How Much is Travel Insurance?

You’ve been looking forward to your dream international backpacking trip all year. Unfortunately, life had other ideas. 

You can’t plan for every calamity while traveling, but you can mitigate the consequences. That’s the beauty of travel insurance. 

Of course, for budget travelers, peace of mind can’t price you out of taking your trip. So it pays to ask how much travel insurance actually costs before you pay an arm and a leg (or pay too little for a plan that doesn’t protect you). 

Unfortunately, there is no pat answer to help you puzzle out the cost of travel insurance. It’s determined based on a variety of factors. To understand why that is (and how much your policy will cost you) here’s a look at what travel insurance covers and how that translates to your upfront expenses. 

What is Travel Insurance?

Insurance doesn’t prevent trouble, but it does offer financial insulation if trouble arises. Following the same basic premise, travel insurance is a type of insurance covering the costs and losses associated with travel, domestically or abroad. 

Like other forms of insurance, travel insurance covers specific events up to a predetermined coverage limit. Coverage limits are determined by the insurance premium, which is paid upon purchase or on the policy’s long-term renewal date. 

Covered risks and exclusions vary by policy type, but often include things like: 

  • Trip interruption due to non-excluded events
  • Trip cancellation (in part or in whole)
  • Emergency evacuations (physical dangers or emergency medical evacuation)
  • Service provider failures
  • Lost or delayed baggage
  • Theft and other crimes
  • Medical treatment
  • Accidental dismemberment due to a non-excluded event
  • Accidental death

Needless to say, not every trip will involve accidental dismemberment. Most won’t even have lost baggage. But if those things do happen, your travel insurance policy will cover you. 

It’s worth noting that not all policies exclude all non-covered events. Most travel insurance plans offer an optional add-on, or rider, called Cancel for Any Reason (CFAR) coverage, which partially refunds otherwise non-refundable travel expenses if you cancel your trip for a reason not outlined in the policy (or for no reason at all). 

It won’t refund the total trip cost, but it will usually give back 50% to 75% of non-refundable trip costs. 

Common Types of Travel Insurance

The most common and comprehensive type of travel insurance policy is trip insurance, in the form of single trip or annual trip travel insurance policies. Single trip plans offer travel coverage for a single trip or parts of a trip, while annual trip insurance are good for any trip within a year of opening the plan. Frequent travelers usually opt for annual travel insurance plans 

Within those two policies, there are several common types of coverage—and the coverage you include changes the cost of your policy. 

Trip Cancellation

Other than the obvious difference, the key difference between single and annual plans lies in interruption and cancellation coverage. If you compare plans, you’ll quickly spot the difference. 

A single trip travel insurance plan usually has generous coverage for trip cancellation or interruption. Annual policies, on the other hand, have limited or nonexistent cancellation and interruption coverage, though a travel insurance company will often offer supplemental trip interruption or cancellation protection for annual policy holders. 

This is one of the most commonly invoked forms of travel protection. It also reimburses prepaid and otherwise non-refundable expenses like a hotel room, a rental car, and airfare. Coverage limits vary depending on the policy, but commonly covered situations include: 

  • Job-related obligations that conflict with planned travel
  • Involuntary termination by your employer
  • Eventualities like the birth of a child
  • Death or serious illness (your own or an immediate family member)
  • A natural disaster
  • Inaccessible destinations
  • Crimes committed against you shortly before your trip
  • A serious traffic accident shortly before your trip
  • Involuntary military service
  • Jury duty

It is not to be confused with trip interruption coverage, which applies to trips cut short while in progress. Allowable circumstances are similar to those covered under cancellation coverage. 


There are two types of insurance coverage under the delay category: delay coverage and missed connection coverage. 

Travel delay coverage is narrowly defined to reimburse expenses from unexpected travel delays, usually six hours or more. Covered circumstances are also much narrower than cancellation or interruption coverage and usually include: 

  • Lost travel documents
  • Natural disasters
  • Severe weather
  • Civil unrest
  • Unannounced strikes
  • Crimes against you and other travelers in your party

Missed connection coverage is even narrower—it only covers expenses from a missed connection or excursion, such as flights or cruise day trips. It covers expenses like re-bookings, baggage shipping, and the like. 


