What Travel Insurance is Right For You? When to Buy or Not

Regional Travel – Credit Card Insurance

For local, more regional travel, we often do not buy extra travel insurance. This is primarily because our credit cards typically come with limited travel insurance that is good enough for us.

My Chase Ink Business card, for example, includes decent car rental, baggage delays, trip cancellation/interruption, trip delay, and lost baggage insurance to name a few. My personal Chase Sapphire Preferred also has pretty decent coverage options, too.

So if you have a stash of travel credit cards, you may be able to get by with some of the coverage options provided as an extra benefit.

Credit card coverage can vary considerably, so you would do well to read out your card’s policies carefully before opening a card and/or booking travel. Likewise, most cards require you to have booked your travel on that card to receive coverage. For example, to receive car rental coverage, you typically must book the credit card using the card with coverage, and the name of the primary driver typically needs to match the cardholder. Second drivers are sometimes not covered, too, or may only be covered if they are named as an additional cardholder.

You tend to only get the benefit if you used the card for the purchase, not for blanket coverage!

In many cases, coverage here can be hit or miss- both in monetary limits and sometimes missing broad categories outright. A nominal bag reimbursement for delay or loss of luggage may not cover all of your belongings. Trip delay insurance typically has long minimum periods before benefits kick in (often 12 hours for my cards). Broader health coverage is often not included at all.

For me, this is a balance of risk and reward. Traveling regionally I’m often not spending as much money as an international trip, have my local health insurance to cover me, and am okay with the risks of extra issues for nominal cost savings.

National Travel – Credit Card or Short Insurance Plan

More national travel, specifically cross-country travel, I consider it a toss-up.

Most of the time, we don’t buy any extra insurance and rely on our credit cards as mentioned with regional travel, above.

But as we go on more elaborate vacations, either be it for increased cost, more remote domestic destinations, having an activity that may require additional medical coverage, or simply traveling for something a bit more consequential that we cannot miss, we can see the logic of paying for a short travel insurance plan.

Dedicated travel insurance typically has a lot of extra benefits over credit cards, including higher coverage limits, better trip delay/interruption options (say, 3-6 hours for trip delay coverage to kick in vs 12+), and included health coverage to name a few.

On a recent trip to the Telluride Bluegrass Festival, for example, our flight from Dallas to Montrose kept getting delayed for mechanical issues. We were genuinely concerned the flight was going to get canceled and, given the rural nature of the destination with typically just one flight a day (if that), we were legitimately running through the hypotheticals of how we’d get there otherwise- most would’ve resulted in missing a day or two of the festival outright and a lot of lost money.

We ended up being okay as the flight finally took off without issue, but had it been any longer a travel insurance policy could’ve activated whereas our credit card would’ve required a delay of 12 hours before any coverage would possibly have helped us even just a nominal amount.

So this one, to me at least, varies and could be based on your own personal circumstances. I probably should’ve bought a travel insurance plan for that Telluride trip due to the cost, if I am honest, but I am glad it worked out in the end.

International Travel (One or Two Trips a Year) – Short Insurance Plans

The minute we leave the country, however, we buy travel insurance- always.

The reasons for this are many, and include that these trips can be much more expensive, are much more consequential for delays, have more baggage insurance concerns (especially important for souvenirs on the way home), and, of course, the variability of healthcare access and costs when abroad.

Now, we know most countries not named the United States have good medical care for that latter point. But, not being citizens and not knowing the local markets, having extra travel insurance that provides medical coverage is simply peace of mind for whatever may come. (And, if you’re not American but traveling to the USA- it is especially important.)

Although our credit card may provide some nominal coverage for, say, a rental car, having premium travel insurance in a more comprehensive package lets us be covered for a larger array of reasons be it trip delay, interruption, car damage, possibly secondary driver as long as they’re also on the policy, or what have you.

This goes a long way for protecting a more important (and expensive) international trip that we had been planning for months or, in many cases, years.

• Note: Many short travel insurance plans scale coverage limits, and policy price, by the declared value of the trip. A covered trip of $2,500 value may have drastically different coverage limits and price to that of a $25,000 trip. We often scale our coverage amounts to a level of acceptable risk to maintain reasonable policy rates.

International Travel (Many Trips a Year) – Annual Plan

But there is one final travel insurance category that often is not discussed, and that is annual travel insurance plans.

As the name implies, annual plans protect covered travelers for all trips over a 12 month period (likely with some exceptions, of course- such as covered destinations or individual trip lengths).

These plans have an excellent perk in that their policy costs are often around the same price as two to three normal trips of reasonable cost. So if you travel a lot, and subsequently purchase two or more insurance policies per year, you may come out ahead buying a yearly policy, having coverage for all trips be them domestic or international, and call it a day.

Most years, we travel on three to four international trips and two or three domestic trips (plus nominal regional travel), so more often than not we always hold an annual policy at all times unless we have a big gap in coverage periods when a policy ends.

This happened during the previously mentioned Telluride trip because we had no international travel from a stretch of April to November, and our policy had just expired a few weeks prior to heading to Colorado- it didn’t really make sense to pay for another year of coverage when we had a five month gap right after, so we decided to rely on our credit cards for this one.

So in this instance, the decision to hold an annual plan may come with some caveats, the biggest of which is just making sure that you have enough trips planned in a rolling 12-month period to make it work- both for when you initially buy and around renewal time.

That said, it is worth noting a downside to annual plans as well- their coverage limits can be a fair bit lower in most categories and may be reduced by upwards of half of a similarly priced individual plan.

• Note: Some companies that offer annual plans have a max trip duration for any single trip, often 45 days. If you are taking a long-term trip with longer stints on the road, be sure to look into these details further.

So, Which is Right For You? Risk vs Cost

But, with everything, it goes back to being a balance of risk vs cost.

Individual plans can really let you scale the coverage limits to match the price of each trip, but the cost goes up to match. Annual plans often have lower upfront premiums, but you have lower coverage limits over a longer period of time.

Would we consider relying on an annual plan solely for a highly consequential, $30,000 trip to Antarctica? Perhaps not. Would we price an individual insurance policy for that same Antarctica trip to cover the full $30,000 value and incur the insane premium to cover it? Also, perhaps not- we likely would scale the coverage limits down a reasonable amount to hedge our bets in key categories.

Are we glad Angie’s parents paid a (to us) crazy premium to cover their Norway trip that ultimately had to get canceled at last minute? Absolutely- they got almost all of their money back without question, although their risk of having a trip canceled was much higher than ours on average.

This is where your specific circumstances come into play, and that is up for you to figure out for your unique case and tolerance for risk.

What do you consider when you buy travel insurance? Comment below to share!