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Whether it’s a family vacation, high school reunion, or romantic getaway, many Americans have some sort of trip planned for this year. And while taking a break from the everyday remains a priority for many, the cost of traveling has started to influence vacation budgets around the country.
Today’s travelers are planning more intentionally, accounting for everything from airfare and accommodation to dining and experiences. With the average cost of a one-week domestic vacation costing over $2,000, unexpected changes, like a cancellation, can quickly turn into costly setbacks.
That means protecting your travel plans can be just as important as booking them. This is where travel insurance comes in.
While it might seem like an unnecessary added expense, we’ll explain why this coverage could offer you peace of mind the next time you’re away from home and the unexpected strikes.
Travel insurance is a financial safety net that may help protect you in case a trip doesn’t go as planned. For example, after flying for seven hours overseas, you discover that while you may have made it to your destination, your luggage didn’t. If you’ve purchased travel insurance and the policy covers lost baggage, you can submit a reimbursement claim.
But with so many policies out there, how do you know which plan is right for you? This will depend on the type of coverage you’re looking for. Here are some common options you’ll come across.
Bottom line: Before purchasing a policy, be sure to review the terms and conditions carefully so you know exactly what’s covered and what’s not.
If you decide to buy travel insurance, once you select a policy, you’ll pay a premium based on your coverage. If something goes wrong during your trip, you can file a claim with your insurance provider.
Here’s how the claims process generally works:
Keep all documentation handy. Whether it’s a copy of your policy, your airline tickets, or a receipt for a meal purchased during a flight delay. The more proof you can provide your insurance company, the smoother the claims process can be.
Good to know: When you buy travel insurance is just as important as what it covers. The longer you wait, the more limited your coverage options may be. So, it’s a good idea to buy it as soon as, or shortly after, you book your trip.
When you start to add up the total cost of your next vacation, it might be easy to talk yourself out of adding one more expense. However, it’s important to think of the potential risks you face if you don’t have travel insurance.
Consider the factors outside of your control, like the weather. What if a snowstorm forced you to cancel your family ski trip at the last minute? Not only would you be disappointed, but you also might not get a refund from the airline or any accommodation you had booked.
The cost of travel insurance varies based on the amount of coverage you want, but it’s often a percentage of the total cost of your trip. While it’s an extra expense upfront, travel insurance can potentially help offset an expensive mishap.
Of course, not every trip calls for purchasing travel insurance. You might want to forgo additional coverage if your plans are refundable or if they’re already protected through a credit card. If you’re relying on your credit card to provide coverage, be sure to review their coverage limits and details carefully, as terms will vary based on your credit card provider.
When debating whether or not to purchase a policy, you might want to consider details like the length of your trip, how far you have to travel to arrive at your destination, and any costly activities, like tours or excursions, you have planned.
It’s also important to understand what standard travel insurance doesn’t cover, generally pre-existing conditions (unless you qualify for a waiver) or “known events,” like a named storm. That means you might want to rethink booking your next Caribbean cruise during hurricane season.
When you’ve invested time, money, and energy in a trip, disruptions can feel frustrating and even overwhelming. Travel insurance can give you options when plans change—a way to recover some costs should the unexpected happen and help you feel more in control.
Remember, the best trips aren’t just well-planned, they’re well-protected.
This article is for informational purposes only and is not a substitute for individualized professional advice. Articles on this website were commissioned and approved by Marcus by Goldman Sachs®, but may not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA, Goldman Sachs & Co. LLC or any of their affiliates, subsidiaries or divisions. Information and opinions expressed in this article are as of the date of this material only and subject to change without notice. You are not permitted to publish, transmit, or otherwise reproduce this information, in whole or in part, in any format without the express written consent of Goldman Sachs. This foregoing restriction includes, without limitation, using, extracting, downloading or retrieving this information, in whole or in part, to train or finetune a machine learning or artificial intelligence system.
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