Why You Shouldn’t Buy Travel Insurance

I’ve been a long-time opponent of buying travel insurance for small dollar trips. I wrote about the tricks insurers use to get out of paying claims as far back as 2007. And a decade ago I explained why it’s usually a bad deal.

Travel insurance can make sense for a ‘trip of a lifetime’ but the tactics used to sell insurance can be questionable.

Reader Tom F. writes,

Would you please consider writing more articles on travel insurance, particularly airline website point-of-sale transactions for flight insurance and credit card travel delay benefits?

It seems to me that Allianz is the primary provider … I find it exceptionally difficult to get Allianz to pay the benefit when we have had a travel delay. It seems the Allianz corporate policy is “Just Say No”.

As an example, we had a flight delay in August, 2018 out of [Albuquerque] on American which caused us to miss a connecting flight in DFW. Our flight into DFW was held on the tarmac for almost an hour after arrival, awaiting a gate assignment.

When we pulled into the gate, we waited almost another hour for a gate agent while planes arriving after ours were gated and off-loaded before our flight. Then American closed their customer service desk which necessitated passengers individually securing meals and a hotel room and paying out of pocket. Allianz has repeatedly refused to pay the benefits of the policy.

Tom hit the nail on the head regarding the transaction costs in dealing with travel insurance. It’s one of the reasons that I’ve long been a lonely voice recommending against purchase of travel insurance for relatively small dollar trips.

The cost of travel insurance isn’t just the purchase price of the policy, it’s the time and effort to get the policy to pay. (The key to a successful claim is persistence.) There’s a reason I’ve been offered 50% commissions if I’d recommend travel insurance. These are big profit engines for the offering companies.

Some companies are easier to work with on claims than others, anecdotally I’ve heard of better experiences with Travel Guard. And I do think it’s important to consider medical coverage for some destinations. Does your health insurance fully cover you when you travel abroad? Are you somewhere that the medical care may be insufficient, and you need medical evacuation coverage?

But that’s really a subset of the larger point that it’s worthwhile to insure (with the right company) against catastrophic losses. Is it a once in a lifetime trip where you couldn’t manage a do-over if something happened? In my view you want to self-insure against manageable losses.

Too often travel agents recommend insurance to protect themselves rather than their clients. If something goes wrong and a client loses their investment the agent can say, well I told you to buy insurance, I warned you, not my fault.

However with credit card coverage there’s often relatively little trade-off. It’s always important to know your coverage (what’s covered and what isn’t) and consider using a card with the richest coverages to purchase your trip.

  • Trip delay. If you are delayed and have to pick up costs like hotel room and meals (document the delay, save your receipts) you’ll often be eligible for up to $500.
  • Baggage dalay. This will often pay out $100 a day up to 5 days to reimburse expenses when you’re without luggage.
  • Trip cancellation. Always know what the covered reasons are here.

A Reader’s Father Being Transferred from Gulfstream to Ambulance at Atlanta Peachtree-Dekalb Airport

In general American Express doesn’t provide trip delay and baggage delay, but can be amazing for medical evacuation.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. Amen to that.

    First and foremost, given the sunk transaction cost in insuring anything, I only insure perils I cannot absorb. Over a lifetime, I am certain dong so will inure to my benefit. And one day it will bite me in the ass.

    Rather, I choose to spend money mitigating risk, e.g., arriving at a cruise departure point a day early and paying for a hotel the night prior.

    And I am vigilant to be able to pull the plug on a trip with minimal cost. E.g., I recently had plans to go to South Africa with my folks. We had Q-suites on QR booked with points, a smashing Airbnb in Capetown, etc., etc. My dad’s health prevented us from going. We were out $400 after all cancellation and miles redeposit fees got collected. Not a bad result when things went sideways.

  2. I only buy travel insurance for the airfare since I never book nonrefundable hotel rooms. I like to fly business class, but only when I can get a really good fare. I am, therefore, insuring a fare of approximately $2800.00-$3,000. I buy it through USAA, and the fee is approximately $200.00. Seems worth it, especially with a 103 year old father still around.

  3. I have a contrary opinion here! We booked a trip to Hawaii a few years ago and insured it with Allianz. My wife had a medical condition which forced us to cancel. It took a while to conform to all the requirements but we received refunds for the non-refundable parts of the trip. Repeated conversations with Allianz were always helpful.

