How Does Trip Insurance Work?

A typical trip insurance policy covers travel and trip-related incidents such as trip cancellation, trip interruption, trip delay, missed flight connection, baggage loss, and rental car coverage, among other benefits. Like any insurance plan, trip insurance only provides trip cancellation and interruption coverage for covered reasons. However, some plans do offer a cancel for any reason benefit, which allows you to cancel your trip for reasons that may not be otherwise covered by your policy.


Death or illness of a family member may cause you to cancel your trip. Bad weather could result in missing your flight or delaying your trip. Your passport or baggage may get lost or stolen. These are just some of the situations in which trip insurance helps travelers. Remember that airlines, hotels, and cruises may not reimburse you for such incidents, even if it's their fault.

Although trip insurance isn't mandatory, it's a good idea to have in case of any unexpected travel related issues. Travelers taking expensive trips are especially encouraged to purchase trip insurance to avoid the risk of losing a substantial trip investment.

Trip Insurance Example

Let's look at how trip insurance could protect your next trip. Imagine this scenario: You've booked your family vacation four months in advance, adding up to about $5,000 in non-refundable expenses such as airfare, hotel accommodations, and prepaid activities. Suddenly, days before your departure, your partner becomes extremely sick and is unable to travel. You have to cancel your trip. Even if the airline, hotel, and activities don't refund your expenses, trip insurance reimburses all non-refundable expenses, so you don't lose the money you invested in your trip.

Why Do You Need Trip Insurance?

  • Last Minute Cancellations
  • Going on a Cruise
  • Family Travel
  • Baggage Loss or Delay
  • Evacuation
  • Lost or Stolen Passport