The Best Travel Insurance Policies Right Now — and How to Choose One During the Pandemic

When COVID-19 first brought travel to an abrupt halt in 2020, travelers were shocked to learn that their insurance didn't cover changes due to an epidemic or pandemic, even one on a global scale. Many who were in the midst of their travels ended up having to shell out their own money, while those with future plans suddenly lost out on non-refundable bookings. Nearly two years into the new reality with variants spreading and ebbing, travel bookings are being made with more caution — with a major uptick in protecting those plans with travel insurance.

"We can't predict every new variant that arises, so for the foreseeable future, you have to expect some sort of COVID-related effect on your travel plans," NerdWallet's credit card and travel expert Sara Rathner tells Travel + Leisure. "Not every vacation needs travel insurance — refundable flights and hotel bookings you can easily back out of can be enough for you. But for very expensive trips, especially if you're going abroad, you'll want to think of additional ways to protect your investment."

Megan Moncrief, chief marketing officer of insurance comparison company Squaremouth, says news of the omicron variant in recent weeks has already resulted in a shift in insurance purchases. "With news of a new highly transmittable variant, and in light of some countries already closing their borders, travelers may have less confidence about the likelihood of their borders remaining open and their travel being possible," she tells T+L. "Likewise, new and evolving requirements may complicate international travel more than travelers are willing to coordinate."

Those factors make travel insurance a more important consideration now. But navigating various offerings can be a challenge, especially when there may already be embedded coverage when booking through certain companies or certain credit cards. "We caution travelers to make sure they aren't overspending on a policy that doesn't cover their concerns, or if they can have adequate coverage elsewhere," Moncrief adds. "Due to the very specific nature of the COVID-19 pandemic and related concerns, we urge travelers to do their due diligence to understand what type of refunds are available to them elsewhere, and then do some research before investing in a travel insurance policy."

Here, we outline the major types of travel insurance — but no matter the policy you choose, make sure to read the fine print carefully and speak with your provider about any concerns.

1. Cancel for Any Reason (CFAR) Insurance

If you're worried about losing money on your trip, CFAR insurance is likely the best plan for you. "With it, you can recoup most of what you paid no matter the reason you back out of your trip," Rathner says. "If standard policies don't offer the level of coverage you want, this could be an option."

While the policy can typically be added 14 to 21 days after the initial trip deposit date, the major downside of CFAR insurance is that it's expensive and doesn't necessarily guarantee that you'll get all your money back. Moncrief says that CFAR plans are typically 40 to 50% more expensive than standard travel insurance policies, and they often only cover up to a 75% reimbursement of non-refundable trip costs, with others only covering 50%. But if border closures or last-minute cancellations due to variants or new travel requirements are a concern, this may be the way to go. Bottom line: This kind of policy might only be worth it if you're taking a really expensive trip.

2. Pandemic-specific Insurance

While many insurance providers have kept their policies pretty much the same (i.e. they still exclude the pandemic as a reason for coverage), a select few are offering new plans designed specifically for pandemic-concurrent travel. Seven Corners, for instance, has an option that includes COVID-19 medical coverage, which is valid for up to $100,000 in coronavirus-related medical expenses. Meanwhile, Allianz has added a special COVID-19 provision into some of its policies that cover cancellations, interruptions, and emergency medical expenses arising from contracting the virus before or during a trip. Again, reading the fine print is key.

"The biggest mistake we are seeing now is travelers simply assuming a policy can cover any inconvenience or change related to the pandemic," Moncrief says. "In reality, an insurance policy will only cover a very specific list of 'perils.' While this is typically a comprehensive list, the COVID-19 pandemic has brought to the forefront concerns that had never before been considered a threat to travel." She reiterates that border closures are one of the big examples that have come to light over the last two years with pandemic travel.

There are also travel insurance policies that have been developed specifically for the new ways in which people are traveling — namely, domestic road trips. Berkshire Hathaway Travel Protection launched its ExactCare Lite policy for that reason. Also, if you are traveling domestically, keep in mind that your health insurance will likely cover you during your trip.

3. Provider-offered Travel Insurance

In order to win back travelers, a number of airlines, hotels, and cruise lines started offering specific COVID-19 travel insurance policies, which might even be free. Cathay Pacific includes free COVID-19 travel insurance with every booking through the end of the year; Japan Airlines through Jan. 10, 2022; and Etihad through March 31, 2022. Hotel groups like Club Med, Iberostar, and Shangri-La are also providing similar programs. Cruise line Atlas Ocean Voyages has also implemented emergency evacuation and return-to-home insurance policies for all guests.

But again, not all provider-offered insurance plans are equal, which is why reading the fine print is crucial. "Most travel insurance policies offered through a travel supplier are mainly designed to provide benefits related to that supplier, meaning other concerns, like illness at the destination, may not be covered," Moncrief says. "Oftentimes, these policies leave off common benefits of a comprehensive travel insurance policy in order to be competitively priced."

4. Credit Card Travel Insurance

You're probably aware that many credit cards have travel insurance policies built into them. Those often provide enough trip cancellation, travel delays, rental cars, and baggage benefits. "Just remember that you need to use that card to make your bookings in order to get that coverage," Rathner says. "Simply carrying the card while paying with another one isn't enough."

If you're traveling with expensive items that you want covered, the maximum coverage on credit card benefits can help cover them. But in other cases, it may not fit your needs. "These policies rarely include medical coverage, which is a leading driver of travel insurance purchases, and in some cases, may require the trip to be entirely booked on that card for coverage to apply," Moncrief adds.

5. Standard Travel Insurance

Even though standard travel insurance typically excludes coverage for reasons related to a pandemic, many providers like airlines, hotels, and cruises are still offering flexible policies on rebooking and cancellation — which is just the kind of reassurance you need to book your trip. Just note that anything you've paid for outside of your flight, hotel, or cruise will likely not be covered, so you'd still be on the hook for those expenses. Additionally, some providers have very specific time frames for cancellation, while others only offer a credit toward future travels rather than a full refund.

"The worst thing a traveler can do is assume they are covered for anything that could happen," Moncrief says. "Especially now, given the impact of the COVID-19 pandemic on travel, it's more important than ever to do some extra research to truly understand your policy's coverage. We never want a traveler to pay the additional expense on an insurance policy on top of their other trip costs if it won't provide the protection they are looking for. Coverage does vary by plan, as does the maximum payout limits per benefit. Policies are also priced differently per demographic. Travelers can use an aggregator, like Squaremouth, to compare coverage and prices to find the best policy for their trip."