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Published: Jun 25, 2021 12 min read
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Travel is different this summer. So is travel insurance. Together, the changes could affect your decision on whether, and how, to insure your vacation.

As the pandemic recedes, a comeback is underway for the full-fledged family vacation -- the kind that involves flying and an Airbnb or hotel stay -- and probably costs more than the road trip you took last year. And as vacation spending rises, so could the amount spent to insure trips. Adroit Market Research predicts the premiums paid for travel insurance will rise by an average of nearly 8% a year between 2021 and 2028.

Even as infections drop, though, COVID-19 continues to affect travel and travel insurance, if in different ways than it did last summer. Continuing concerns about the virus have prompted airlines to offer greater flexibility about switching or canceling flights, which may mean less need for insurance in case you change plans. At the same time, travel insurers are providing surer coverage of COVID-19 treatment than they did in 2020.

Other issues for travelers this year include predictions of widespread flight delays and the fact that some countries now require foreign visitors to have travel insurance in order to enter.

Travel insurance doesn’t come cheap, typically costing 5% to 10% of the total cost of the trip. If you’re traveling this summer, here’s what to keep in mind when deciding if insuring your trip is worth the cost.

1. Insurance could help during a troubled summer for flight delays

More flight delays and cancellations than usual are predicted this summer. That means insurance that compensates you for those setbacks could be especially valuable -- if you aren't already covered in other ways.

“If you’re going to travel, make plans for at least a potential 24-hour delay,” said Dean Headley, emeritus associate professor of marketing at Wichita State University, as reported by KWCH-TV. “As summer goes on, it’s just going to get worse.”

Airlines blame factors including staff shortages for the delays to date. Whatever the reasons, the prospect of unreliable flight schedules potentially add to the reasons to insure flights, since insurance offers more reliable compensation for flight delays and cancellations than do airlines.

As the U.S. Transportation Department warns, “there are no federal laws requiring airlines to provide passengers with money or other compensation when their flights are delayed” -- or for cancellations, save for refunding the passenger the cost of their ticket and other fees, such as those for baggage. The department notes that an airline may provide compensation for these occurrences as a courtesy.

Travel insurance, by contrast, typically guarantees reimbursement for the costs of meals and other necessary expenses if a flight is delayed by a certain length of time -- typically between three and 12 hours, depending on the policy.

An insurance policy may also allow you to cancel a trip and receive reimbursement for its costs if the flight is further delayed. The delay must be 24 hours or more, typically, and the required period could be longer -- say, half or more of the total trip.

However, it pays to check that you aren’t covered in other ways that might preclude your need for insurance. If you're traveling to and from Europe, or on a European airline, be aware that European Union rules mandate compensation of specified amounts for if your flight is delayed or cancelled.

Your credit cards, too, may provide reimbursement for delays and cancellations as an included benefit. For example, the Chase Sapphire Preferred® and The Platinum Card® from American Express -- both among our recommended travel cards -- will reimburse you for up to $500 in expenses incurred during a delay of at least 6 hours.

2. You probably don't need to worry about airline change fees

A key motivator for insuring trips has been anxiety at the prospect of paying high fees to the airline if travel plans have to change. As a rule, canceling or rescheduling a trip has meant paying a penalty of $150 or $200 per ticket for domestic flights, and between $200 and $750 for international itineraries.

Now those penalties have been largely eliminated, continuing a perk airlines introduced early in the pandemic to persuade reluctant travelers to fly.

However, some exceptions and caveats remain. The very cheapest tickets -- usually known as basic economy -- are still subject to change fees, as a rule. Some smaller airlines, including Allegiant, have only reduced fees, rather than eliminated them. Other carriers allow fee-free changes only until a certain time ahead of the flight; Frontier allows them for up to 60 days in advance, for example.

Finally, regardless of airline, you’l l likely be issued not a refund on the ticket price, but a credit for future flights, for which there could be a time limit for their use (such as a year from the original ticket purchase, as is the case for Delta). And if the fare for your new flight is higher than you paid for the original ticket, you'll have to pay the difference.

