What is Travel Insurance & How Does It Work?
Key Takeaways
- Travel insurance is a type of insurance policy that provides reimbursement if your trip is disrupted by an unforeseen event.
- Comprehensive travel insurance is the most popular type of policy, providing the most robust protection against cancellations, medical emergencies, delays, baggage loss, and more.
- Annual travel insurance covers any number of trips taken within 12 months and can be a cost-effective option for frequent travelers
- While travel insurance is usually optional, some destinations and tour operators require proof of travel insurance coverage.
- We recommend comparing travel insurance plans from multiple providers to get the best policy at the lowest price.
Whether you’re traveling across the country or around the world, every trip comes with some level of risk. Even minor disruptions can quickly turn into costly setbacks.
For example, you might come down with the flu just days before departure and have to cancel your trip. Or your flight could be delayed overnight due to mechanical issues, leaving you to cover unexpected hotel and meal expenses. In truth, any unforeseen travel event can have negative financial consequences.
Travel insurance is designed to give you peace of mind before and during your trip by protecting you financially if things don’t go as planned. Follow along as we dive into the details so you can purchase your coverage with confidence.
What is Travel Insurance?
In short, travel insurance is a type of insurance policy that protects you against financial losses and unforeseen events that occur before or during a trip. Common examples include cancellations, medical emergencies, flight delays, and lost belongings.
Coverage typically works on a reimbursement basis, just as it does with most forms of insurance. This means that if a covered event results in out-of-pocket costs, such as an overseas hospital bill, you can file a claim with your provider to be reimbursed.
Travel insurance is more common than you might think. According to a 2025 survey from Upgraded Points, roughly 60% of Americans have purchased travel insurance at some point in their lives. As travel becomes more expensive and unpredictable, the need for reliable trip protection continues to grow.
What Does Travel Insurance Cover?
Travel insurance coverage varies by plan and provider, but generally includes protection against the following events:
Trip Cancellations
If your travel plans get cancelled because of a covered reason, like an illness or a hurricane at your destination, the Trip Cancellation will refund you for prepaid flights, cruises, and other expenses.
Based on data from the past 12 months, the average trip insured through Squaremouth includes over $7,000 in prepaid, non-refundable trip costs, which means Trip Cancellation can save you thousands if you’re forced to cancel.
Trip Interruptions
Travel insurance covers disruptions that occur while you’re on your trip. For instance, if you had to depart a trip early due to a family emergency at home, Trip Interruption would reimburse you for missed trip expenses and additional transportation home.
Medical Emergencies
Emergency Medical coverage can reimburse you for medical expenses in case you or someone you are traveling with is sick or injured on your trip. It may cover hospital stays, doctor visits, prescription medications, and other unexpected medical expenses.
According to a recent Squaremouth survey, suffering a medical emergency during a trip is the most common concern among travel insurance customers. Since U.S. health insurance is not accepted abroad, getting adequate treatment can be a stressful and costly endeavor.
Important Note: Most travel insurance providers can also assist you in finding the best local care at your destination and arranging upfront payment on your behalf if required for treatment.
Emergency Evacuations
Most travel insurance plans cover an emergency Medical Evacuation if you get seriously sick or injured while traveling and need to be transported to a facility that can provide the best care. This coverage is crucial, because an evacuation is one of the most expensive emergencies you can face while traveling.
Travel insurance generally offers two types of evacuation protection:
- Medical Evacuation: If you suffer a severe injury or illness, medical personnel can airlift or transport you to the nearest facility capable of providing adequate care.
- Non-Medical Evacuation: If your destination experiences a natural disaster, terrorist attack, or civil unrest, this coverage helps transport you to a safe location.
As noted by the CDC, emergency evacuations can cost more than $100,000 per person. Without coverage in place, this expense would fall entirely on you, potentially creating a significant financial burden during an already stressful situation.
Significant Delays
Travel insurance can help cover the cost of Trip Delays due to weather, mechanical issues, or other covered reasons. This coverage typically includes flights, cruises, trains, and buses.
Flight delays occur fairly frequently. A recent report from the U.S. Department of Transportation revealed that around 1 in 5 flights are delayed at least 15 minutes. While short delays can be relatively harmless, longer disruptions can result in meal and hotel purchases as you wait for your new departure time. Travel Delay coverage can save you hundreds of dollars in expenses in this situation.
