3 tips for insuring domestic trips
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If you're like us, you haven't purchased insurance for a domestic trip in a long time -- if ever. Well, maybe you opted for insurance to cover that splurge on an Alaska cruise or for that pricey vacation home you rented for a multigenerational trip. But, by in large, you probably passed up the insurance for close-to-home vacations. Then came 2020 and the novel coronavirus, which causes the disease COVID-19. With infection rates still on the rise as summer starts, more and more travelers are deciding to invest in trip insurance for their upcoming vacation plans.
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And, this isn't just anecdotal information we're going on. Insurers are noting an increase in the number of policies they are selling for domestic trips. Squaremouth.com, a travel insurance portal where you can compare policies side-by-side to find the best option for your circumstances, says that "domestic trips now comprise 57% of all insured travel throughout 2020, compared to just 12.3% in 2019." This is interesting since the company also reports that its seen a 90% decrease in international travelers throughout the remainder of this year, compared to only a 5% decrease in the number of domestic travelers.
That tracks with what TPG is seeing: a strong desire to travel somewhere this summer -- even if it's local or regional. In fact, the popularity of road trips from big cities like Chicago, New York City and Washington, D.C. are on the rise as are vacation home rentals -- both vacation types that allow you to maintain social distance if you so choose.
Related: I took a socially distant vacation with my family -- here are 6 things we learned
Since domestic travel is on the rise, now is the time to think about your insurance options. The type of coverage you select will be different from what you'd want for an international trip so it makes sense to think things through now and draft your domestic insurance game plan. Here are some tips.
Related: The best travel insurance policies and providers
Don't pay for more medical coverage than you need
When traveling overseas, carrying adequate medical coverage is very important. If you're injured or get sick in a foreign country, you want insurance that covers treatment since not everyone's health insurance policy extends coverage outside of the United States. It's another matter when you're traveling domestically and have a health insurance policy that's in force.
According to Squaremouth.com, "Most U.S. health insurance providers can cover emergency medical expenses for travelers remaining in the U.S., but require a deductible to be paid upfront." If that's your situation, Squaremouth.com suggests that you buy a travel insurance policy with minimal medical benefits that will cover your specific deductible. For example, if your health insurance policy has a deductible of $2,500 that you haven't met yet, look for a policy that offers medical coverage up to that number. You'd be reimbursed for your out-of-pocket deductible and then your health insurance policy would kick in to cover the rest of the bill.
When searching on SquareMouth, look for its "USA Only" policies sold through Tin Leg. These packages are designed to include domestic cancellation coverage and minimal medical benefits at an affordable price.
Related: Travel insurance vs. credit card protections
Pick the right cancellation coverage
Trip cancellation coverage can be an integral part of an insurance policy. This coverage reimburses you for nonrefundable, prepaid trip expenses when a trip must be canceled or altered due to a covered situation. So, for example, if a travel companion falls ill and can't make the trip and everyone in your group decides to cancel, cancellation coverage will protect your investment.
Related: The best credit cards that offer trip cancellation coverage
Don't forget that many premium credit cards also convey some type of trip cancellation and interruption insurance. Review what coverage you may already have if you carry any of these cards: Chase Sapphire Reserve®, Chase Sapphire Preferred® Card or The Platinum Card® from American Express.
Related: Your guide to Amex's trip insurance coverage
Spring for Cancel for Any Reason coverage
InsureMyTrip.com recommends a Cancel for any Reason policy add-on for anyone nervous about traveling in the age of coronavirus. The company says, "While some standard trip cancellation policies may cover physician-ordered quarantine or contracting the virus (unless pandemics are specifically excluded), these policies do not cover COVID-19-related cancellations due to fear of travel or any government-ordered border shutdowns. That's why a cancel for any reason upgrade is recommended."
As mentioned, many traditional trip insurance policies exclude pandemics and epidemics, so coronavirus and COVID-19 are not covered reasons for cancellation and reimbursement. However, many insurers sell an add-on "upgrade" called Cancel for Any Reason. It costs extra -- usually 40–60% more than a standard policy -- but lets you cancel up to two to three days before your trip for just about any reason. As always, read the policy fine print carefully for any exclusions.
Related: Will future pandemics be covered by travel insurance?
With CFAR, you won't get all of your money back though. Coverage generally only refunds 50% to 75% of your trip costs. Still, if it's an expensive vacation and you want the peace of mind to cancel if you get cold feet due to coronavirus concerns or just about anything else, CFAR is the way to go. And, remember, we are entering hurricane season so if you have travel plans to the Southeast U.S. or Caribbean, CFAR is a powerful ally if you want to cancel a trip due to the threat of bad weather from a tropical storm or hurricane.
InsureMyTrip.com has a few tips when it comes to CFAR. First and foremost, know that you need to insure your entire trip costs. So, add up all of your prepaid, nonrefundable trip expenses and provide an accurate trip cost when asking for insurance policy quotes. Second, don't procrastinate. You must buy CFAR coverage within 14–21 days of making an initial trip payment or deposit. And, finally, understand the cancellation timeline. You can't cancel your trip 30 minutes before boarding your flight. Most CFAR policies require that you cancel at least two to three days in advance.
Related: Why you might want to get a premium credit card instead of purchasing travel insurance
Bottom line
When it comes to trip insurance, only you can decide if it's worth the investment. If the nonrefundable trip costs are low, you may decide to "self-insure" and eat any losses if a trip must be canceled. But, consider insurance if you're spending a fair amount of money on a vacation and are concerned that you may need to cancel. This is especially important if your cancellation reason is not normally covered by traditional trip insurance policies. In that case, you may need to invest in a policy with a Cancel for Any Reason upgrade.