And speaking of baggage, travel insurance can also help you avoid a headache if your baggage is lost (we’re advocates of carry on-only travel, but this policy is a relief for travelers who haven’t quite made the switch). There are two types of baggage coverage: baggage loss and damage coverage, and baggage delay coverage. 


When emergencies strike, you might need medical care. With emergency coverage, you can be reimbursed for medical care and transportation due to an emergency. These policies are critical in countries where medical care is expensive for those without insurance (like the United States, for example). 

Typical travel insurance policies often reimbursements for emergency medical care and emergency transportation. Coverage limits can be quite high—above $100,000 is not unheard of for emergency transportation coverage due to the high cost of emergency medical transportation in remote areas. 


Last but not least is coverage for business travelers. If you’re a travel photographer and travel with a collection of expensive camera equipment, for example, business equipment coverage offers some peace of mind. You can also insure rental equipment, which is separate from coverage for equipment that you own. 

That said, business equipment coverage usually isn’t all that generous—usually only $1,000 to $2,000, which is a drop in the bucket if you travel with high-end equipment. If your equipment is on the pricey side, it’s usually best to insure it separately. 

Other Types of Travel Coverage

All of those inclusions fall under trip insurance. Since most travelers opt for trip coverage, you’ll most likely deal with those inclusions. That said, there are other types of travel insurance plans, though they’re specialized and far less common. There are four alternative options to trip insurance: 

  1. Medical
  2. Evacuation
  3. Accident
  4. Supplemental

Travel medical insurance is like medical insurance away from home. These plans reimburse you for medical expenses incurred outside of your home country (U.S. citizens and permanent residents without overseas coverage often opt for this type of policy). 

Evacuation policies cover urgent, emergency evacuations and repatriation trips, including medical evacuation coverage. These are more expensive (single-trip policies usually cost $10 to $15 per person per day, while annual policies start at $100 per person per year) but insurers coordinate evacuation with local providers so you don’t have upfront out-of-pocket costs. 

Accident coverage, to put it bluntly, helps reduce the cost of serious injuries or premature death. This type of plan is often chosen by travelers without life insurance. 

Supplemental policies are broad and ill-defined and cover…well, almost everything else. 

What is the Cost of Travel Insurance?

Now, you came here to answer a simple question: How much does travel insurance cost? And what does all that information have to do with it? 

The truth is, the cost of travel insurance isn’t a simple question. It varies based on a huge array of factors. So the simple answer is: there is no simple answer. 

Generally, travel insurance costs 5% to 10% of your total trip cost. The single biggest determining factor is the cost of trip cancellation coverage, and your insurance company uses a variety of factors to make this determination. The bulk of the decision usually rests on: 

  1. Your age
  2. Your total trip cost
  3. What you include in your policy
  4. The number of travelers covered under the policy

Some plans also factor in where you’re traveling to and for how long. 

To put it simply, travel insurance, like all other forms of insurance, is priced based on risk. A driver with a list of traffic tickets a mile long is more expensive to cover than a model driver. The riskier you are to insure, the more expensive you are to insurance companies. 

Think of it this way: insurance companies make money by not paying out claims. If you cancel a trip and make a claim, they lose money by paying it out. Risk, in this case, is the relative risk that the company will have to pay out a claim. 

Take age, for example. In general, the older you are, the more you can expect to pay for travel insurance—the older you are, the more likely you are to cancel. However, it isn’t a sliding scale. Insurance companies use age bands based on where they see shifts in claim volume or claim amounts. 

As for trip costs, that calculation is simple: cheap trips are less expensive to refund than expensive ones. However, the calculation is based on prepaid non-refundable expenses, so an all-totaled expensive trip without a lot of prepaid expenses might have a lower trip cost. 

Similarly, basic plans cover less and are therefore less expensive than luxury plans. However, the coverage amount may not differ as much as the sticker price. 

Finally, more people mean more risk, which means more people are more expensive to insure. 


Travel insurance protects you when things go wrong while traveling. Trip insurance is the most common type, including cancellation, interruption, delay, baggage, and emergency coverage. Some specialized policies offer tailored coverage, such as travel medical insurance. The total cost of your policy depends on the level of risk, which is determined based on:

  • Your age
  • Your trip cost
  • Your policy inclusions
  • The size of your travel party

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