What Does Travel Insurance Cover and How Does It Work?

What Travel Insurance Covers: Key Takeaways

Travel insurance reimburses you for covered trip cancellations, medical emergencies abroad and lost baggage, with costs ranging from 1.7% to 11% of your trip value.

Buy within 14 to 21 days of your initial deposit to access maximum benefits like pre-existing condition waivers and cancel for any reason coverage.

Comprehensive plans cover trip cancellation, emergency medical care, evacuation, baggage issues and travel delays, but exclude pre-existing conditions (without early purchase), high-risk activities and foreseeable events.

You need medical coverage for international travel since U.S. health insurance often doesn't work abroad, with recommended limits of $100,000 to $500,000.

What Is Travel Insurance?

Spending months planning the perfect trip — booking flights, reserving hotels, maybe even splurging on that sunset dinner cruise — means you've got a lot invested. Travel insurance is designed specifically for the unexpected events that can happen when traveling.

Travel insurance reimburses you when covered events go wrong. Instead of losing thousands on a canceled trip, facing large medical bills in a foreign country, or replacing clothes from a lost bag, you can enjoy your vacation knowing these expenses are covered.

Travel insurance costs 1.7% to 11% of your trip value, depending on age, destination and plan choice. Most people spend $50 to $150 on insurance for a one-week trip.

How Does Travel Insurance Work?

The timing of when you buy travel insurance, what benefits activate when and how the claims process works determine what you're covered for.

1
When to buy travel insurance
Best practice: Purchase within 14 to 21 days of your initial trip deposit to access maximum benefits, including pre-existing medical condition waivers, cancel for any reason (CFAR) coverage and primary medical coverage (on select plans).

Late purchase: Most plans can be bought up to the day before departure, though time-sensitive benefits won't be available.
2
Coverage effective dates
Travel insurance benefits activate at different times before and during travel.
- Immediate coverage (day after purchase): Trip cancellation, pre-departure medical coverage, cancel for any reason (if purchased)
- Coverage during travel: Medical emergencies, evacuation, baggage coverage, travel delays and trip interruption
3
Primary vs. secondary coverage
Travel insurance medical coverage is either primary or secondary coverage.
- Primary coverage pays first, before your standard health insurance kicks in. This means faster claims and no deductibles from your health insurance.
- Secondary coverage pays after your regular health insurance. You'll need to file with your primary insurer first, then submit remaining costs to your travel insurance.
Most comprehensive plans offer secondary medical coverage, while premium plans often include primary medical benefits.
4
Filing a travel insurance claim
If you need to file a claim:
1. Contact your insurer immediately: Policies require notification within 72 hours for cancellations or as soon as possible for other claims.
2. Document everything: Take photos, keep receipts, get police reports for theft and get medical records for health claims.
3. Submit the required documentation: Completed claim forms, original receipts and invoices.
4. Follow up: Stay in contact and provide additional documentation if needed.
5. Receive payment: Claims are processed within 10 to 30 days.

What Does Travel Insurance Cover?

Comprehensive travel insurance policies cover:

Trip cancellation and interruption

Trip cancellation protects the money you've invested in your vacation. Covered reasons include illness, injury, death of family members, job loss, weather emergencies, natural disasters at your destination, terrorism or even jury duty. You'll get reimbursed for your prepaid, nonrefundable costs up to what you actually spent. Spend $5,000 on your vacation? That's your coverage limit.
Trip interruption kicks in if you're already on your trip but have to cut it short and head home early for those same covered reasons. This pays 100% to 200% of your trip cost to cover unused expenses and those expensive last-minute flights home.

Emergency medical coverage

You need this coverage for international travel since your regular health insurance might not work abroad. Medical coverage pays for hospital bills, doctor visits, prescriptions and emergency dental care. Coverage ranges from $25,000 to $500,000+, and this is often the most expensive travel issue.

Medical evacuation and repatriation

Emergency evacuation coverage pays to get you to proper medical care or back home when local hospitals can't help. These flights can cost $100,000 to $1 million. While it's less likely you'll need this coverage, having it helps you avoid a large expense.

Baggage and personal effects

This coverage protects lost, stolen, damaged or delayed luggage (up to a $1,000 to $2,500 limit). It also includes electronics, sports equipment for golf or skiing and other personal items like passports.

Travel delays and missed connections

When flights get delayed or canceled, this covers your hotel, meals and transportation while you wait. It also covers costs to catch up with your cruise or tour if delays make you miss connections.

Pregnancy coverage

Pregnancy coverage covers complications only (pre-eclampsia, emergency C-sections, premature labor) but not routine prenatal care or normal childbirth. Learning you're pregnant is a standard reason for trip cancellation, depending on your policy, as long as you bought the policy before becoming pregnant.

Learn more: Compare travel insurance coverage benefits and quotes

Travel Insurance Optional Coverage Add-Ons

In addition to standard travel insurance coverage, you can purchase optional coverage add-ons, including:

Cancel for any reason (CFAR)

CFAR is the ultimate flexibility coverage upgrade for travel insurance. Cancel for any reason and get back 50% to 75% of your trip costs. You must purchase it within 7 to 21 days of booking, and it costs extra, but provides flexibility for trip changes.