Still, the option of fee-free changes might make you more comfortable in not getting travel insurance, since the other bookings you’ve made -- for hotels and rental cars, for example -- may also be cancellable at little or no cost.

Alternatively, if you still want the other protections of a policy, you could opt for less expensive insurance that eliminates cancellation coverage but keeps other benefits. For example, Allianz, one of our picks for travel insurance, offers an “affordable plan” called OneTrip Emergency Medical that offers no coverage before you leave home, but insures you against emergency medical and transportation expenses as well as benefits for travel delays and lost or stolen baggage.

However, here, too, some credit cards, including most of the best travel cards, protect against these perils as a free perk. Check the benefits for your cards before you buy insurance to see if they might suffice.

3. Don’t fret that insurance won’t cover COVID-19 treatment

Last summer, many travel insurance companies covered the costs of treatment for COVID-19 if you caught it during or even before an insured trip. But the coverage was offered despite fine print about pandemics that technically absolved them of paying those expenses.

This year, coverage for COVID-19 coverage has been made explicit in most policies, including those of all the best companies on our list. That eliminates last year’s anxiety that a policy’s fine print might in fact be enforced, and so deny you a claim if the virus derailed your trip.

That said, the same limitations to pandemic-related coverage as in 2020 remain in place. You still can’t collect on insurance merely because you fear getting the virus on your trip, and so want to cancel it. You’re similarly out of luck on collecting if you sour on your destination because it’s introduced new lockdown and quarantine requirements.

4. Consider paying more to get more coverage

The uncertainties of travel in a pandemic have prompted more travelers who insure their trips to choose the broadest and priciest level of coverage, known as CFAR (Cancel For Any Reason). Where other policy types set strict rules on when you can cancel and receive reimbursement, CFAR leaves you free to quit the trip for, well, any reason at all.

If the unknowns of post-pandemic travel are making you more anxious about an upcoming trip, a CFAR policy may be worth considering. Many more travelers are now opting to get it, according to Squaremouth. Before COVID-19, fewer than one in 10 insurance buyers opted for CFAR coverage, the travel insurance broker reports. That percentage rose to 19% in 2020 and is running at nearly 27% this year.

CFAR policies can easily cost half again what you’ll pay for regular coverage, according to Allianz, meaning their cost is closer to 10% of the trip cost than 5%,

If you’re considering CFAR coverage, keep some caveats in mind. It usually must be purchased at least 10 days before travel begins, and within a certain period of time after you pay the deposits on your travel purchases. And it reimburses not the entire amount you paid for the trip, says Squaremouth, but “up to 75% of prepaid and non-refundable trip expenses.”

5. Travel insurance may be required if you go abroad

Summer travel this year will be predominantly domestic, says Skift Research. Citing “ever-changing local COVID-19 levels, most Americans are still hesitant about traveling overseas,” the company says, reporting that only 10% of U.S. travelers it surveyed indicated they had foreign travel plans.

Most countries continue to require either a recent negative test for COVID-19 or proof of vaccination in order to enter, sometimes replaced or supplemented by a mandatory quarantine period. But a select few countries are also requiring travelers to show proof of travel insurance upon entry, covering medical expenses and sometimes associated benefits such as medical evacuation in case of serious illness.

At present, at least three countries mandate such insurance: Costa Rica, Egypt and Turks and Caicos. However, requirements are in flux, and international travelers should check requirements for entry to the countries they will visit, to be sure not to be caught short.

Obviously, deciding on whether to buy insurance for a trip begins with researching ways you may already be covered, such as through credit cards, and on the risks and rules at your planned destination. But a big part of the decision depends a lot on you and your priorities.

As travel expert Rick Steves writes, ”there will always be risks when you travel. And while insurance helps mitigate many expenses associated with those risks, it won't eliminate that risk entirely. When choosing if travel insurance is right for you, do your homework, ask questions, and think about how much peace of mind is really worth to you.”

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