Planning a Trip? What to Know About Travel Insurance

Seeing new sights and exploring the world — or maybe just your state — can be a great way to make memories with your family and meet new friends. But traveling also comes with some risks.

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There may be flight delays, lost baggage, illnesses and injuries that can keep you from enjoying your vacation. When the worst happens, travel insurance can help you get some of your financial investment back.

Travel insurance is an insurance policy that covers some travel expenses if you have to cancel your trip or cut it short. Purchasing travel insurance provides a financial safeguard so you don't have to worry about losing money if something happens during your trip. Some travel insurance policies also provide specific coverage for things like evacuation in case of an illness, delayed flights, or lost luggage.

What Does Travel Insurance Cover?

Every insurance company has its own terms and conditions that outline what the policy covers. Many insurance providers also have multiple policies or riders so you can customize the amount and type of coverage you need. At a minimum, your travel insurance should provide reimbursement for any prepaid travel expenses if you need to cancel your trip or come home early. 

Depending on the type of travel you're planning, you may want to look for a policy that covers any health care expenses you incur while out of the country, or a policy that covers some of the trip costs when they need to be canceled due to natural disasters. If you have questions about what coverage you need or what a specific policy covers, talk with an insurance agent. 

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Common Exclusions With Travel Insurance

Each insurance provider and policy has its own exclusions, so always make sure to read the fine print. However, there are some common issues that are normally excluded from coverage, such as:

• Expenses related to pre-existing medical conditions
• Injuries related to high-risk activities, such as skydiving or bungee jumping
• Having to cancel or end a trip due to acts of war, terrorism or natural disasters
• Claims arising from illegal activities

Sometimes there are specific riders you can buy to cover certain circumstances, but these can significantly increase your travel insurance cost.

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How Much Does Travel Insurance Cost?

The cost of travel insurance varies widely, and the most influencing factor is the overall cost of your trip. Travel insurance is generally priced as a percentage of your overall travel costs, with an average of 5% to 6%. Let's run some numbers to see what kind of travel insurance costs you should anticipate.

The average cost of a one-week vacation in the United States is $1,984 per person (CAD 2,675), according to BankRate. For a family of four, this totals $7,936 (CAD 10,697). This would mean an average of $397 to $476 (CAD 536 to 642) in travel insurance. Trips that are longer or include travel outside of the United States are likely to require more expensive travel insurance policies.

Where Do You Get Travel Insurance?

You can get travel insurance directly through an insurance broker or a travel agent. If you're booking your trip through a third-party company, such as an app that lets property owners rent out their homes for others' vacations, you may be able to select travel insurance as part of your booking. Because travel insurance varies so much in price and coverage, it's a good idea to shop around and compare several quotes before choosing a company.

All CAD conversions are based on the exchange rate on the date of publication.