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Why do people buy travel insurance?

Woman with pink suitcase and passport with boarding pass standing on passengers ladder of airplane opposite sea with palm trees. Tourism concept
With travel insurance, you can have some peace of mind for yourself and your wallet. Getty Images/iStockphoto

You may have noticed a recent uptick in news related to flight delays and cancellations for various reasons – from system outages to weather-related issues and beyond. With the chaos that can come with traveling, you may be inclined to purchase trip protection.

"Travelers today are growing more cautious following mounting airline-related mishaps, including widespread cancellations, staffing shortages, system outages and the looming threat of strikes," travel insurance marketplace SquareMouth said in a recent news release.

If you find yourself scouring the internet for ways to protect your trip, you're not alone. In fact, in 2020, Americans spent $1.72 billion on various kinds of travel protection, the U.S. Travel Insurance Association (UStiA) said, citing a recently released study

You now may be wondering: Should I get travel insurance, too? It all depends on your situation – your health, destination, the length of time you're planning to stay and more. The cost of travel insurance, of course, is also a factor. 

Fortunately, an online site like SquareMouth can make the process easy: You just plug in your travel information and you'll receive a list of recommendations within minutes (bonus: you can sort the results by the price, so you can guarantee an affordable deal).

Here's why travelers purchase travel insurance

Still not convinced? You'll want to think about the primary benefits of travel insurance. With help from a consumer survey, the UStiA was able to narrow the top reasons travelers buy travel insurance down to five:

  1. Their trip was expensive
  2. They wanted protection from unforeseen events
  3. They wanted peace of mind
  4. They wanted a refund for trip changes
  5. They had to pre-pay for their trip

Protecting your wallet is particularly important these days – as Americans still share concerns about the economy and inflation, though there have been recent signs of it easing

Travel insurance should be just a fraction of your overall trip costs, ranging anywhere from 5% to 10% of your trip, Squaremouth estimates. Most travel insurance providers will agree: You should buy the most cost-effective insurance plan with the benefits you need. 

Start your travel insurance search now on SquareMouth

It's typically pricier to travel abroad than domestically. That's why many people who travel abroad are three times more likely to buy travel insurance compared to those staying within North America, according to the UStiA.

"Travel insurance buyers are often doing one or more of the following: traveling with a group of people; taking longer trips; going on more expensive trips; or have considerable pre-paid non-refundable expenses," the UStiA says.

There are several travel insurance plans to pick from, but generally, comprehensive coverage should be more than sufficient. Most comprehensive plans will offer you coverage for trip cancellation, medical expenses, delays, lost luggage and other losses.

"People are now more knowledgeable about the unpredictable nature of their everyday lives, which can be affected by natural disasters, terrorism or even an illness in their family, so they are drawn to solutions that will mitigate these problems," Immediate Past President Jon Ansell of the UStiA said in a news release. "Savvy, experienced travelers know the value of travel insurance and assistance, and use it to improve their overall travel experience."

Ansell continued, "At the same time, we are concerned about how few people realize their healthcare policies provide very little if any, out-of-country medical coverage, and some don't cover you if you are traveling more than 100 miles from home."

One of the main reasons travel experts recommend getting travel insurance is solely for medical coverage, especially if you have pre-existing conditions or you're planning a long stay. Both the U.S. State Department and the Centers for Disease Control and Prevention (CDC) urge Americans to get medical coverage because their current health care may not cover them in certain countries.

"Even if a country has nationalized health care, it may not cover people who are not citizens. Before you go, consider your insurance options in case you need care while traveling," the CDC states online.

Bottom line

There are several good reasons to buy travel insurance, even if it's just for peace of mind. But the major reasons tend to revolve around financial security and protection for unexpected situations.

It's even more critical for those traveling abroad, mainly because they're likely to spend more money and more time away from home compared to domestic travelers. Plus, medical coverage is a must (and even required in some countries).

Today, more than 30% of leisure travelers purchase travel insurance, the UStiA reports. So, don't think you'd be an outlier if you decide travel insurance is the right move for you. Utilize a marketplace like SquareMouth to snag the best deals.

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