Travel Insurance

How to Calculate Your Travel Insurance Needs


Did you know that in 2014, more than 33 million people bought travel insurance policies in the US? According to data provided by the US Travel Insurance Association and published in an article on USA Today in May 2017, since 2012, the travel insurance market had witnessed 12% growth in its customers.

Successful examples of claim settlements and full reimbursement of non-refundable expenses are adding to the popularity of travel insurance amongst travellers, both seasoned and first timers. It seems that travel insurance companies are playing their part well. But do policy buyers know how to make the most of these policies or even to calculate the right amount of coverage they need for a trip?

When you get a travel insurance quote, you should be aware of your total trip costs. The best way to ensure that you get adequate coverage is to estimate what the entire travel will cost you and only then seek cover, comparing various policies to get the maximum protection at the most reasonable premium.

Even when a traveller tries to calculate the total trip costs, they end up adding every single expense made while travelling, which is not correct. Here’s how to do it.

Calculate “Insurable Trip Cost” Instead

Firstly, you should know that insurable trip cost is not the same as “total trip cost.” It is much less. This cost is obtained only when you add the pre-paid and non-refundable expenses associated with the trip. Travel insurance companies will only insure you for pre-paid expenses, such as travel and hotel bookings, not on any additional expenses you incur during travel.

The pre-paid, non-refundable expenses would include airline tickets, cruise costs, hotel bookings, tour cost or excursions, most expenses that you have made much before the trip itself. If a trip needs to be cancelled or is interrupted, these costs, in most cases, get forfeited.

Expenses incurred during flight bookings through frequent flier miles will not be added to the trip cost, due to their own means of reimbursement. However, taxes, fees paid to re-deposit the miles, points or change of dates of travel can be included in the trip cost.

Fortunately, some plans allow you to add recreational expenses, such as theme park admission fees and event tickets, to the travel insurance coverage, offering maximum protection to the policy buyer. In a nutshell, you need to get yourself insured for any money insured that you’ll lose in case you need to cancel the trip prior to departure or on the same day.

If you have still missed something, don’t worry. You can add it later, after you have purchased the plan, but before departure, with an added premium. Just make sure to buy a travel plan as soon as you book your flight or make the very first trip payment.

Most insurance companies offer certain benefits to buyers who insure 100% of their pre-paid, non-refundable expenses. Usually, a travel plan will cost anywhere from 4% to 10% of your total pre-paid, non-refundable trip cost.

The key is to neither underinsure or over-insure yourself. In both cases, you stand to lose money.


Having lived in 3+ countries, worked for companies small and big in USA, Middle East & India, I have a lot of stories to share about international travel, immigration and living as an NRI in the US.

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