This Is What You Actually Need to Know About Travel Insurance Before You Book a Trip

Travel insurance is one of the most commonly recommended vacation purchases, yet it’s also among the murkiest. Many travelers add it at checkout when purchasing their flights or cruise reservations, while others rely on a credit card benefit, assuming they’ll be covered for any issues that arise. Unfortunately, though, this is rarely the case—and it’s where travelers tend to get tripped up (pun intended). “Travel insurance isn’t blanket protection,” says Suzanne Morrow, chief executive officer of InsureMyTrip. She continues, telling Travel + Leisure, “Coverage depends on the specific plan, benefits, limits, and exclusions.”

Emily Hartman, general manager at Allianz Partners, echoes these sentiments, explaining that “most policies only reimburse cancellations or disruptions caused by a defined list of ‘covered reasons'” (think: family emergencies, serious illnesses, and severe weather). Additionally, while common travel headaches like flight delays or lost luggage are usually covered, benefits typically only kick in after several hours of delay.

Another common misconception is that travel insurance is expensive. However, Morrow says policies typically cost about four to 10 percent of a trip’s prepaid, nonrefundable expenses. And if your bookings are fully refundable and you’re mainly looking for medical coverage, some plans can cost less than $10.

Medical Coverage

Medical coverage is often the most important part of a travel insurance policy, especially for international trips. Many domestic health plans offer little to no protection overseas, and Hartman notes that medical emergencies abroad can be “both expensive and extremely difficult to navigate without assistance.” For example, evacuation from a remote area or a cruise ship can cost tens of thousands of dollars

In these cases, travel insurance becomes particularly valuable when the financial or medical stakes are high, whether that’s an expensive, nonrefundable itinerary or travel to a destination where your regular coverage won’t apply. On the other hand, for a short domestic trip with refundable reservations or flights booked with points that can be easily redeposited, coverage may be less essential.

Some policies include additional support, such as access to virtual or in-person doctor visits abroad, which can help travelers receive care quickly without incurring out-of-pocket costs. Conversely, it’s also important to consider common exclusions, which, according to Morrow, include alcohol- or drug-related incidents and pre-existing medical conditions.

The Truth About CFAR

Beyond standard policies—which only reimburse cancellations tied to specific covered reasons—there are add-ons to consider. One of the most popular and most misunderstood upgrades is “Cancel for Any Reason” (CFAR) coverage. The name implies total flexibility, but it’s more complicated than that—and it’s not necessary for everyone. According to Morrow, CFAR is best suited for travelers who want maximum flexibility, rather than those whose concerns are already addressed under a standard policy.

CFAR coverage also comes with strict conditions. For one, it typically must be purchased soon after your first trip payment (often within two or three weeks). Travelers are also typically required to purchase trip insurance that covers the full cost of the trip and cancel at least 48 hours before departure. Even then, reimbursement is sometimes capped—often at 50 to 75 percent of prepaid, nonrefundable expenses—meaning you might not get all your money back.

Other Forms of Travel Insurance

While most premium credit cards offer some level of trip protection, the benefits can be more limited than those of standalone policies. For example, Hartman tells T+L that “credit card emergency medical coverage limits may also be lower than available travel insurance products.” It may also be what industry insiders consider “secondary,” meaning you’ll need to pay for your care out of pocket and then file a claim with your primary health insurance provider to get reimbursed. Another key limitation with credit card coverage, says Morrow, is that only the expenses charged to that specific card are typically eligible for reimbursement. 

Morrow similarly cautions travelers about the insurance offered directly by airlines, cruise lines, and booking sites at checkout, which she calls “point-of-sale travel protection.” While convenient, this coverage is “often limited and may not protect travelers the way they expect.” For example, in some cases, airline-provided coverage may only reimburse flight-related expenses and might not cover a missed hotel night caused by a delay.