cruise in Europe in June and going in December.

With many plans, purchasing travel insurance 10 to 14 days from your first trip payment entitles you to “early purchase” benefits such as a waiver for pre-existing medical conditions that impact travel. If such a waiver is included, it is usually prominent in a summary of benefits, so read it carefully.

“Not all plans have a pre-existing condition waiver,” said Suzanna Morrow, the senior vice president of InsureMyTrip.com, an online insurance marketplace. “If I have a heart condition and if something occurs, I don’t want it excluded, so I would need to buy a policy within 14 days of the first dollar spent.”

Hedge against the weather

You can’t control the weather, but you can insure against its unexpected disruptions. For example, if you’re ready to jump on great rates in the Caribbean during the height of hurricane season, buy your insurance immediately after booking so that if a hurricane develops and your destination is evacuated, you’ll be covered.

“That’s probably the biggest use case for travel insurance,” said Stan Sandberg, a co-founder of TravelInsurance.com, an online marketplace. He counsels travelers to buy early — if you wait and the storm is named it will be too late to insure against it, because it is no longer an unforeseen event.

Similarly, with winter travel, if you’ve purchased nonrefundable ski lift tickets and a storm prevents you from reaching the resort, you may be able to claim the unused portion of your ski pass.

This coverage may prove more valuable as climate change exacerbates weather events like hurricanes and tornadoes, which are considered “natural disasters” and are covered by most policies.

Pick up the phone

With the proliferation of automated insurance offers when you buy airline tickets or tours, travel insurance can feel like a one-size-fits-all product. It is not. Many policies, for example, exclude extreme sports like skydiving and mountain climbing, though there are specialty policies that include them.

If you have a specific concern — a family member is sick or you’re going heli-skiing — the best way to know if a travel insurance policy will cover you is to call an insurer or the help line at a travel insurance marketplace to get advice.

“Tell them the what-if scenario and then you can get professional and accurate advice,” Ms. Morrow said. “Thinking you’re covered and then having your claim denied is salt in the wound.”

Travel insurance does not cover ‘unpleasantries’

What if you’re dreading spending a week in an unairconditioned rental in England during a heat wave and decide you don’t want to go? Most standard travel insurance will not cover a change of heart.

“Travel insurance doesn’t cover you for unpleasantries,” said Carol Mueller, the vice president of strategic marketing at Berkshire Hathaway Travel Protection.

A policy upgrade, Cancel For Any Reason coverage, which is not available in every state, will cover a change of heart, usually up until a few days before departure. Most only reimburse 50 to 75 percent of your costs and the purchase must be made within weeks of your initial trip payment. It will bump your insurance premium up 40 to 50 percent, according to the insurance marketplace Squaremouth.com, which only recommends C.F.A.R. for travelers with specific concerns not included under covered reasons for trip cancellation.

A relatively new twist in trip protection, Interruption For Any Reason, works like C.F.A.R. in that it reimburses a portion of your expenses and can be invoked if you decide to bail while you’re on a trip for a reason that isn’t covered by standard trip insurance. Normally, you must buy it within weeks of your initial trip payment and be 72 hours into a trip before you can use it.

Keep records

If something goes wrong and you need to make a claim, you’ll need proof in the form of a paper trail. That could be receipts for clothing you purchased when your bags went missing, a hotel room required when your flight was canceled (along with flight cancellation notices from the airline) or a doctor’s note stating that you have Covid — or another illness — and are unable to travel. (With Covid, a positive test taken at home is not considered official documentation for the purposes of a claim.)

Resist pressure to buy flight insurance

When purchasing an airline ticket online, most carriers offer travel insurance to cover the cost with some version of vaguely menacing language like, “Do you really want to risk your investment?” when you decline.

Don’t fall for it. You may want to insure that ticket, but price out the policy elsewhere. A recent offer to insure a $428 flight for nearly $28 on an airline website cost $12 to $96 with a range of options at InsureMyTrip.com.

The $12 option was closest to the airline’s offer. Caveat emptor.