Everything You Need to Know About Vacation Insurance—Especially Amid COVID-19

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With travel plans constantly in flux, is travel insurance the solution?

With airlines’ change fees and cancellation policies in flux, the list of countries reopening to Americans shifting, and most unfortunately, coronavirus numbers rising across the U.S., looking into vacation insurance has become a prescient step on the road to booking travel. As a result of COVID-19, travel plans have simply never been more subject to change, and those changes are often out of our control. Being prepared, by making refundable bookings and ensuring that your medical insurance covers you abroad is just one pragmatic step travelers can take right now. For those wondering about vacation insurance, and how it helps reimburse you when canceling bookings and cover you medically when traveling, we’ve talked to travel insurance experts to give you all the details. 

What Is Vacation Insurance?


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It’s an insurance plan you buy, much like you’d buy monthly car insurance or take out an insurance policy to cover an engagement ring. The benefit of travel insurance is two-fold: your vacation bookings (lodging, flights, etc.) are protected, but your policy can also cover your medical expenses overseas. So, in addition to getting your money back if you need to cancel your trip at the last minute, travel insurance can also help with medical treatment on the ground when you’re traveling abroad. Vacation insurance might also help you replace your passports if they’ve been stolen in a foreign country, provide translation services at a hospital, or cover the cost of your suitcase being lost. 

To gain a thorough understanding of how travel insurance works, we consulted Daniel Durazo of Allianz Global Assistance, a leading vacation insurance provider in the U.S. As Durazo put it, the two main benefits of travel insurance are “covered financial risks” and “access to assistance services” while traveling.

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Specific Protections Vacation Insurance Offers Travelers

Distilled into a few quick bullet points, here’s what vacation insurance can help with:

  • Trip cancellation coverage, even if your airline tickets, hotel rooms, or other bookings are non-refundable
  • Reimbursement for unexpected expenses like losing luggage
  • Coverage for medical treatment and transportation abroad

Choosing the Right Vacation Insurance Policy

“Travelers can consider two types of travel insurance policies to protect their trip, annual policies and per-trip policies,” explained Durazo. “Annual policies will cover every trip a traveler takes in a year and can offer great convenience and cost savings while per-trip policies cover specific trips.”

There are multiple tiers of coverage, so how much is covered will depend on the plan you choose. The best way to choose a travel insurance plan is to search based on your type of trip (“cruise versus domestic versus international,” said Durazo). Then, weigh the cost-benefit of the tiered plans (i.e., Do you want to spend more and be covered in every circumstance, or would you rather have only the emergency benefits of travel insurance but pay a lower premium?) Finally, when booking a plan, be thorough in reading the plan descriptions, so you know exactly what you’re signing on for; Durazo flagged certain language you should always make sure is included in your plan. 

“It’s important to look for trip cancellation benefits when choosing a travel insurance policy, since this benefit type can reimburse lost prepaid, non-refundable trip deposits for things like airline tickets or hotel rooms,” he advised.

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Why Travel Insurance Is Important During COVID-19

As we see more countries reopening to American travelers, one thing is clear: many destinations want to see proof of medical insurance that will specifically work when traveling abroad. To put it in blatant terms, in admitting U.S. citizens, destinations abroad don’t necessarily want to get stuck with the bill if travelers need medical attention. Therefore, they ask travelers to get third-party insurance that will cover their medical expenses.

To offer a keener understanding of how vacation insurance can help mitigate travel risk, John Rose, chief risk and security officer at Altour International, a travel agency under Internova Travel Group, weighed in.

“This proof of insurance is required upon entry at passport control,” said Rose, when discussing the countries only admitting foreigners who have medical travel insurance. “It is not unrealistic that nearly all countries will implement these insurance requirements.” Rose continued to point out that some countries are not just requiring travel medical insurance, but want to see proof that the insurance “contains coverage for COVID medical costs.”

What to Know Before Booking Vacation Insurance


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Currently, there is something of a mad dash to book travel insurance. Both Rose and Durazo report increased travel insurance bookings in 2020 as a result of COVID-19. But even amid this frenzy, it’s important to be deliberate and thorough when booking vacation insurance.

When you go to book, Rose encouraged travelers to “ensure the third-party insurer provides insurance accepted in the country where [you are] booking. Many countries may become restrictive on the providers they consider acceptable, specifically to cover COVID medical costs,” he warned.

Durazo advised travelers to review the trip cancellation insurance and make sure the “covered reasons” are aligned with your travel needs. “Travel insurance covers only specific situations, events, and losses included in your plan document (such as illness, injury, job loss, hurricane warning at your destination, and canceled services due to a severe weather or a natural disaster, etc.).”

If you’re worried about your trip being canceled for a specific reason, whether it’s increased COVID-19 infection rates or a last-minute conflict, make sure that will be one of the “covered reasons” on your policy before you buy the insurance plan.