How Does Travel Insurance Work? Your Definitive Guide to Travel Insurance in 2026

Travel insurance is a type of insurance that pays for the costs of things that go wrong when you travel. Sounds simple, right? Unfortunately, much more goes into getting you insured before you travel, from limits to deductibles to comprehensiveness and much more.

For example, suppose you're a twenty-year-old planning a two-month solo backpacking holiday to the jungles of Vietnam. In that case, you'll probably look for a higher deductible, lower maximum limit, and totally different set of coverage options than you would as a young family of four travelling to Disneyland Paris for a long weekend. In this article, you'll learn what all of this means and much more!

In this guide, we delve into travel insurance by explaining what it is, how it works, how much it costs, and why you should strongly consider having it for your next trip abroad!

How Travel Insurance Works: An Overview

Anete Lūsiņa

Let's start with the basics — what is travel insurance?

Simply put, travel insurance is a type of insurance that protects you from unexpected events that may occur while you're travelling in a foreign country. Much like other insurances you'll probably be familiar with, such as health insurance, auto insurance, or home insurance, travel insurance works by paying a fee (called a 'premium'), generally on a monthly basis, that insures you against a prearranged set risks that might occur while you travel (arranged in a contractual document called a 'policy'). These risks usually include medical emergencies, trip cancellations, lost or stolen luggage, repatriation, search-and-rescue, and other unforeseen circumstances.

Travel insurance can be purchased before or during a trip and usually covers a set period (called a 'policy period'). The cost and comprehensiveness of your travel insurance policy could vary dramatically depending on the duration of your trip, your destination, and how much coverage you're after. As we'll find out, it's not just recommended, but essential, for you to carefully review the terms and conditions of your policy before purchasing it to ensure your coverage is up to scratch and that you understand any exclusions or limitations.

Once you're travelling, you can file a claim with your insurer to receive reimbursement for covered expenses (provided your claim is indeed insured).

To better understand how travel insurance works, let's walk through the process from purchase to the filing of a claim. (Note that the steps below outline online purchase — which is by far the easiest — but you can also purchase travel insurance offline through your travel agent.)

Why Travel Insurance is Important

Ari He

Travel insurance is important because you never know what might happen to you while you're travelling abroad. If you're like most people, going overseas, whether for a holiday, work, or anything else, is an exciting experience. However, because healthcare and travel-related expenses can be far higher than you might expect, ensuring you're covered in case of unexpected incidents is a surprisingly important step for any overseas trip.

For example, if you're an American travelling abroad, you might be surprised to learn that the average medical claim overseas is around $1,600, with doctor's visits and medical treatment usually falling between $100 and $2,000 more for most travellers.

Moreover, travel-related problems, including lost baggage, flight delays, theft, and many others, are not only severe headaches while travelling but are not as unlikely as you might think! That's why always a good idea to leave for your trip with some form of travel insurance under your belt.

Types of Travel Insurance

Holly Mandarich

There are several types of travel insurance, but they broadly fall into two categories based on what they cover:

• Trip insurance: This covers travel-related incidents, which commonly include the cancellation of transport, trip cancellation, stolen or lost luggage or valuables, repatriation to your home country in case of civil unrest or disasters, and more.
• Travel health insurance: This covers medical-related incidents, commonly including doctor and hospital visits for accidents, illness, and death, and (in more expensive policies) dental care, pre-existing conditions, maternity and childbirth, or mental health-related costs.

A good health insurance policy will include a combination of both health and trip insurance, but depending on your needs and preferences, you may want to look for one or the other. For example, if your normal health insurance in your home country already covers hospital visits overseas, then it may be a smart idea to find a trip insurance policy only.

Similarly, travel insurance can also be categorised based on the type or duration of the policy. For example:

• Single-trip insurance: This insures you for a single trip abroad, regardless of the exact duration.
• Multi-trip insurance: This insures you for multiple nonconsecutive months within a longer period (normally a year).
• Expat/digital nomad insurance: This insures you for longer periods of time while living abroad (i.e. longer than one year). See below.
• Family insurance: This insures you and multiple others in one policy.
• Business insurance: This lets businesses to insure employees travelling abroad on business trips.

Typical Conditions and Exclusions

As we touched on above, most health insurance policies, regardless of the type, generally include coverage for the following kinds of incidents:

• Doctor's visits (within covered limits),
• Hospital visits (within covered limits),
• Evacuation or repatriation to your home country due to natural disasters, epidemics, or civil unrest,
• Expenses for the injury of a third party or damage to their property,
• Cancellation of transport,
• Trip cancellation (for reasons outside your control),
• Stolen or lost luggage (including passports or cash),
• Stolen or lost mobile phones, cameras, clothes or jewellery.

