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Why is Travel Insurance so Expensive? Solved!

By: Swena Kalra

Edited By: Scott Sidders

Updated on November 6, 2023

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Traveling is a fantastic experience, full of new sights, sounds, and cultures to explore. However, before you book your tickets, it's essential to factor in the cost of travel insurance. Many people are surprised to find that travel insurance can be pretty expensive, but there are a few reasons why this is the case.
In this blog post, we'll look closely at what travel insurance is, why it costs so much, what you can do to reduce it, and if it's really worth the investment.

What is travel insurance, and what does it cover?

Travel insurance is a type of insurance that covers you financially if something goes wrong during your trip. It can cover things like lost or stolen luggage, medical emergencies, flight cancellations, and more. Travel insurance is designed to give you peace of mind while you're traveling, knowing that you're covered financially if something unexpected happens. Some travel insurance policies also offer coverage for things like missed connections and activity cancellations.

How much does travel insurance cost?

The cost of travel insurance varies depending on several factors, such as the length of your trip, your age, the destination(s) you're visiting, and the activities you'll be doing. That said, in general, travel insurance is fairly expensive. A one-week trip to Europe can easily cost over $200, depending on your chosen company.

Why is travel insurance so expensive?

There are a few reasons why travel insurance tends to be on the pricier side. Here are some of the main reasons:

1. Emergency medical assistance can be very costly

If you need to be flown home for medical treatment or to be hospitalized while abroad, the costs can quickly add up. Travel insurance covers these costs so that you don't have to worry about them financially. This is one of the most important reasons to have travel insurance, but it's also one of the most expensive.

2. Global events are becoming more common

In recent years, we've seen an increase in the number of global events that can disrupt travel plans, such as terrorist attacks, natural disasters, and pandemics. While these events are relatively rare, they can significantly impact travelers. This means that insurance companies have to pay out more in claims, and as a result, travel insurance costs are rising.

3. People are traveling to more remote and risky locations

As global travel becomes more accessible, people are venturing to more remote and dangerous parts of the world. This means that there's a higher risk of something going wrong, and insurance companies have to account for this. You can expect to pay more for travel insurance if you're visiting a country that's considered to be high-risk.

4. Insurance companies are for-profit businesses

At the end of the day, insurance companies are businesses that need to make a profit to stay in business. This means they need to charge enough to cover their costs, including claims payouts, administration, and marketing.

What can you do to reduce the cost of travel insurance?

There are a few things you can do to reduce the cost of your travel insurance policy:

1. Shop around and compare policies

The best way to find a good deal on travel insurance is to shop around and compare company policies. Make sure to read the fine print to understand what each policy covers. Finding the best deal can be time-consuming, but it's worth it.

2. Buy insurance as soon as you book your trip

You'll likely pay more if you wait to buy travel insurance until closer to your departure date. That's because the sooner you buy a policy, the lower the risk is that something will go wrong and you'll need to make a claim. This is especially true for last-minute travelers.

3. Consider a multi-trip policy

If you travel frequently, you may be able to save money by purchasing a multi-trip policy. These policies cover you for an unlimited number of trips within a certain period of time, usually one year. Be sure to check the terms and conditions to see if there are any restrictions, such as a maximum trip length or destination.

4. Use a travel agent

If you use a travel agent to book your trip, they may be able to get you a discount on travel insurance. This is because agents often have relationships with insurance companies and can negotiate better rates.

5. Check if your credit card offers insurance

Some credit cards offer complimentary travel insurance for cardholders. This benefit is usually only available if you book your travel using the card. Check with your credit card issuer to see if this is a feature of your card.

6. Customize your policy

You may be able to save money by only purchasing the coverages you need. For example, if you have a comprehensive health insurance plan, you may not need to purchase medical coverage on your travel insurance policy. Or, if you're only traveling within Australia, you may not need to purchase coverage for overseas medical expenses. This will vary depending on your destination and the policies you're comparing, so be sure to read the fine print.

Is travel insurance worth the cost?

In most cases, travel insurance is worth the cost. This is especially true if you're traveling to a high-risk country or going on a costly trip. However, if you're only taking a short trip or visiting a low-risk country, you may be able to get by without it.

Ultimately, the decision of whether or not to buy travel insurance is up to you. When making your decision, consider the policy's cost, the coverage it offers, and your personal risk. This will help you decide if travel insurance is right for you. But the best benefit of having travel insurance is the peace of mind it provides. Knowing you're covered can help you relax and enjoy your trip, even if something goes wrong. This is priceless.

So, ultimately, the cost of travel insurance is worth it for many people.

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