Despite never buying travel insurance, I have received thousands of dollars in compensation when things have gone wrong, thanks to credit card travel insurance.With COVID-19 devastating the travel industry, travel insurance is more prevalent than ever. Travel agents and planners push it, prominently featured on the checkout page of hotel and airline websites.

But is travel insurance essential? Whether or not it’s worth it and what it covers depends entirely on your trip. I’ve consistently declined it, but that doesn’t mean I’m taking a financial risk if something goes wrong. I’ve received thousands of dollars in compensation for unexpected issues.

In this article, I’ll explain how I’ve managed to do this and whether or not buying travel insurance should be something you consider.

Travel Insurance: What Does It Cover and Do You Need It?

Travel insurance is a safety net that can come in handy when things don’t go as planned. Various types of coverage are available, each with its own set of benefits. Here’s a breakdown of the most prominent ones:

• Baggage Delay Insurance: This coverage reimburses if your checked luggage is delayed. You’ll get money for things like toiletries and clothes if you need them.
• Trip Cancellation Insurance: This coverage reimburses you for prepaid, nonrefundable travel if something goes wrong before your trip begins.
• Trip Interruption Insurance: This coverage covers prepaid expenses you didn’t get to use if something goes wrong while on your trip.
• Emergency Medical Transportation: This coverage pays for you to be taken to a particular facility because of injury or illness during your trip.
• Trip Delay Insurance: This coverage reimburses you if your trip is delayed for a specific time. For example, your flight is canceled, and you must stay overnight. You’ll be covered for lodging, toiletries, food, etc.
• Primary Rental Car Insurance: This coverage covers up to the cash value of most vehicles for theft or damage. It won’t cover the car you slam into or any injuries to people inside the vehicle.

In addition, you can purchase Cancel For Any Reason (CFAR) insurance, which allows you to receive a large portion of your airfare as a refund (sometimes up to 90%) for a small charge. As the name suggests, you can cancel your travel simply because you changed your mind.

But do you need travel insurance?

The answer is no, you don’t need travel insurance. However, if misfortune shoehorns its way into your vacation, you might have to pay thousands of dollars that would otherwise have been covered by a nominal fee upfront. The peace of mind that comes with travel insurance may be worth the money.

For example, during a trip to Ireland, insurance saved me twice:

• My checked bag never showed up in Dublin. Because I had baggage delay insurance, I received $500 to buy new clothes.
• I scraped my rental car in a parking garage. The rental agency charged $2,400 to get it fixed. But because I had primary rental car insurance, I didn’t have to pay a shiny dime.

That sort of stuff only sometimes happens. But there are a few critical insurances that I always make sure I have, just in case.

Wait. Didn’t I say earlier that I never buy travel insurance?

I get my insurance for free by booking my flights and rental cars with my Chase Sapphire Preferred® Card. But if you don’t have a credit card that includes insurance, you can also buy a policy that consists of these things for about $100 or more — along with other helpful coverages you won’t find on a card, such as COVID-19 cancellation.

Again, Cancel for Any Reason (CFAR) insurance is especially useful nowadays after all the recent mayhem inflicted on the travel industry.

Where to Purchase Travel Insurance

When purchasing travel insurance, there are several reputable providers to choose from. Sites like Seven Corners, John Hancock, and Tin Leg offer various options, making it easy to customize your insurance to fit your needs.

Below are some examples of different price points:

If you’re traveling overseas and are concerned about the potential impacts of COVID-19 on your plans, you can purchase a policy from Seven Corners for as little as $65. This policy includes benefits such as trip cancellation and interruption coverage, medical coverage for COVID-19, medical quarantine, and no medical deductible.

Suppose you’re traveling to Miami during hurricane season and plan to rent a car. In that case, John Hancock offers a policy for $106 that covers trip cancellation and interruption, hurricane and weather insurance (which covers flight delays of up to 48 hours and reimburses you if you must leave your accommodations due to weather), CFAR insurance (which gives you the option to change your mind and receive 75% of your money back), and rental car insurance covering up to $50,000 in case of inclement weather damage.

If you’re taking a cruise, a $38 Tin Leg insurance policy can get you all the suggested coverages for that activity, such as hurricane and weather insurance, medical coverage for COVID-19, medical evacuation and repatriation up to $250,000, travel delay (kicking in after six hours), and baggage and personal items loss of up to $500.

However, the most common time you’ll be tempted to buy insurance is at the checkout page of an airline website. Here, you’ll find insurance that offers trip cancellation, lost baggage, and medical insurance. You’ll also likely encounter some alarmist and fear-mongering language.

It’s important to remember that certain travel rewards credit cards come with built-in travel insurance. You’ll receive automatic coverage as long as you pay for your travel with one of these cards. Some examples of such cards are:

• Chase Sapphire Reserve: offers trip cancellation and interruption, emergency medical and dental, and baggage delay insurance, among other benefits.
• The Platinum Card from American Express: offers trip cancellation and interruption, baggage insurance, and a global assistance hotline, among other benefits.
• Citi Prestige Card: offers trip cancellation and interruption, worldwide travel accident insurance, and baggage delay insurance, among other benefits.

It’s worth noting that the specific benefits and coverage amounts provided by these cards can vary depending on the card and the issuer. Read the terms and conditions carefully before relying on your credit card’s insurance benefits for your travels.

Ultimately, the type of travel insurance you choose will depend on your travel plans, budget, and personal preferences. By researching and comparing different providers and policies, you can find the coverage that best fits your needs and gives you peace of mind while on the road.

Is travel insurance worth it?

Although it’s essential to prioritize peace of mind during your travels, travel insurance is often unnecessary if you have a virtual travel credit card. However, consider credit cards like the Chase Sapphire Reserve® Card or the Capital One Venture X Rewards Credit Card for top-notch travel insurance. While the annual fees are higher, they may be worth it if you would otherwise purchase rental car insurance and trip cancellation insurance.