On the other hand, some other activities and incidents are seldom covered by standard travel insurance policies, although they can sometimes be paid for at a premium. A few examples of common exclusions include:

• Mental health-related expenses,
• Pregnancy, childbirth, and maternity-related expenses,
• Chronic or pre-existing conditions (especially if not disclosed),
• Risky activities (e.g. skiing, extreme sports, etc.).

How to Use Travel Insurance

JK

Once you've purchased your travel insurance, there's little to do but to enjoy your trip! But whether you're about to buy your insurance or have already done so, here are a few additional tips:

How to Choose the Right Type

Choosing the right type of insurance depends on your needs, preferences, risk tolerance, and budget. —

First, it's always a good idea to check your primary health insurance policy in your home country to see if it covers medical expenses like hospital or doctor's visits abroad. If it doesn't (or if it does but with strict limits), you may want to consider an insurance policy with medical coverage that replaces or augments any coverage from your home insurer. Similarly, you can also check your credit card conditions to see if you're already insured for basic travel-related incidents like missed flights or cancelled transport.

Next, you'll want to consider what kind of insurance you'll need. There are three main things to understand here:

• Deductibles: This is the amount you must pay out of pocket before your insurer starts covering the costs. A higher deductible means a cheaper premium, but it also creates more expense for you if you need to visit a doctor or hospital. Deductibles are sometimes customisable before purchase, though this isn't always the case.
• Maximum limits: This is the maximum amount the insurer will pay in total for any claims you file. The higher the maximum limit, the higher the premium, and the more you're insured. Like deductibles, limits are sometimes customisable, but again, this depends on the insurer.
• Premiums: This is the amount you'll pay the insurance company monthly in exchange for the insurance you get. Your deductible, maximum limit, and the coverage options you pick will all influence the final premium you'll pay.

Generally, younger and healthier travellers opt for high deductibles and low maximum limits. This keeps down the final cost of their insurance policy. Older travellers or travellers with existing health concerns normally opt for the opposite: low deductibles and high maximum limits (not to mention more comprehensive coverage options). It's therefore important to closely consider your own individual needs, preferences, risk tolerance, and budget before picking a health insurance policy for your trip.

When to Purchase Travel Insurance

We recommend purchasing travel insurance as soon as possible after booking flights for an international trip. This is because some policies may require purchase within a specific timeframe to be eligible for certain types of coverage.

Some travel insurance providers like VisitorsCoverage and SafetyWing allow you to buy travel insurance even after you've started your trip, but this isn't the norm, so if you don't want to be limited in your options, it's best to purchase your insurance in advance of your departure.

How to File a Travel Insurance Claim

To file a travel insurance claim, you'll typically need to provide documentation describing the incident for your insurer to review. The best form of documentation is a doctor's note or a police report. Still, in some circumstances, you might need to write a report yourself, which you should always do carefully and truthfully, providing lots of detail.

You'll also need to show any bills, receipts, invoices, and card or bank statements relevant to your claim. Be ready to show the original copies. According to your policy terms, you'll very likely be expected to pay these expenses upfront yourself and then be reimbursed later once your insurer has validated the claim.

Once you have your documentation in order, you can typically submit everything at once via an online portal on your insurer's website or mobile app. If you don't have access to these devices, it's normally also possible to phone your insurer directly. Good travel insurance providers will be on standby 24/7 to receive your calls.

Your insurer will then review your claim to determine if the expenses are eligible for reimbursement based on the policy terms.

How to Cancel or Renew Travel Insurance

If you'd like to cancel, renew, extend, or modify your health insurance policy, it's usually straightforward to do. Most travel insurance providers allow you to get the job done directly via the customer portal on their website or mobile app, and the whole process usually takes no more than a few clicks.

If this option isn't available, you can call your insurer via their customer hotline. Travel insurance operators often process calls around the clock, so reaching them shouldn't be an issue, no matter your timezone.

Cost of Travel Insurance

Guilherme Stecanella

The cost of travel insurance varies dramatically. From the insurer's perspective, the premium they charge you centres around how likely you are to file a claim. From the customer's perspective, the cost is based on the coverage chosen. All of this includes factors such as:

• Your age,
• Your health profile,
• The length of your trip
• Your home country,
• Your destination country or countries (note: travelling to or through the USA raises the cost of your premium dramatically),
• The insurance provider's pricing model,
• The specific coverage you're looking for.

