Is 2025 the Year for Travel Insurance?
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Putting the final touches on your 2025 travel plans is an exciting time. What’s not so exciting? Thinking about all of the things that could go wrong.
Forty-four percent of would-be travelers are worried about delays and cancellations this year, and one in five are even avoiding travel because of it, according to a recent survey from a unit of Fidelity National Financial.
And it’s understandable. There’s always that lingering worry that you or your loved ones will get sick before or during a big trip, but nowadays all the extreme weather can make travelling feel pretty unpredictable. And then there is the state of the world. It’s hard not to consider how overseas wars and other international political turbulence could affect your plans.
One way to protect yourself — financially, at least — is travel insurance. But how does it work and is it worth the cost? Now’s a great time to learn more.
Types of Travel Insurance Plans
Travel insurance can be confusing, partly because different types cover different things. People often misuse terms, too, referring to various forms of coverage interchangeably. And there are lots of rules and stipulations about the amount of coverage and the circumstances, all of which can vary by provider.
To try to simplify things, here’s a quick breakdown. Travel insurance is generally the umbrella term used to describe four main types of protection:
• Trip cancellation: The biggie. If you can’t travel for certain reasons outside of your control, you can get back some or all of the money you’ve already paid. Covered reasons may include illness, the death of a non-traveling family member, weather, an unforeseen natural disaster, or a legal obligation like jury duty. The key is what’s listed in the policy. (If you’re worried about political unrest or other things that aren’t listed, you might be able to pay extra to add a “cancel for any reason” provision to your policy. Just know that this will cost more and usually only cover 50% to 75% of a trip’s cost.)
• Trip interruption/delay: While trip cancellation covers trips before they begin, this covers trips that are cut short or otherwise interrupted. It can be something as simple as your flight is delayed, causing you to miss connecting flights you’ve already paid for. Sometimes lodging and other expenses are covered while you’re waylaid, too.
• Baggage: Losing your luggage is a huge pain. A lost baggage policy pays you for personal belongings lost or stolen in transit, and a baggage delay policy covers things you need to buy while waiting for your suitcase to catch up to you.
• Medical care: Travel medical insurance pays the doctor bill while you’re abroad, while emergency evacuation insurance foots the bill to bring you stateside again if needed.
Sound like a lot? It is. But you can often get more comprehensive plans that bundle more than one type. Just remember, it’s on you to make sure that your coverage has all the features you want.
Cost of Travel Insurance
Having this type of extra peace of mind is great, but the key question is whether it’s worth the cost, right? A typical bundled travel insurance policy usually costs between 4% and 8% of the price of a trip, according to the U.S. Travel Insurance Association. That’s for trip cancellations and delays, baggage loss and delays, and travel medical coverage and evacuation costs.
(If you’re wondering, SoFi doesn’t offer travel insurance. But if you want to free up some of your travel budget for insurance, consider checking out the hotel deals SoFi offers members who book travel in the SoFi app.)
How to Decide Whether to Get Travel Insurance
Start with this basic question: Can you afford the financial hit if (insert possible travel fiasco here) happens? Can you handle either paying double to book a second trip, or skipping it altogether? If not, it’s a good idea to consider travel insurance. You’ll also want to check the coverage you either already have or are being offered when you book the vacation.
• Consider your risks: What will you be doing on the trip? Do you have health conditions that might require you to make an early exodus? Consider emergency evacuation coverage. What about your stuff? If you’re just packing shorts and t-shirts for your summer getaway, then maybe you’re not worried about losing your luggage. But if you’re bringing along your spiffy new stand-up paddleboard, the scales might tip in the “buy insurance” direction.
• Check your existing coverage: See what’s covered and what isn’t. Health insurance here doesn’t necessarily apply abroad. (Medicare and Medicaid won’t cover you overseas, for instance.) But many credit cards offer some travel insurance benefits and you may be able to use your auto policy for renting a car or your renters or homeowners coverage for baggage theft.
• See what you can get through your airline, hotel or tour operator: Travel insurance can often be purchased from travel agents and travel suppliers as well as insurance companies and brokers. So shop around to see who has the best prices for the most comprehensive coverage.
Really Read the Fine Print
Travel insurance works a bit differently from other insurance you’re used to. It can be a bit scattershot, and you don’t want to get caught off guard without protection you thought you had.
Case in point: If a tree falls on your home, your homeowners insurance will cover the damage. But what if that fallen tree keeps you from going on a trip? Will travel insurance cover your costs? Maybe not. Since travel insurance is for unforeseen events, it typically doesn’t cover claims related to a tropical or winter storm if you bought the insurance after the storm was on the radar.
These kinds of variables make it especially important to read and understand the fine print before you buy any coverage. Your credit card might offer a loss damage waiver when you rent a car, for example — but it’s usually secondary coverage, meaning it doesn’t kick in unless you file a claim with your own auto insurer or the rental car policy first. And that could affect your auto insurance premium for years.
Another example? Medical travel insurance can help if you get sick with a nasty stomach bug — but not necessarily if you’re injured in a skiing or SCUBA diving accident. You could need special coverage for those kinds of higher-risk activities.
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