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Travel Insurance 101

Updated: May 2018

When you plan an expensive or long-distance trip, you may have a few moments of worry along with the excitement: What if you get sick and can't travel? Or what if a hurricane destroys the island hotel where you're planning to stay? Can you get some or all of your money back if something unexpected happens before or during your trip? That's where travel insurance can provide some peace of mind.

What Does Travel Insurance Cover?

Travel insurance helps reimburse you for nonrefundable deposits and other costs related to your vacation if something goes wrong, such as lost or stolen baggage or unexpected medical expenses. To decide whether travel insurance is right for you, it's helpful to understand the types of coverage available in a policy. Most policies include the following types of coverage:

Family with two children watching a plane at the airport.

1. Trip Cancellation Coverage: If You Can't Travel

When you have to call off your trip and you've already paid for nonrefundable tickets or put down deposits, travel insurance may help reimburse you for those costs. Your travel insurance company will give you a specific list of cancellation reasons that qualify you for reimbursement, according to the National Association of Insurance Commissioners (NAIC). In other words, if your trip is canceled for a reason that's not listed on your travel insurance policy, you won't be eligible to make a claim.

It's important to understand the difference between trip cancellation insurance coverage and a trip cancellation waiver offered by some cruise or tour companies. According to the NAIC, these waivers are not insurance and may come with many restrictions. Additionally, the Insurance Information Institute (III) says if your travel company develops financial trouble, a waiver may not guarantee that your travel costs will be repaid.

Covered trip cancellation reasons may include:

  • Covered illness or injury: You, your travel partner or children traveling with you get seriously ill or pass away.
  • Natural disaster: A covered hurricane or other covered event makes your destination uninhabitable or shuts down airline service.
  • Financial default: Your travel company faces financial problems that affect your trip or the company goes out of business.
  • Other: Your policy may list additional, qualifying reasons to cancel a trip, including being called to jury or military duty.

2. Baggage Coverage: When Your Belongings are Lost or Stolen

There are two types of baggage coverage that may be available on a travel insurance policy:

Baggage loss/damage coverage:
If your bags are lost or stolen, you may need to replace the clothing and other items that were inside them. This coverage may help reimburse you for your personal items, up to a certain maximum amount, says the III.

Baggage delay coverage:
If your baggage is delayed or misdirected for 24 hours or more, this coverage may help reimburse you for the reasonable additional purchase of essential items during your trip.

3. Emergency Medical Coverage: If You Get Sick or Injured While Traveling

Emergency medical benefits may be helpful if you're traveling internationally or in remote areas. According to the III, this coverage may help pay for:

  • Prolonged stays in a foreign hospital
  • Airlifting after a skiing or hiking accident
  • Flight home if you're seriously sick or injured. According the III, some airlines require sick passengers

4. Other Types of Coverage: Trip Interruption, Travel Delay and More

Depending on your policy, additional types of travel insurance coverage may be available. Some travel policies may also include:

Trip interruption coverage: May help reimburse you if you've already begun your trip and have to cut it short due to a covered event (for example, a covered serious illness/injury or natural disaster that makes your destination uninhabitable), according to the III.

Travel delay coverage: May help pay for certain expenses if you can't travel because of delays such as a late or cancelled flight, according to the NAIC.

Missed connection coverage: May help cover extra transportation costs for you to catch up to your cruise or tour if you're delayed due to a covered reason, such as severe weather.

24-hour telephone assistance: Gives you access to representatives who can help you replace lost or stolen passports, get legal help, find medical care and more.

Related Resources:

This content is for informational purposes only and may not be applicable to all situations. © 2020 Allstate Insurance Company, Northbrook, IL.
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