Should I purchase travel insurance?

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Dear Cashing In,

I’m booking travel for 2021, but I can’t decide if it’s worth the added cost to pay for travel insurance or if my credit card travel insurance is sufficient. Does travel insurance even cover me if get COVID while I’m away or if I have to cancel my trip because of the pandemic?–Wendy

Dear Wendy,

Purchasing travel insurance is definitely one way to buy yourself peace of mind when planning a trip during the coronavirus pandemic. But you’re right, trip-specific travel insurance policies are an added cost and—like your credit card travel insurance benefits—they still might not cover everything you’re hoping for.

If you want the reassurance that you have the right travel insurance to cover the 2021 trips you’re booking, you’ll have to do your homework. Every independent policy offers a range of coverage and exclusions, and the same goes for policies through credit cards. Most importantly, you can never assume coronavirus-related claims will be covered under any policy unless it’s explicitly mentioned.

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What travel insurance covers

Travel insurance usually covers you and the investment you’ve made for your trip should your travel get canceled or interrupted. It also generally covers a medical emergency situation while you are traveling.

Most travel insurance policies will cover a combination of events such as trip interruption, travel delays, missed connections, trip cancellations due to injury, medical emergencies that occur on the road, unexpected weather events, loss or damage of your baggage and emergency medical transportation and evacuation.

Typically, the more you pay for a policy, the more comprehensive your coverage will be across any combination of these areas of coverage.

What travel insurance doesn’t cover

Every travel insurance policy also has exclusions. During the coronavirus pandemic, it’s even more important to know what’s excluded.

In general, travel insurance does not cover claims due to known, foreseeable or expected events, epidemics, pandemics, government prohibitions, warnings, travel advisories or fear of travel.

Since we’ve been aware of COVID-19 since early 2020, insurance companies consider the pandemic a “known event”—a circumstance that is already happening at the time of purchasing your policy. Just like you can’t buy home insurance when your house has already caught fire, travel insurance policies won’t cover claims for losses related to a virus you’re already aware of.

When it comes to the coronavirus, most insurance policies are likely to cover your trip cancellation and provide reimbursement only under the circumstance that you’ve been personally diagnosed with a positive case of the virus.

When considering travel insurance policies, you’ll need to do your due diligence to determine how each specific policy covers coronavirus-related claims.For example, travel bans or new quarantine and testing guidelines might derail your trip and force you to cancel, but unless they are explicitly stated in your travel insurance policy it’s likely you won’t be covered.

TravelInsurance.com and SquareMouth.com are great websites for comparing the details of travel insurance policies.

‘Cancel for any reason’ coverage

For the anxious traveler, one alternative to standard travel insurance is to purchase a “cancel for any reason” travel policy, which gives you the option to cancel your trip and receive some reimbursement no matter the reason you cite. Cancel for any reason policies must be purchased within a close-in time frame of your trip purchase.

While this level of coverage offers the most peace of mind, it also comes with the highest cost, of course. And despite its name, it sometimes still has exclusions, so you’ll have to read the fine print.

When purchasing travel insurance makes sense

Purchasing travel insurance makes the most sense when you’ve invested a lot of money in a trip upfront, or when it’s required by a destination or a tour operator.

According to SquareMouth, there’s a growing list of international destinations requiring travel insurance for entry. For example, if you want to go to Thailand in 2021, you’ll need to prove you’re insured for at least $100,000 of coverage for COVID-19 related medical treatments.

If you’re planning travel as part of an organized tour, you’ll likely also be required to get a travel insurance policy. Kelly Lewis, founder of Damesly Travel explains, “You just can’t plan for everything, and travel insurance helps to ensure that your trip doesn’t get ruined when life throws a curveball your way. As a tour operator I require my guests to get travel insurance for precisely this reason. The small amount you pay upfront pales in comparison to the treatments and services you may require if something goes really wrong.”

When you can skip travel insurance

Trip insurance only covers non-refundable expenses when you make a claim. If all you’ve booked for your trip is a plane ticket and a refundable hotel room, travel insurance may not actually benefit you at all.

Consider that nearly all airlines have become more flexible with reservations and have started waiving change fees most of the time when you do need to alter your flight. Likewise, most hotel reservations have a 24-to-48-hour cancellation policy, and car rental reservations normally have no cancellation costs unless you’ve selected a pre-paid rate. Though pre-paid rates can sometimes have good discounts, it might be cheaper for you to book a cancelable hotel and car reservation for a few extra dollars and skip the insurance policy.

What credit card travel insurance covers

While credit card insurance isn’t nearly as comprehensive as most travel-specific insurance plans, several of the best travel credit cards offer notable travel insurance benefits to their cardholders, including varying levels of trip delay reimbursement, trip cancellation and interruption protection, baggage delay protection, lost or damaged baggage protection, medical evacuation, travel accident insurance, auto rental collision insurance and emergency medical benefits.

The Chase Sapphire Reserve® offers the most comprehensive travel insurance benefits, providing some level of coverage for every area mentioned above. The insurance offerings from the Chase Sapphire Preferred® and The Platinum Card® from American Express are also good options.

Be sure to read all the rules for your card so you understand exactly what you’re covered for and what’s excluded. You might be surprised to find that some of your cards’ travel insurance benefits have very detailed requirements. For example American Express’ travel interruption protection is only valid if you’ve purchased a round-trip itinerary, and Chase’s emergency medical and dental benefit is only valid for trips arranged by a travel agent.

What if you have already have credit card insurance coverage?

Choosing to rely solely on credit card travel insurance or purchasing a trip-specific travel insurance policy is going to depend on your personal situation and how much risk you’re willing to take.

To make your choice you’ll need to consider what you want to have protected and what you’ll need to have insured. If you’re worried about getting sick or losing your bag if your flight gets delayed, credit card travel insurance is probably enough for you. If you want to book a non-refundable trip to Europe because it’s a good deal now, but you’re concerned that you might change your mind if the pandemic doesn’t get better, then purchasing a cancel for any reason policy might be the best option for you.

The bottom line

Travel insurance offers you some reassurance in the face of traveling during this time of uncertainty—and you’ll definitely be glad you have it if you wind up in your own worst-case scenario. Just make sure you know exactly what you’re signing up for and do it in advance. It’s too late to buy travel insurance once you know that you need it.