  4. It irks me when I have to click the “no” box before I can complete my booking on Delta and others. You know there is huge profitability there when they make that a mandatory part of booking on-line.

  5. Everyone’s needs vary; but for those who don’t necessarily have credit cards offering a deep scope of coverage, or who’s health insurance already makes life difficult and complicated where they live and work, we’ve found that options offered at Squaremouth and Insure My Trip have been cost efficient as they allow one to better customize their needs according to what their credit cards may, or may not, offer; or what their other insurance policies be they health, home, or automobile also offers – and if there are any gaps in coverage, etc., that the policies available at those web sites offer.

    As we live in NYC, in a rental apartment and don’t own a car, we lack many of the coverages that others may have included with their homeowners and/or automobile insurance policies.

    And again, given the headaches and exhaustion that is “managing” health insurance in our own backyard, we’ve decided that we might want to have health insurance FOR our health insurance! 😉

    Fortunately, we’ve never had a medical emergency when we’ve been away, but during our recent Xmas family homecoming trip to the Philippines, two family members came down with pneumonia (13 out of 14 of us came down with either pneumonia, bronchitis or severe colds), so one can never be assured that they won’t need urgent medical attention as the two who developed pneumonia did.

    Also, we’ve found that when situations arose during at least two prior trips and it appeared that we’d end up stranded overnight due to cancellation of trains or planes, the concierge service at the insurance company we typically favor, has always been there to answer our questions about our options.

    Again, fortunately in both instances, it turned out that we ended up getting to our destination and did not need to stay overnight unexpectedly, but both times it looked like we would’ve, and the concierge was very helpful.

    The first incident we were lucky that a stranger who commuted between Cologne and Brussels overheard our conversation with a rep about total service cancellation on our line at Deutsche Bahn railways and arranged for us to join him in the all expenses paid taxi from Cologne to Aachen (200+ kph ride on the autobahn included!) that allowed us to (just barely) make the train on that line back to Brussels after the line between Cologne and Brussels was shut down due to a fatal accident at another station on that line.

    The other was at Orlando/MCO when the airline we were booked on had a computer network outage and it was unclear if our 8pm flight would take off that night – it did, but around 12midnight!

    But, for the first couple of hours after we arrived at MCO to check in, it looked like we might’ve been marooned at MCO.

    Anyhow, and as noted at the outset, everyone’s needs are different – and yes, a great many likely have the types of credit cards that offer exceptional trip insurance coverage along with exceptional health insurance, too.

    But, for those who don’t necessarily have plastic that offers the best of everything and/or whose health insurance similarly does NOT offer the best coverage possible (especially out of network and/or outside of the country), then trip insurance may offer coverage that comes in handy.

    So, I’d offer that it’s NOT necessarily trip insurance that’s “bad” – but rather where that insurance is purchased and what types of scope of coverage is best according to one’s needs.

    And as such, it’s the policies sold by airlines, cruise lines, and the online travel agencies that are best avoided as they typically are high cost, limited coverage, “one-size fits all” policies that are laden with exclusions and exceptions, whereas policies purchased separately from third parties offer far more variety and “bang for the buck” than anything ever seen on any airlines’ or online travel agencies’ booking pages/portals.

    And for us, Squaremouth or Insure My Trip have always served us, and those that have sought my assistance to book their flights.

    Finally, and just to be clear: I am NOT a paid endorser for any of the companies mentioned here; nor any insurance companies; and I have NOT received any compensation be it directly or in consideration of the comments expressed here.

    NONE. Period.

  6. I buy annual travel insurance. It’s relatively cheap (much less than the change fee for an airfare), covers every trip during the year (maximum stay is 30 days, but mine don’t go over that) and crucially it covers me for medical repatriation, which would be a huge expense if I should ever be so unfortunate. It also has comprehensive cancellation insurance if I, or a family member, is ill resulting in my not being able to travel. I can’t speak for the claims experience, but I sleep much more easily knowing that the catastrophes are fully covered.

    I read so much about people who haven’t bothered to insure then complaining that the non-refundable ticket means what it says. I have zero sympathy.

    But I do agree that the policies offered as add ons to travel purchases are disgracefully expensive.

  7. I buy travel insurance specifically for medical coverage. If your health insurance does not cover you outside the country it seems really foolish to not have something in place. Can you talk in more detail about what is necessary to trigger emergency evacuation coverage with amex plat? Does the chase sapphite reserve have something similar? Specifically i am interested if just some of your flights are paid with the plat. I used the csr on my award taxes for the long hauls but then i got the personal plat afterwards and want to use it for all my inter-regional flights in se asia. Im wondering if doing this will trigger the protection.

