Gerri Hether has big travel plans for 2023. In a few weeks, she’s embarking on an Antarctic cruise. Then there’s her annual vacation to Hawaii. And there are shorter domestic trips, still to be planned.
But she won’t go anywhere without one thing: travel insurance.
“With airlines being as messed up as they are, travel insurance for trip cancellation, delay and trip interruption is only a common-sense decision,” explains Hether, a retired nurse from Mesa, Ariz. “The peace of mind is worth the cost.”
It’s not too soon to declare 2023 the year of travel insurance. The summer of 2022 flashed a warning that travelers are heeding, according to the latest forecasts.
New research predicts the global travel insurance market will grow 17% this year to $18.8 billion. By 2026, it will be a $32.61 billion industry.
“Given today’s global and economic uncertainties, coverages that help protect travelers’ trip costs may be even more important in 2023,” says Chris Carnicelli, CEO of Generali Global Assistance. “No one wants to lose the financial investment that it takes to plan a trip, especially in the current economy.”
The biggest driver of change has been the pandemic, say experts.
“In the past, travelers might have said, ‘I don’t plan to cancel my trip, so I don’t need trip cancellation coverage,” says Shannon Lofdahl, CEO of Travelex Insurance Solutions. “Now, they realize canceling may not be their choice. For example, young, healthy people who pre-COVID had little fear of becoming ill while traveling now know they can contract COVID anytime, anywhere — so they purchase travel insurance.”
What’s changed in 2023?
The travel landscape is dramatically different from last year. COVID is less of a concern now, but experts fear the summer’s airline problems could carry over into 2023. There’s also more geopolitical uncertainty and economic worries — all making travel more uncertain than ever next year.
“2023 will be the year that consumers want their travel insurance policies to work harder,” says Daniel Durazo, director of external communications for Allianz Travel Insurance. “As more travelers add travel insurance to their packing list, they’ll look for products that provide the coverage and benefits that best meet their needs.”
Also, travel is more expensive that perhaps ever. So there’s more to lose, says Laura Heidt, the insurance desk manager at Brownell Travel.
“So I think even more people, people who don’t normally even think about insurance, will have a different mind set about it,” she says. “I found it so much easier to have detailed conversations with clients and advisors about it in 2022, and I think it will continue to be a welcome conversation, even with the younger set, in 2023.”
Heidt has also been talking to customers about medical evacuation membership such as Medjet, which are a supplement to travel insurance.
Who needs travel insurance in 2023?
So when do you need to consider a travel insurance policy?
When you’re spending more than $3,000 on a trip
In fact, some travel agents insist that you insure a pricey vacation. “If the trip cost is over $3,000, I will not book the trip without insurance,” says Lisa Prosser, a travel consultant with Chartwell Luxury Travel.
If you need peace of mind
Hether, the retired nurse, says her trips aren’t inherently dangerous, but she likes knowing someone has her back. “Travel insurance is more for peace of mind than anything else,” says Michal Strahilevitz, a consumer psychologist who teaches at Saint Mary’s College of California. “That reduces anxiety while you’re traveling and lets you enjoy your trip more. I think it’s money well spent.”
When you leave the U.S.
A hospital outside the U.S. will probably insist on an upfront payment for medical services, which can cost thousands of dollars or more. Also, if you’re on Medicare, and don’t have a supplement or advantage plan coverage. “There is a common misunderstanding among seniors that that their Medicare will protect them outside of the U.S., but it will not,” says travel advisor Mitch Krayton.
Experts say travel insurance is especially important after COVID. Travelers with concerns about infection or who may be immunocompromised may want to consider special insurance such as COVAC, which offers a Global COVID-19 Membership with a $1 million in transportation benefits.
But there’s one more reason you’ll need travel insurance in 2023.
Where is travel insurance required?
Several countries began requiring travel insurance or health insurance during the pandemic. Here’s a short list:
- Caribbean destinations, including the Cayman Islands, Jamaica, and St. Maarten, require their visitors to have insurance.
- Popular European destinations, notably many in the Schengen region (most of Western Europe), also have insurance mandates for tourists.
- In the Middle East, Egypt, Israel, and the United Arab Emirates have travel insurance requirements on the books.
Note: As a practical matter, these requirements are not always enforced. In the last year, I’ve visited several countries with travel insurance requirements, including Qatar, Israel and UAE, and have never been asked for my travel insurance or health insurance information.
Do you need travel insurance?
More travelers will buy insurance in 2023, according to experts. But are you one of them? Here are a few reasons you might consider a travel insurance policy:
If unsure about what could happen
“As we have all learned over the past two years, life is uncertain,” says Tiffany Bertram, who owns a bed and breakfast near Hot Spring, Ark. Her inn’s cancellation policy urges guests to consider a travel insurance policy, particularly for next year’s stays.
“And yet, every time we get a last-minute cancellation, we are asked to ‘bend our rules’ and not charge them, because they didn’t think they needed insurance,” she says.
Her advice: if you think life may be uncertain in your travels, you may need travel insurance in 2023.
If you want protection against travel disruptions and medical emergencies
“Travelers are now looking for ways to protect themselves against costs associated with trip cancellations, travel disruptions and unexpected medical emergencies,” says Lisa Conway, chief underwriting officer at battleface. She says the persistent worries have translated into an interest in multitrip annual plans. “That will enable you to travel without the need to purchase a new policy for every single trip,” she adds.
If you’re traveling to an exotic destination
Jennie Flaming, a tour guide in Seattle, says the more exotic your 2023 trip, the more likely you are to need travel insurance. She used to plan tours to Alaska — easily one of the most exotic domestic destinations — and speaks from personal experience.
“In Alaska, many things are nonrefundable and tour operators and remote lodges encourage people to get travel insurance,” she says. “I consider it to be imperative for myself if I’m traveling on a small plane — because of the weather delays — and I also get insurance that covers a quarantine hotel because I don’t have the income to get stuck in a hotel for an unplanned stay.”
When do you not need travel insurance for your 2023 trip?
Travel insurance is not for everyone. Some travelers can safely skip insurance in 2023. Here’s a list of circumstances in which travel insurance may be unnecessary.
If you have coverage through your credit card
Many credit cards offer travel insurance benefits, including trip interruption, cancellation and medical benefits. “If you have a credit card that provides travel insurance for most of your travel expenses and you have medical insurance that provides adequate coverage abroad, you may be covered enough on most trips to forgo purchasing travel insurance,” says Melissa Yeager, Lonely Planet’s senior news editor. But she cautions that the coverage can be limited, and in 2023 you’ll want to check your benefits carefully before skipping out on travel insurance.
If you’re spending less than $3,000 on a trip
If you are prepared to potentially lose the prepaid, nonrefundable components of your trip, you shouldn’t worry about insurance.
If your trip includes things that insurance doesn’t cover
If you’re staying at a friend’s house, or using a voucher for your plane ticket, travel insurance would probably be minimally useful. (Some travel insurance policies cover the cost of redepositing miles when you need to cancel for a covered reason.)
Bottom line: You may need travel insurance in 2023
With all the uncertainties ahead, travel insurance may be a safe bet for your 2023 trip. There’s a long list of things that could go wrong, from more airline disruptions to wars and pandemic flare-ups. It is not mandatory for you to get travel insurance, but experts say you should at least consider it.
But what additional advice do the experts have on travel insurance in 2023. In part two of this series, I’ll ask them. Their answers might surprise you.