Travel Insurance Trends Report: Q2 2026

About Our Data

Squaremouth is the nation’s largest travel insurance marketplace, with more than 4.4 million insured customers and 23+ years of market data. The following data reflects real traveler behavior drawn from thousands of travel insurance purchases made through the Squaremouth platform. Unlike other industry reports based on surveys or estimates, our data reflects actual trends from finalized insurance purchases.

This report is not a comprehensive look at the travel insurance industry; it’s a focused collection of observations and key trends from our own sales data.

All data on this page is available for media use. Please credit Squaremouth.com when citing.

Skip Ahead To Topics We Cover

• Travel Spending Continues Its Exponential Rise
• Travelers Forced to Get Creative With Rising Costs
• Demand for Premium Travel Holds Strong
• CFAR Coverage Top Of Mind Into Summer

Travel Spending Continues Its Exponential Rise

In our Q1 travel trends report, we reported that travel spending had reached a record 20-year high, driven by macroeconomic conditions and jet fuel shortages. However, trip costs have continued to increase, unabated by the recent opening of the Strait of Hormuz and reduced pressures on global fuel supplies.

The data reflects insured trip costs for comprehensive travel insurance policies sold on Squaremouth.com, with travel dates between June 1 and August 31.

The average American now spends $9,032 per person on trips in 2026, up nearly $2,000 versus just 3 months ago.

This cost represents a 17.4% increase versus this time last year, and for context, that’s nearly a 33.1% increase from last year’s 5-year average.

It’s important to understand that these cost figures represent prepaid, non-refundable trip costs declared at checkout, meaning destination spending upon arrival and other refundable expenditures likely place total travel costs even higher for most Americans.

Travelers Forced to Get Creative With Rising Costs

The rise in travel costs isn’t forcing Americans to stay home; instead, they are changing where they go, how long they stay, and how they fund it.

Redirecting Budgets to Fund Travel

In light of record-high trip costs in Q2, one of the clearest trends we see is travelers prioritizing how they spend in order to afford trips this year.

Over half of travelers (54%) surveyed in Q2 reported spending less in other areas of their lives in an effort to fund their 2026 travel plans.

• 19% are spending less on retail shopping
• 13% are spending less on saving or investing
• 12% are spending less on dining out
• 10% are spending less on home improvements or furniture

Taking Trips Closer To Home

Apart from adjusting their spending habits, where travelers are going is also changing.

Squaremouth policy sales data reveals that Americans are traveling closer to home, likely in an effort to reduce the cost of travel.

Canada jumped from 4th to 3rd among the most popular destinations this quarter, overtaking France, while the Bahamas jumped from 11th to 8th, surpassing Japan and the UK. Mexico, the Dominican Republic, Jamaica, and Turks & Caicos are also seeing strong demand, in some cases outperforming historically popular destinations in Europe.

These destinations lend themselves to shorter, more accessible trips and a practical alternative to the traditional 2-week European vacation. This is part of a growing trend coined “the long international weekend”.

Shorter Itineraries

Travelers are also spending less time at their chosen destination.

Our data shows that reported trip cost for Gen Z travelers remains flat year over year, while the industry at large has seen costs rise by roughly 24%. In essence, as Gen Z’s budget remains fixed, they are reducing trip length to account for the increase in the cost of travel year over year.

In fact, Squaremouth data shows that trips booked by Gen Z have reduced in length by between two and five days, year over year:

• Sales for Medical-only policies show average trip reductions of five days, declining from 25 days to 20.
• Sales for Comprehensive policies show average trip reductions of two days, declining from 17 days to 15.

Although we see clear variations in the way in which different segments adapt their plans to afford their trips, this data all points to one conclusion: travel remains a priority in 2026, despite budget constraints.

Demand for Premium Travel Holds Strong

The rising costs this quarter haven’t slowed demand for premium travel. In fact, two trends in our data show that it’s actually accelerating:

1. Everyday travelers aspire to take luxury trips and are willing to stretch their budget for bucket-list experiences.
2. High-end travelers are not deterred by macroeconomic pressures and are spending more than ever.

Aspirational Travel Drives Increased Spending

A survey of over 3,000 Squaremouth customers found that over 40% of travelers reported plans to voluntarily increase their travel budgets in pursuit of more frequent and premium experiences:

• Nearly a quarter of travelers (23%) plan to spend more this year to get a premium or bucket-list experience.
• Another 20% of travelers plan to spend more to take additional trips.

When asked if they were planning a luxury vacation within the next 2 years:

• 46% of travelers answered yes, with the desire for a luxury island vacation being the top priority among respondents at 19%.

Logic would dictate that as prices increase, the demand for expensive aspirational travel would decline. However, this data shows that aspirations for premium travel remain high, despite cost constraints.

As seen in previous sections, cost constraints aren’t causing travelers to abandon their goals; they’re finding ways to achieve them.

Existing High-End Travelers Are Unfazed

While cost pressures and global uncertainty have hindered most traveler segments, the opposite is happening at the top of the market. More than half of surveyed luxury travelers (55%) said they can afford the type of travel they want without making tradeoffs.

• Insured trips over $10,000 and $20,000 are up 15.9% and 17.9%, respectively, while trips under $10,000 remain flat.
• Even with reported Ebola outbreaks in African countries that border popular safari destinations like Kenya and Tanzania, safari bookings are up 10%, with an average trip cost of $25,000.
• Similarly, in April and May, high-profile hantavirus and norovirus outbreaks on Antarctic expedition vessels captivated the news, but luxury cruises to Antarctica are up 34% year-over-year, averaging roughly $27,000 per trip.

Just like other traveler segments, luxury travelers are finding creative ways to problem-solve rather than foregoing travel altogether.

This group continues taking the trips they want, and simply opts for stronger travel insurance coverage. Demand for premium insurance upgrades like Cancel For Any Reason and Interruption For Any Reason has nearly doubled among luxury travelers versus last year, from 10% to 19%.

CFAR Coverage Top Of Mind Into Summer

Cancel For Any Reason (CFAR) coverage appears to be one of the main ways travelers are providing themselves with a backup plan amidst global uncertainty this year.

The data reflects the distribution of reasons cited across all CFAR-related customer service interactions on Squaremouth.com during Q2 2026.

Out of almost 11,000 calls handled by the Squaremouth Customer Service team, almost 3,000 mentioned CFAR.

32.5% of the time, interactions wanted assistance regarding their geopolitical and safety concerns.

In these calls, customers specifically referred to:

• The armed conflicts involving Iran and Israel
• Active global and regional travel advisories
• Global fuel shortages
• A general sense of feeling unsafe at their destination

Interestingly, a large portion of travelers cited a general sense of unease, even in cases where no formal advisory had been issued.

Life & planning uncertainty was the next most common reason travelers sought CFAR guidance, cited in 27.4% of interactions. These calls typically had trips booked 12 to 18 months out and were concerned about the unpredictability of their own life circumstances as much as the global travel climate at the time of departure.

Work & business uncertainty accounted for another 21.3% of interactions, largely among business owners and consultants who cited the appeal of CFAR’s “no-questions-asked” cancellation flexibility.

Elderly or ill family members drove 11.2% of interactions. In most cases, these customers had family members with a known diagnosis (cancer, dementia, general health) and were concerned that standard cancellation protection might not be enough.

Lastly, the smallest category, at 7.6%, came from travelers who had previously been denied on a standard cancellation claim and were investigating how to avoid a similar outcome in the future. These customers understood the value of travel insurance and were focused on choosing the right level of protection that would guarantee reimbursement in the event of a claim.