Lost, Damaged, or Stolen Items
Travel insurance includes Baggage Loss protection, which can reimburse you for items that are lost, stolen, or damaged during your trip, helping to minimize the financial impact of these unexpected events. This coverage may also cover losses due to pickpocketing, bag snatching, and other petty crimes while you are traveling, like having your wallet stolen out of your bag while strolling down Barcelona’s La Rambla.
24-Hour Emergency Assistance
If you need assistance while you’re traveling abroad, most travel insurance policies include 24-hour emergency assistance. You can get help for things like a lost passport, arranging alternate travel, or finding a medical facility.
What Does Travel Insurance Not Cover?
There are certain situations in which travel insurance does not apply, known as travel insurance exclusions, which can vary from one policy to the next. Some of the most common exclusions include:
Pre-Existing Conditions
In most cases, your policy will not reimburse you for medical expenses if you experience a flare-up of a pre-existing medical condition during your trip.
Common examples of pre-existing conditions include:
- Diabetes
- Joint issues like arthritis & herniated disks
- Breathing issues like asthma & COPD
- Heart disease, heart attacks, high blood pressure, or strokes
- Recent injuries
Tip: A policy with a pre-existing condition waiver essentially removes the pre-existing condition exclusion and applies coverage if a flare-up disrupts your trip. You generally need to purchase coverage within 14-21 days of your initial trip deposit to qualify.
Expected Events
Travel insurance is designed to financially protect you against unavoidable disruptions that are beyond your control, and won’t cover foreseen events, like:
- Fear of flying or general travel anxiety
- Changing your plans or travel destination
- Deciding that the trip is no longer worth taking
- Events that were known before you purchased your policy
Named Storms and Foreseen Natural Disasters
If a storm, natural disaster, or other severe weather event is considered foreseeable at the time you purchase your policy, travel insurance will not cover any resulting delays, cancellations, or interruptions.
A storm may be considered “named” if:
- It’s officially named by a meteorological authority
- A government agency issues a travel advisory
- It’s otherwise publicly announced (e.g., reported in the news)
High-Risk Activities
The majority of travel insurance plans will not reimburse medical expenses if you get in an accident while participating in high-risk activities, like skiing, rock climbing, scuba diving, and mountain biking.
However, some providers do offer adventure travel insurance policies that cover unexpected injuries, evacuations from remote areas, lost or delayed sports equipment, and more.
>> See the best adventure travel insurance plans.
War or Civil Unrest
Most policies won’t cover cancellations or interruptions due to acts of war, civil disturbance, or insurrection. This is due in large part to the extreme scale and unpredictable nature of such events, making it difficult for insurers to factor into a policy.
While rare, some insurers do cover Level 4 Travel Advisories issued for your destination during your coverage period.
Medical Tourism
Since travel insurance is designed to cover unexpected medical costs, any planned or elective procedures abroad are excluded from coverage. This means, if you’re traveling for medical treatment or a medical procedure, your policy will not cover any health-related expenses, including complications from your procedure.
If you plan to receive medical treatment in a foreign country, it’s important to find an insurance provider that specializes in medical tourism coverage, in case it results in a medical emergency.
Illegal Activities
Breaking the law is never covered by travel insurance. Disruptions resulting from criminal activity both before and during your trip are commonly excluded from travel insurance protection.
Coverage for any resulting injuries, damages, or legal expenses are also typically voided.
Alcohol & Substance Abuse
Consuming recreational drugs or alcohol typically voids any travel medical coverage you may have. For example, treatment for alcohol poisoning or overdose is generally not covered by your travel insurance policy.
Note that this clause does not typically apply to prescription drugs taken in accordance with treatment prescribed by your physician.
Pregnancy Checkups or Childbirth
Normal pregnancy activity, such as routine checkups or childbirth, is typically excluded from coverage. Pregnancy complications may be covered by travel insurance, but this is never guaranteed, so it’s important to plan your trip at a time when it is safe to travel.
Routine Medical Procedures
Routine medical care is a foreseen event, so it is not covered by travel insurance.
Examples of routine medical care excluded from coverage include:
- Routine doctor visits
- Preventive care, including vaccinations
- Prescription refills
- Annual physicals or wellness exams
Real Trip Scenarios: Is It Covered?