It's therefore tough to estimate what you can expect to pay in premiums, as the final number can vary so extensively.

However, to give a rough estimate range according to our analysis, young travellers with no health problems, high deductibles, and low maximum limits can expect to pay between $30 and $80 per month (provided they're not travelling to the US). Conversely, an older traveller with low deductibles and high maximum limits probably won't expect to pay less than $200 per month, though the final amount can be higher still.

If you're interested, here are a few estimates of average health insurance costs from other sources:

• 5% to 6% of your total trip cost (Forbes Advisor)
• $271 per month (Nerdwallet)
• $248 per month (Business Insider)

Best Travel Insurers

Jeremy Bishop

When it comes to shopping around for travel insurance plans among different providers, you'll have a lot of options. There are two groups of insurers:

• Traditional travel insurers,
• Insuretechs.

Both offer travel insurance policies that cover you while you travel, but the main difference is in the user experience. Insuretechs leverage technology to deliver more personalised, streamlined, and often more affordable policies. They focus on user experience and innovative features such as instant policy issuance, AI-powered claims processing, and mobile app integration. On the other hand, traditional travel insurance providers tend to rely more on conventional sales channels, with more rigid policies and processes and higher premiums.

VisitorsCoverage

VisitorsCoverage is an online travel insurance marketplace offering various travel insurance plans, making it easier for travellers to compare and purchase insurance based on their specific needs.

Below are a few highlights of their travel insurance:

• Type: Insuretech focusing on both medical and trip coverage
• Customer support: FAQ, live chat, phone support
• Pricing range: $25 to $150 /traveller /month
• Insurance underwriter: Lloyd's, Petersen, and others
• Best for: Value for money and overall travel and medical coverage

SafetyWing

SafetyWing is a good insurance option for younger travellers because it offers flexible but comprehensive coverage at a famously affordable price.

Here are the main highlights of SafetyWing:

• Type: Insuretech focusing on trip coverage
• Customer support: FAQ, live chat, phone support
• Pricing range: $119 to $200 /traveller /month
• Insurance underwriter: HDI Global Specialty SE
• Best for: Digital nomads, youth, long-term travellers

Insured Nomads

Insured Nomads is another very good travel insurance option, especially if you're adventurous or frequently on the go.

Below, we go through a few insurance highlights:

• Type: Insuretech focused on both medical and trip coverage
• Customer support: FAQ, live chat, phone support
• Pricing range: $80 to $420 /traveller /month
• Insurance underwriter: David Shield Insurance Company Ltd.
• Best for: Adventure seekers wanting comprehensive travel insurance

Allianz Travel

Allianz Travel Insurance is a major name among travellers. While pricier, they offer excellent coverage options and have a long record of service and an excellent reputation.

Here are the main points of Allianz's travel insurance.

• Type: Traditional insurer focused on both medical and trip coverage
• Customer support: Phone support
• Pricing range: $100 to $500 /traveller /month
• Insurance underwriter: Jefferson Insurance Company
• Best for: Older travellers looking for reputable, comprehensive coverage and don't mind the higher premiums

Best Digital Banks For Travel Insurance

Bambi Corro

In addition to traditional insurers and insuretechs, many digital banks and credit or debit cards offer travel insurance in their plans. Note that these cards are typically paid for on a monthly basis, and the insurance is only an extra rather than a main feature: therefore, it's not nearly as comprehensive as travel insurance from an insurer.

Still, if you're looking for a new digital account and card with travel insurance as a perk, here are a few good options:

• N26: Available in the EU, the premium N26 You and N26 Metal plans come with medical insurance up to €1,000,000, travel insurance (including travel cancellation, flight insurance, luggage coverage, and more) and lifestyle insurance (including winter sports insurance, car rental insurance, and more). N26's insurance is underwritten by Allianz Assistance.
• Revolut: Available in the UK, US, and EU, Revolut's Premium and Metal Account holders have access to a wide range of travel insurance benefits underwritten by Allianz Partners, including protection for overseas medical emergencies, trip cancellation, trip interruption, lost or delayed baggage, winter sports cover, and more.
• Monzo: Available in the UK, Monzo Premium offers travel insurance for up to 45 consecutive days underwritten by AXA that includes coverage for travel delays, medical bills up to £10,000,000, winter sports, lost valuables, and others.