  8. Howard Miller said: “As we live in NYC, in a rental apartment and don’t own a car, we lack many of the coverages that others may have included with their homeowners and/or automobile insurance policies.” I have a Non-Owner Car Liability Insurance rider attached to my apartment insurance. This allows me to comfortably say “no” to auto-rental liability insurance. I recommend people the do not own a car and rent cars to investigate that option.

  9. @Other Just Saying,

    We have renters’ insurance, so will look into that!

    Thanks for adding that information.

  10. Piggy backing on what Bill said: I travel all the time. To be honest, I am willing to eat travel delay and baggage losses. However, I am worried that I might have a medical emergency in another country. I have been considering getting Annual Trip insurance, but have been having difficulty finding information on the internet. Gary, if you ever have the inclination, I would be very interested in reading about annual travel insurance.

  11. “Too often travel agents recommend insurance to protect themselves rather than their clients. If something goes wrong and a client loses their investment the agent can say, well I told you to buy insurance, I warned you, not my fault.”

    As a travel advisor it absolutely would not be my fault if something goes wrong. I have no control over natural disasters, terrorism, flight delays, illnesses, injuries, accidents, strikes, etc. We offer our clients travel insurance so that they can protect the nonrefundable portion of their travel expenses, and to ensure medical and evacuation coverage when abroad, should they choose to do so.

    While your readers may be savvy travelers, many people don’t know that they cannot present their health insurance card in other countries and receive benefits. They also don’t know that many countries require proof of funds prior to treatment. Or that any potential international coverage with Medicare is capped. Or that some countries require proof of travel medical insurance for entry. Or that there are two types of coverage: Primary and Secondary.

    Of course, travel insurance, like all insurance is simply a risk management product. For some people self insuring makes sense. For others it is not possible or desirable. It is a personal decision. I tell my clients to research all potential forms of coverage that they may have access to and compare them to the policy that I have quoted. If they choose to not insure or to use other coverage, that is fine with me.

  12. I’ll add another vote “for” info regarding annual trip insurance policies as it’s really health insurance and medical transport/repatriation coverage that we’re seeking when we travel, too.

    That, and Accidental Death or Dismemberment since neither of us have superpowers or are immortal even if we’re otherwise in good health.

    Yeah, it’s never easy to have that conversation, especially when either of us is traveling solo, and any accidents resulting in permanent harm (including death) could jeopardize the ability of the surviving partner to meet financial obligations.

    But even worse than mourning the loss of a loved one, would be the threat of losing one’s home, too.

    So, we very much value policies with AD&D benefits because heaven forbid something life changing/ ending happens, the last thing we’d want to risk is the surviving family member(s) facing the looming threat of being forced out of their home.

    Sure, if it’s an airline or “common carrier” (etc.) incident the possibility exists of seeking monetary damages via litigation, but who knows how long that will take to resolve?

    So, that’s another option we include in our decision-making.

    Also, some policies offer waivers for pre-existing conditions if the policy is purchased within a set period after the initial payment for a non-refundable component of a trip is made (usually 2-weeks, but for those considering this option, the pre-existing condition waiver MUST be researched closely as once the waiver period expires, it’s gone for good and only a handful of companies offer that).

  13. In general I agree that travel insurance usually isn’t worth the cost if you’re buying it over and over again for each trip unless, as Gary said, it’s a once-in-a-lifetime trip. My wife had a travel agency that specialized in destination weddings and while she would suggest it for the bride, groom and immediate wedding party members, she didn’t feel it was a good value for the rest of the entourage.

    Check out organizations you belong to for cheaper coverage. I dive a lot when traveling and Divers Alert Network (DAN) offers a good annual policy including “cancel for any reason” coverage (your child becomes sick, you lose your job, etc.) medical (including repatriation) and baggage (my gear alone would cost $4k to replace). There are others out there worth checking out, but the nice thing about my DAN policy is that it covers ALL of my travel whether for pleasure or business. I’m 64 and my wife is 58; we pay a little over $600 per year for both of us.