The table below walks through specific situations travelers commonly ask about, along with why each one is (or isn’t) typically covered by travel insurance.
| Situation | Typically Covered? | Why? | What You Need |
|---|---|---|---|
| You get food poisoning while traveling and miss your flight home | Yes | Sudden illnesses are considered an unforeseen event and covered by travel insurance | Keep any medical documentation pertaining to your doctor or urgent care visit |
| You hear about a hurricane forming near your destination and purchase a policy to protect yourself | No | The storm wasn’t foreseeable at the time of purchase | Purchase your policy as soon as possible |
| You break your leg while mountain biking during your trip | No | High-risk activities and adventure sports are often excluded from coverage | Purchase an adventure travel insurance plan that includes the Sports & Activities benefit |
| You have a heart issue that flares up mid-trip and requires medical attention | No | Pre-existing medical conditions are not eligible for coverage under most plans | Find a policy that offers a pre-existing condition waiver (and be sure to meet eligibility requirements) |
| Your bag is stolen from a locked hotel room | Yes | Stolen items are typically covered under the Baggage Loss benefit | Most insurers will require you to file a policy report before filing a claim |
| You go into early labor with no prior complications during your trip | No | Regular pregnancy is not covered by travel insurance | Purchase a policy with the Interruption For Any Reason (IFAR) add-on |
| Your gate agent cancels your flight for a mechanical issue | Yes | Mechanical issues are generally covered by Trip Delay coverage | Keep all documentation, such as airline alerts, proof of delay, and booking confirmations |
Tip: You should review a policy’s Certificate of Insurance to see its exact list of coverages and exclusions. Policy certificates can be overwhelming and full of technical language, so be sure to contact the provider or our customer service department for clarification.
How Do I Use My Travel Insurance?
If something unexpected happens before or during your trip, you can file a claim with your insurance company to get reimbursed. While the exact process of filing a travel insurance claim depends on the insurer, here’s the general process:
- Contact your insurance company: Call your insurance company’s customer service or claims department to start a claim. Most insurers also allow you to file claims online.
- Gather your receipts: Collect the documentation for your claim, like hotel receipts or an airline email confirming a flight cancellation.
- Complete claim forms: Fill out the necessary claim forms and include your receipts and other documents. Once you submit the claim, the insurer will review it.
- Get reimbursed: If your claim gets approved, you’ll receive reimbursement for the money you spent.
Be sure to follow these best practices:
- Keep your receipts for flights, hotels, emergency medical visits, and excursions.
- Save official correspondence from airlines or cruise carriers for delays or cancellations.
- Understand your policy’s limits, so you know how much is covered.
- File a police report for situations like accidents or stolen belongings.
How Much Does Travel Insurance Cost?
The average cost of comprehensive travel insurance is roughly 4% to 10% of your total trip cost.
Medical travel insurance plans are much cheaper. Our data shows that a medical-only travel insurance policy costs costs as little as $1 a day. However, these policies don’t include coverage for things like cancellations and interruptions.
The 3 Best Types of Travel Insurance
There are four main types of travel insurance available online, each serving a unique purpose:
- Comprehensive Coverage: The most popular kind of travel insurance, providing broad protection for trip cancellations, medical emergencies, travel delays, and baggage loss. Ideal for international travelers with non-refundable trip costs.
- Travel Medical Insurance: Focuses primarily on medical emergencies abroad, including hospital stays, doctor visits, and medical evacuation. Best for budget-friendly travelers concerned about healthcare costs while overseas.
- Annual (Multi-Trip) Insurance: Covers multiple trips within a year under a single policy, often at a lower cost than purchasing separate policies for each trip. Great for frequent travelers.
- Group Travel Insurance: Covers travel groups of 10 or more at a discounted rate.
This is a high-level overview of the main types of travel insurance you may encounter. For a deeper dive, check out our full guide: “The Most Popular Types of Travel Insurance.”
What Are ‘Trip-Specific’ Travel Insurance Plans?
Certain trips carry unique risks that standard coverage may not fully cover. Trip-specific travel insurance plans are designed for these getaways, offering benefits and coverage limits tailored to the particular type of vacation.
Providers create these specialized policies to ensure their customers are fully protected while away from home. Here are some examples of trip-specific plans available on Squaremouth:
- Cruise Travel Insurance: Includes cruise-specific benefits like Missed Cruise Departure coverage and high Medical Evacuation protection in the event you need to be airlifted at sea.
