What’s New in Travel Insurance this Year?
By Michael Giusti
A universally disheartening experience is finding out something has gone wrong with a long-planned vacation. Lucky for travelers, a combination of careful strategizing and insurance products can make mitigate potential financial impacts of unexpected changes in plans, and hopefully provide some comfort.
According to the U.S. Travel Association, Americans are planning to venture out more in 2025 than in past years, with travel spending expected to grow by 3.9% to $1.35 trillion compared with 2024. Alongside more travel-related spending and more trips planned, there are more opportunities for things to go wrong.
Whether it is through refund policies or insurance policies, travelers who know where to look can keep a change in plans from becoming a financial nightmare. This guide aims to break down some of the most common ways travelers can protect themselves if their plans go awry.
New in 2025
While pundits and politicians have been warning of the coming Real ID requirement for years, unless the government rolls back the requirement again, 2025 will be the year travelers will need the more-robust identification in order to board a plane.
That Real ID requirement is scheduled to begin in May 2025.
Most newly issued state IDs should now be Real ID compliant. But if someone is still hanging on to an older ID from a few years ago, a drivers’ license may not cut it at the TSA screening checkpoint this summer.
To qualify as a Real ID, the credential must include proof of identity, citizenship, social security number, and proof of a current address. All passports currently in circulation should already qualify as a Real ID.
Also new in 2025 is a handful of new requirements to enter some European countries.
For starters, travel to the UK will require an Electronic Travel Authorization to help with security pre-screening. This is an additional credential over and above any passport or visas travelers might need.
Travelers can apply online here. The ETA costs $13 per traveler. Applicants have to upload their personal information and a passport photo. The ETA is valid for two years.
Other European nations within the European Union are also implementing a pair of new requirements called the European Travel Information and Authorization System and the Entry Exit System. The ETIAS and The EES are expected to launch later in 2025 and are meant to work in tandem.
It’s worth paying attention to these new travel rules because if a traveler didn’t have a Real ID or failed to secure an entry permit, these situations presumably wouldn’t qualify for reimbursement through a travel insurance policy.
Regulatory Protections
April will mark the one-year anniversary of a set of regulations put in place by the U.S. Department Of Transportation that requires airlines to reimburse travelers promptly, without objection, and in the method of payment used to purchase the ticket if a flight is canceled and they do not rebook the traveler.
The rule also kicks in if the airline substantially changes the flight in a way that negatively impacts the trip and the traveler declines a new itinerary. Significant changes include long delays (more than three hours domestically or six hours international), arrival at or departure from a different airport than was originally booked, an increase in the number of connections, a downgrade to a lower class of service, among others.
If the airline does offer to rebook a traveler and they take the new flight, they will not also get an automatic refund.
There are also detailed rules about compensation for lost or delayed baggage.
Since this is a federal regulation rather than a law, it is unclear how the new Trump administration will approach this issue, depending on their policy and deregulation priorities.
Travel Insurance
In many cases, travel insurance might help protect the travelers beyond the reimbursement policies. In other cases, it is traveler beware.
At its core, travel insurance pays for specific unexpected and unpreventable issues that get in the way of travel. It reimburses un-reimbursable or non-refundable portions of a trip and is typically priced as a percentage of the total cost of the trip. Factors, such as the travelers’ ages, number of travelers, travel destination, and types of travel covered impact the rate travelers will pay.
Some policies can be purchased from insurance companies as stand-alone policies. Others can be included in the purchase by the travel agent or site, while still others are included in the purchase through a benefit of a premium travel-oriented credit card used to purchase the trip.
In the case of extreme weather, all forms of travel insurance should kick in and protect travelers from covered events.
If something like a hurricane or a wildfire caused the trip to be canceled, the non-refundable items could be covered by that travel policy.
The catch would be if the adverse conditions were in place before the trip was booked. If the ticket was purchased after the adverse conditions had developed, then it would be a known risk and might not be covered.
