Here's Why Travel Insurance Premiums Could Rise in 2023

Travel insurance may soon come at a higher price. 

Many people invest in travel insurance to protect money spent on prepaid travel costs. With the right policy, you can be reimbursed for prepaid non-refundable travel expenses when a vacation doesn't go as planned. Travel insurance brokerage Insuremytrip noted that the average cost of a travel insurance policy was $278 in 2022 -- which was $33 more than the average cost in 2021. 

Travelers could see another increase in insurance premiums this year, which could result in you needing to adjust your vacation budget. 

Airline cancellations are making travelers nervous  

In 2022, many U.S. airlines experienced significant operational disruptions. At The Ascent, we've previously written about the record number of holiday flight delays and cancellations travelers experienced in December 2022. Airline disruptions continued to be a substantial issue at the start of 2023, which resulted in travelers having to change or cancel their vacation plans. 

Reuters recently discussed how an increase in airline cancellations has made travelers feel nervous about potential disruptions to their travel plans. It turns out more people are purchasing insurance policies to protect themselves.

According to insurance comparison provider Squaremouth, travel insurance policy purchases increased by 16% between Dec. 26, 2022, and Jan. 8, 2023 -- likely due to increased fears of continued airline disruptions. Travel insurer World Nomads saw a 56% increase in policy sales from December 2022 to January 2023 compared to the same period the year prior. 

With more travelers buying coverage, claims could increase -- leading to higher premiums. Inflation may also impact premium prices. It seems everything costs more each day, including insurance. However, some insurers may revise policy benefits rather than raise rates. 

What to consider before buying a travel insurance policy 

Travel is an investment -- so it's a smart idea to consider purchasing a travel insurance policy. After all, you probably saved up a long time to afford your upcoming trip. Before buying coverage, review the policy terms to ensure you understand what's covered and what's not. 

Not all policies are created equal, and you want to ensure you choose a policy that meets your needs. You should also compare coverage details and policy costs between multiple insurers to find the best policy and get the best deal. 

Many factors influence premium prices, such as age, total trip cost, length of trip, and the type of coverage chosen. Travelers should expect to pay anywhere from 4% to 10% of their total prepaid non-refundable trip costs for a travel insurance policy. 

Travel credit cards may offer protection 

While travel insurance can be a good investment, you can protect yourself in other ways. Many travel credit cards include travel protections like trip interruption and trip cancellation coverage. While there are some limitations, these credit card perks can provide value. 

If you have a credit card with these benefits, check to see if the included coverage will offer enough protection for your next trip. You may be able to keep more money in your pocket by skipping a travel insurance policy and instead using your credit card benefits. You can review our list of the best travel rewards credit cards to learn more about the many perks offered.