  14. We’ve found the best travel medical policy is by GeoBlue. A one year “trekker” policy for 2 people (up to age 84) costs only $235 and provides medical, dental, drugs and emergency evacuation. We’ve had our policy for about 5 years and have made 4 claims – all we’re paid (less an annual $50 deductible) in full quickly with minimal hassle.

    For trip cancellation we rely on Citi and CSR and have collected large claims from both.

  15. I have to echo Howard Miller’s comment. I have used Square Mouth and Trip Insure for all my trips (granted they are usually 2 weeks or more), and of the three claims I have had to make over the past 12 years, they have been responsive to my first contact. Once I filled out their form and provided the requested documentation, I usually had a check within two weeks………never a hassle or a delay in processing my claims.
    Also, as Howard mentioned, I do not receive any compensation from either company (although I wish I did).

  16. @Gary: Two really useful future articles on travel insurance:

    1) Which policies do honor their contracts?
    2) Which credit cards have the best trip delay/baggage delay/trip cancellation coverage;

  17. I use my CSR for it’s great travel insurance. Not that you still won’t need perseverance; I had trouble getting paid on the oft-touted primary rental car insurance because there was never an estimate (one of several documents required, probably to weed out those less persistent).. I was forced off the road in South Africa by a truck passing a truck passing yet a third truck on a curve in oncoming lane. Happily, I ran over a rock, lost a hubcap and dented the rim. Hertz wouldn’t supply an estimate. Finally the insurance company agreed that $84USD was a fair price–who gets an estimate on a hubcap? Anyway, this was more a test case for me, and I think I’ll continue to depend on this card’s coverage along with MedJet. But I’ll be certain to document, screenshot, photograph, get names, etc if any situations that may lead to loss develop.

  18. I’ve purchased an annual trip insurance policy with Allianz for the last 6 years & have had to make several claims: 2 medical claims while seeing a doctor & purchasing medication on an international trip & one claim for a luggage delay of 34 hours. Allianz has paid me quickly & without a lot of questions or hassles so I’m very pleased & will continue to use them.

  19. I carry an international medical policy through Blue Cross for all our possible medical needs. It costs me less than $450/year for me and my wife. This is due to Medicare not covering most needs outside the U.S. I also have medivac insurance through my state bar association. This is all I need other than what I get through my credit cards.

    We travel outside the U.S. 5-6 times/year. This seems the most economical to me, and certainly beats the 6% of what you paid for the trip that is the going rate for “travel insurance”.

  20. Although it appears to be no longer offered, Citi Prestige once offered trip cancelation coverage for pet illnesses.

  21. I have an annual policy from Allianz for around $500. Last March I was caught up in a snowstorm in NYC and needed to spend an extra night in NY which at the last minute was a bit over $600, and I had two extra fares in Lyft.

    I was shocked at how easy Allianz made it… in their claim form one of the options was for this storm, and I was reimbursed in full within 72 hours of uploading my receipts. In reading the policy I thought that they would not cover the full price of the room, but they did.

    So in my opinion travel insurance that’s part of an annual policy can work well if you travel a lot or I just got very lucky, but the upsell on each ticket purchase seems like a poor value by comparison.

  22. I never buy travel insurance for low cost trips. But I do have great medevac insurance that works 100 miles or more from home by a reasonable cost membership in Divers Alert Network. No age limit, don’t have to be a diver, doesn’t have to be a dive-related incident.

  23. Another vote for annual travel insurance.

    My wife and I are full time digital nomads and have an Allianz travel insurance policy. This policy cost $450 for both of us for one year and covers travel related mishaps like accidents, lost luggage and, if needed, emergency repatriation to the US. It also covers medical mishaps (with a lot of caveats) if you are more than 100 miles from home.

    I had to go to hospital in Chiang Mai to have my ankle looked at. It was Thailand so the entire visit only cost about $50. The next day we submitted the $49 claim to our Allianz travel insurance policy using their online claims tool. A day later we got an email saying the claim would be paid directly to my checking account. A day later the money was in my account.

    I’m a big fan.