Travel insurance is particularly useful to reimburse prepaid expenses like a cruise ticket, tour bookings, or a prepaid home rental, especially if those prepaid items have restrictive refund policies.
If the trip isn’t completely canceled, travel insurance could help rebook the traveler at a different hotel or reroute the travelers through a different airline.
Depending on the policy, the travel policy could help with evacuation expenses if the traveler is subject to a mandatory evacuation while they are already there or if the destination becomes uninhabitable.
The travel policy could also pay out if the traveler or their traveling companion is a first responder and is called to work rather than take the trip.
The federal reimbursement rule requires that airlines provide accommodations, such as a hotel room if the cancelation was the airline’s fault, such as a maintenance or crew issue. The rule however does not mandate that the airlines provide accommodations in case of weather-related cancelations or delays. In the case of a weather event, the rule only mandates reimbursement or rebooking on another flight. In weather events, travel insurance would typically provide for a hotel if a trip were disrupted, though.
Also, if the federal rule kicked in and the traveler was reimbursed or rebooked by the airline, the travel insurance would not also refund the ticket.
The world can be a dangerous and scary place, but that doesn’t mean if travelers opt to cancel travel plans on their own then they will qualify for insurance reimbursements.
Whether the travelers’ fears are of wildfires or warzones, as long as the destination is open and the accommodations are available, choosing not to go is not a covered reason.
Cancel For Any Reason or Cancel Anytime policies would cover fear of travel.
Special Considerations
In addition to the federal airline reimbursement rule, travelers also have some built in protections with many hotels’ reimbursement policies. It is typical for hotels to offer full refunds as long as the stay is canceled within 24 hours of the scheduled arrival.
But that is often not the case with rooms booked for special events, such as the Super Bowl or the recent Presidential Inauguration. It is also often not the case for house rentals, such as through Airbnb, which often leave the refund policy to the individual homeowners. Some cruises and resorts also have restrictive cancelation policies.
Travel insurance shines when purchasing accommodations or excursions with restrictive cancelation policies, though it is useful to read the fine print to make sure everything is covered by each particular policy. Travelers need to be sure to list the cost and type of the accommodations and excursions as part of the travel costs, as well as the ages and names of each traveler when buying the policy to ensure everything is covered.
The more complex the trip, the more likely it is that a comprehensive stand-alone travel insurance policy is the best choice.
Many travel policies specifically exclude adventure activities, such as rock climbing, scuba diving, or zip lining. Other polices specifically cater to them. Read the fine print if an adventurous activity makes up part of the itinerary.
If the traveler is injured while doing a covered activity, travel insurance is helpful with securing health care, and in worst cases, medical evacuations.
Health insurance in general is a place where stand-alone travel insurance policies can shine.
Travelers’ health insurance policies don’t always protect travelers if the trip goes outside the regular coverage network, especially for non-emergency care.
If a traveler is worried about getting sick, such as if they were traveling to China and were worried about the HMPV outbreak, many travel insurance policies will cover them for their out of network coverage.
With a travel insurance policy that has a health care provision, the travel policies generally take over and cover the healthcare, either as the primary insurance, or in some cases as secondary coverage, meaning they first bill the traveler’s home health insurance policy, and then they pick up any costs that aren’t covered, such as out-of-network fees or copays.
Hit the Road
As the 2025 travel season gears up, travelers have big plans and exciting destinations in front of them. By knowing what refund policies might apply and then looking for travel insurance protection to cover the gaps, they can keep themselves financially secure, even if their travel plans are thrown for a loop.
The fine print is important. Coverage from a travel booking site differs from the coverage from a premium credit card, which differs from the stand-alone policy purchased from an insurance company, but depending on the details of what the trip entails, where it is heading, and what needs to be covered, all of those pieces can fit together to make a financially secure trip.
Michael Giusti, MBA, is senior writer and analyst for InsuranceQuotes.com