Pre-existing medical conditions coverage

If you have ongoing health issues, pre-existing condition coverage is available if you buy early (14 to 21 days after booking). This includes coverage for heart conditions, cancer, diabetes and disability needs.

Long-term travel coverage

For gap years or extended backpacking trips, travel insurance coverage can be purchased as an annual or multi-trip policy.

Adventure sports and activities coverage

Standard policies exclude extreme activities like scuba diving and rock climbing, but you can add this coverage or buy a plan with adventure sports coverage included. World Nomads is the best option for this coverage.

What Is Excluded from Travel Insurance Coverage?

Standard travel insurance policies don't cover:

1
Health-related exclusions
- Pre-existing conditions (unless you buy early and get a waiver)
- Mental health issues like depression or anxiety (though newer plans are starting to include coverage)
- Routine medical care, including vaccinations, prescription refills and elective procedures
2
Activity and behavior exclusions
- High-risk activities: Extreme sports, professional athletics (unless specifically covered)
- Illegal activities: Drug use, criminal acts, traveling against government warnings
- Reckless behavior: Injuries from drinking and dangerous stunts
3
Event-related and weather exclusions
- Known events: Hurricanes already named, ongoing wars and foreseeable political situations
- Foreseeable circumstances: If you could reasonably expect it to happen
4
Travel destination exclusions
Countries or regions might not be covered due to government travel advisories, active war zones or civil unrest, and areas without adequate medical facilities.

Choosing the Right Travel Insurance Plan

Selecting the right travel insurance depends on your specific travel needs, budget and risk tolerance:

1
Trip investment
How much non-refundable money have you spent? Higher investments justify more comprehensive coverage.
2
Health status
Pre-existing conditions require early purchase for waiver eligibility. Consider higher medical limits for chronic conditions.
3
Destination risk
Remote locations or countries with expensive medical care need higher coverage limits.
4
Activities
Make sure your planned activities are covered or purchase additional protection.
5
Travel frequency
Annual plans often make sense for travelers taking two or more trips per year.
6
CFAR coverage
Consider adding CFAR coverage, which will allow you to cancel your trip and receive a 50% to 75% refund.
7
Key coverage amounts
- Medical coverage: $50,000 to $100,000 for domestic and $100,000 to $500,000 for international travel. Pick higher limits for remote destinations or pre-existing conditions.
- Evacuation coverage: Minimum $500,000 recommended or $1 million for remote destinations.
- Trip cancellation: Should equal your total nonrefundable trip cost. Consider CFAR and trip interruption add-ons.

What Does Travel Insurance Cover: Bottom Line

Travel insurance protects your vacation investment from unexpected cancellations, medical emergencies and lost baggage. Buy within 14 to 21 days of booking to access maximum benefits like pre-existing condition waivers and cancel for any reason coverage.

Your needs depend on trip cost, destination and health. International travelers need $100,000 to $500,000 in medical coverage since U.S. health insurance rarely works abroad. Domestic travelers should focus on trip cancellation if they've invested significant nonrefundable costs. Understanding exclusions, like foreseeable events, high-risk activities and pre-existing conditions without waivers, helps you choose the right plan.

FAQ: How Does Travel Insurance Work?

Here are answers to common questions about travel insurance coverage, timing and how it works with your existing health insurance.

Can I buy travel insurance after I've already booked my trip?

Yes, but timing matters. You can buy it until the day before you leave, but to get the best benefits (like pre-existing condition waivers and cancel for any reason coverage), you must buy within 14 to 21 days of your first trip payment.

What's the difference between trip cancellation and trip interruption?

Trip cancellation covers you before you leave home, and if you can't go on your trip, you get reimbursed for what you spent. Trip interruption covers you if you're already traveling but have to cut your trip short and come home early. Interruption usually pays more (100% to 200% of the trip cost) because you need money for unused expenses and expensive last-minute flights home.

What counts as a pre-existing condition?

It's any medical condition you've been treated for, had symptoms of, or taken medication for within 60 to 180 days before buying your policy. This includes everything from diabetes to a sprained ankle you saw a doctor about last month.

Is travel insurance worth it for domestic trips?

It depends on your trip investment and risk tolerance. Trip cancellation coverage makes sense for expensive domestic trips with high nonrefundable costs (like that $5,000 family Disney vacation). Medical coverage is less critical since your regular health insurance works domestically, but you might still want coverage for trip delays and baggage issues.

Does my health insurance work when I travel abroad?

U.S. health insurance plans rarely cover expenses outside the country, including Medicare. Even if they do cover international emergencies, you'll need to pay upfront and get reimbursed later. Travel insurance with medical coverage can pay providers directly and covers things your regular insurance won't.

About Mark Fitzpatrick

Mark Fitzpatrick, a Licensed Property and Casualty Insurance Producer, is MoneyGeek's resident Personal Finance Expert. With over five years of experience analyzing the insurance market, he conducts original research and creates tailored content for all types of buyers. His insights have been featured in publications like CNBC, NBC News and Mashable.

Fitzpatrick holds a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He's also a five-time Jeopardy champion!

He writes about economics and insurance, breaking down complex topics so people know what they're buying.

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