  24. Aren’t most of these coverages, including Medical Evacuation Insurance of up to $100,000 benefits included with the AA/Citibank World Elite Executive MC (in addition to Admirals Club membership) or am I not understanding the card perks correctly?
    Howard Miller, please feel free to elaborate.l

  25. Thanks for this article and more importantly for the comments. We have a CSR and use if for the coverage it provides and have successfully filed 2 claims – one for an overnight delay that paid out just over $500 for two of us, and one for a cancelled business class flight due to a medical emergency, paying out $2500. The first claim was straight-forward, the second required a bit of time and stamina but after filling several requests for more documentation, it was ultimately paid out. We book all hotels on flexible rates that can be cancelled up to a few days before the trip to hedge against problems there. But a medical emergency scares us as we get older and travel overseas several times a year. Several comments mentioned the Blue Cross international travel plans and I just looked into it for an upcoming trip – $89 for two of us for their best plan – wow, that’s so worth the peace of mind. My spouse was thrilled that I looked into this and I typically count on the benefits from the CSR, but they are weak for a medical emergency. Thanks to all the commenters for sharing your experiences.

  26. @Juan Trippe,

    On matters of credit card scope of coverage for trip insurance, I will defer to @Gary here in “View From The Wing” and his talented colleagues at its sister publications within the “Boarding Area” universe.

    While I’m happy to research this particular topic, and am honored by your request to “elaborate” on the perks offered by the cards you mentioned, @Gary, and others at the Boarding Area publications are bona fide experts, and have extensive knowledge and experience that far and away exceeds mine as regards credit card mileage programs, perks/scopes of coverage for insurance and/or other benefits, etc., whereas my expertise is more limited to airlines as a former columnist and data analyst for the trade publication/financial newsletter, PlaneBusiness Banter; principal researcher and data analyst for an industry attorney and consultant for technical tax research (my introduction of a class of sales tax exemptions previously unknown for airport development projects financed in part with NY State Industrial Develoment Agency [IDA] tax exempt bonds [now Empire State Development] for Terminal redevelopment projects at New York’s JFK and LaGuardia Airports has saved airlines and others with specific types of on airport facilities hundreds of millions of dollars since 1999!); and finally as a former travel agent, which was my first job as a teenager from 14 years of age after school and weekends that continued as time permitted during semester breaks and summers during college and grad school, and full time for a portion of 1988 before I began working full-time at Smith Barney between early 1989 and 1993.

    Simply put, Gary and his colleagues are far better suited to answer your question than I am when it comes to credit cards.

    As noted above, I’ve found that Squaremouth (or Insure My Trip) meets mine and my partner’s needs when he travels for work (something he does fairly often), and/or we travel together.

    For his work, his employer reimburses the expense.

    For our own personal travel, both of us have health insurance that meets our needs locally via a PCP and as residents of NYC a universe of “in network” hospitals and other facilities for outpatient care that is nearby and reasonably accessible.

    However, given the complexity of figuring out who’s “in” and who’s “out” of network for the two different insurance companies we have as his health insurance and mine are separate, we’ve decided that for us, we’d prefer to have “insurance for our insurance” when away to avoid trying to figure out those thorny issues during an emergency because accidents happen, or as happened to two family members on our recent family reunion trip to the Philippines, serious, life threatening illness can happen suddenly (they developed pneumonia), and we find it helpful to have the peace of mind to know that we have ample coverage just in case (bad) “stuff” happens.

    However, this works for us!

    Those who have more comprehensive (read: better) health insurance than we have; and/or premium credit cards offering a wide array of travel benefits; plus home and automobile insurance policies that offer coverage for things we either don’t have, or don’t have confidence as meeting our needs were an unforeseen emergency to occur while traveling, may NOT necessarily have a need to purchase additional trip insurance as we do.

    However, one thing I’m absolutely certain of is that for those who do see a need for additional trip insurance, they’d be wise to **AVOID** purchasing their insurance at any airline, cruise line and/or online travel agency booking page/portal, and instead take the “DIY” approach using Squaremouth or Insure My Trip as it is our experience that the “one size fits all” policies sold by the airlines, cruise lines and/or online travel agencies are very expensive for what they offer, whereas those two web sites allow one to better match their needs and budgets with the various policies offered there.

    That, plus, the Accidental Death or Dismemberment coverage were the worst to happen to either of us (as noted above) are the reasons why we find supplemental trip insurance indispensable.

    But again, everyone’s needs are different, so what works for us does NOT necessarily apply for others!

  27. Disagree because I had 2 claims this year on our first annual policy with Allianz – the first one took a bit of time to get resolved because it was an item missing from my luggage when I returned home, but the other was a travel delay and that was resolved very quickly without a problem. Very happy with them so far and have received much more than the cost of the policy in my 2 claims. Probably means I won’t be able to renew 🙂

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