Is Travel Insurance Worth the Cost?

If you are planning a family vacation to Paris from, say, New York City, and are paying about $750 per plane ticket for a family of four, is it smart to pay a small percentage of the total cost to protect your vacation “investment”? For nearly 40% of Americans who are traveling internationally this summer, the answer is “yes.”

According to a new report from AAA, among travelers who choose to purchase travel insurance, the number one reason is protection against an unforeseen cancellation. Nearly 90% of Americans who purchase travel insurance say that getting their money back is their top priority if they have to cancel their trip.

Bill Sutherland, executive vice-president at AAA travel and publishing, commented:

More than 30 million family travelers will visit an international destination this year, 9 percent more than just two years ago. There are just too many unknowns, like family emergencies and natural disasters, which can throw an unexpected wrench into a planned vacation. Travelers are increasingly not taking chances and they’re choosing to invest in the value and peace of mind that travel insurance can provide, for international as well as domestic and cruise vacations.

The cost of travel insurance varies, depending on what travelers choose to insure against, but the typical range is 4% to 10% according to For a family vacation to Paris that includes airfare costs of $3,000, travel insurance would cost between $120 to $300 for all four tickets.

AAA noted that among travelers who choose to buy travel insurance, 70% do so to protect their investment and 69% do so to mitigate health concerns. Other factors that figure into the decision include how far ahead tickets must be booked (61%) and recommendations from family and friends (57%).

AAA’s Sutherland noted:

The relatively small upfront cost of travel insurance can pay back dividends in the event of sudden and unforeseen circumstances before or during a vacation. As policies and coverage options vary, travelers should consult a knowledgeable travel agent to explore their travel insurance options.

Here are five things AAA recommends that travelers keep in mind when trying to decide whether to purchase travel insurance:

You landed, your bags didn’t. Airlines mishandled more than 22 million bags in 2017. Travel insurance can provide coverage to replace needed items if luggage is delayed, damaged or stolen.

Sick happens. Insurance may help cover medical expenses while traveling, internationally and in the United States.  Many hospitals outside of the country require cash payments before providing treatment.

Health insurance. Most health insurance policies don’t cover international travel. Travel insurance can help cover medical expenses and costly medical evacuation back to the United States in emergencies.

Flight delays and cancellations. Airlines may not cover all the costs associated with a delayed or cancelled flight. Travel insurance can help reimburse expenses such as rebooking fees, meals and accommodations.

Economic uncertainties. The loss of a job or other income may mean having to postpone a trip planned in advance. Travel insurance can help travelers recoup their costs when funds are tight.

Last year, AAA members bought insurance for trips that cost 18% more than they did in 2016. AAA has seen a year-over-year increase of more than 20% in sales of its own domestic and international travel insurance so far in 2018.

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