- Flight Insurance: Provides strong coverage limits and low minimum delay periods for flight-related benefits like Trip Delay, Missed Connection, and Baggage Delay.
- Family Travel Insurance: Offers complimentary coverage for children under the age of 18, providing substantial travel insurance savings for large families.
- Adventure & Sports Travel Insurance: Covers high-risk adventure sports and activities that are commonly excluded from standard trip protection.
When is Travel Insurance Required?
Travel insurance is generally only mandatory if your destination or tour operator requires it. While this is rare, failing to provide proof of coverage can result in denied entry, inability to board a tour, or financial penalties, making it important to confirm requirements before traveling.
For example, all major Antarctica cruise lines require passengers to have travel insurance with high Medical Evacuation coverage before boarding. Similarly, all Schengen countries mandate travel medical insurance for visitors who require a visa.
More often than not, though, travel insurance is optional but strongly recommended to protect against unexpected medical emergencies, trip cancellations, or lost belongings.
5 Tips for Finding the Best Travel Insurance Plan
1. Determine Your Coverage Needs
Take a moment to review your itinerary and consider any destination-specific travel risks. This can help you get a better feel for the type of travel insurance plan you need, the benefits to prioritize, and the reimbursement rates to look for.
For example, safari trips often require high Medical Evacuation coverage due to travel in remote national parks, while a trip to India may call for higher Emergency Medical coverage to account for unexpected illness.
2. Check for Existing Travel Protection
You may already have trip protection without realizing it. Many travel credit cards offer benefits such as Trip Cancellation and Trip Delay to assist cardholders while traveling.
However, this coverage rarely includes medical protection, so it should be used as supplemental coverage alongside a dedicated travel insurance plan.
3. Compare Options From Multiple Providers
Travel insurance coverage and premiums can vary dramatically from one provider to the next. It’s not uncommon to see almost identical plans offered by different providers at two completely different prices. Comparing your options is the only way to know you’re getting the best plan at the lowest cost.
Using a comparison site, like Squaremouth, can save you a lot of time and stress when going about this process. We suggest getting quotes from at least three different providers. Due to the uncertainty of travel, consider plans that include optional benefits such as Cancel For Any Reason (CFAR) and Interruption For Any Reason (IFAR).
4. Review Lists of Popular Policies
Not all travel insurance providers are household names. Unless you frequently purchase trip protection, many of the companies and plan names you encounter are likely completely new to you.
To help, we’ve created a handful of lists that include some of the top-selling travel insurance policies for various categories:
- Best Medical Travel Insurance
- Best Senior Travel Insurance
- Best Cruise Insurance
- Best International Travel Insurance
- Best Domestic Travel Insurance
5. Pay Attention to Policy Coverage Limits & Exclusions
Every travel insurance plan comes with coverage limits and exclusions that define what is and what isn’t covered. Before purchasing a policy, carefully review these details to avoid surprises if you need to file a claim.
For example, some plans limit coverage for high-risk activities like scuba diving or skiing, while others exclude pre-existing medical conditions unless certain eligibility requirements are met. Understanding these limits and exclusions ensures you select a plan that truly meets your needs and provides the protection you expect.
Checklist When Reviewing Travel Insurance Policies
Whether you’re purchasing travel insurance for the first time or the 1,000th time, a little checklist doesn’t hurt. When reviewing policies from different providers, make sure the following items are covered:
- Your itinerary: Make sure all activities you plan to pursue during your trip are eligible for travel insurance coverage.
- Your health: Since U.S. health insurance is not accepted overseas, we recommend at least $50,000 in Emergency Medical coverage when traveling abroad.
- Your destination: Some destinations are excluded from coverage due to conflict or terrorism threats.
- Your travel expenses: If you’re getting comprehensive coverage, ensure the Trip Cancellation coverage covers all of your upfront costs.
- Your trip length: Some single-trip travel insurance plans cap trips at 30 days, which may not work if you’re taking an extended vacation.
- Your baggage: If you’re traveling with valuable items, make sure your plan includes strong Baggage Loss protection.
Keep in mind, when you start a quote on Squaremouth, we will only show you policies that match your trip details, eliminating a lot of the guesswork. Visit our complete guide on buying travel insurance on Squaremouth for more information.