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Why Travel Insurance Is More Important with Travel Prices on the Rise

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In 2022, inflation has impacted almost every aspect of travel, including hotels, airlines, car rentals, fuel, and restaurants.

With US travelers choosing to drive amid canceled flights, surging gas prices and lodging costs are taking a toll on summer plans. As a result, even travel-hungry pandemic road trippers that once enjoyed extended RV excursions are shortening their 2022 trips.

Let’s examine how costs impact your travel budget and which travel insurance options provide the best coverage rising.

The Real Cost of Travel Inflation

Even if you are not traveling far in 2022, you might notice a significant price hike in hotels, airlines, car rentals, fuel, and restaurants.

Hotels

During the pandemic, travel lodging providers such as hotels laid off workers and struggled to fill rooms. As a result, lodging prices dropped so low that 2020 pricing was similar to 2013.

Once restrictions reduced in the Summer of 2021, lodging prices increased nearly 50% to their highest level. Unfortunately, hotel pricing remains high to meet customer demand and recover lost revenue from the pandemic.

High prices don’t equal a 5-star experience either. Housekeeping and room service are the top amenities missing from most US hotel stays.

Airlines

The airline industry took a hit over the last couple of years with Covid-19 restrictions massively slowing business and family travel, with international trips almost non-existent.

As a result of the low demand during the pandemic, decreased fuel costs, and difficulty staffing key positions like pilots and mechanics, airline tickets dipped in price.

Fast forward a few years later, and travel has resumed as usual. However, airlines are still struggling with canceled flights, staff shortages, and rising fuel costs. As a result, in the second quarter of 2022, airline tickets will cost you over 20% more than similar fares in 2019 (see statistics below).

Car Rentals

Renting a car used to be standard when flying to a vacation destination. Like other travel services, once demanded picked up, so did the pricing. And you’ll have sticker shock even compared to buying airline tickets.

You’ll be paying over 70% more than May 2019 prices for the same car rental. Combined with the gas price, you may want to rethink your destination transportation.

Other options include public transportation, Uber, and Lyft; for larger groups, transit van shuttles may be more cost-effective.

Fuel

According to the Washington Post, 61% of Americans factor in the cost of gas prices when making summer travel plans. The concern over gas price now trumps the population’s travel fear of coronavirus (under 30%).

In May 2022, gas was already over $4.50 a gallon (national average). So whether you are driving your car on vacation or renting one, the cost of gas is sure to account for a more significant part of your budget this year.

Restaurants

When you visit a restaurant while traveling, you may think you are paying more because of the higher cost of food. According to the Bureau of Labor Statistics, wholesale food costs have risen 17% in the last year.

While food pricing plays into the overall cost of your check, the business you are supporting is also fighting rising costs for staff, rent, and utilities.

How to Budget for Your Next Trip

While you can’t control travel inflation costs, there are a few ways you can save the most money on your vacation in 2022.

Book asap. The quicker you book travel accommodations, the more money you can save. Plus, the faster you start your research, the more options you may have regarding lodging, flight times, rental car sizes, and more.

Book at the last minute. You can score significant discounts for flexibility with your travel dates. Booking last minute can be as cost-effective as booking early.

Choose less traveled destinations. With 2022 travelers hitting the beach and mountains, this is the year to think outside the box. Instead of tourist places, try a more low key destination, choose an Airbnb instead of a hotel or a winter time frame instead of summer.

Drive instead of fly. Even with high fuel costs, travelers can save money and time by driving instead of flying. Skip the frustration of canceled flights, going through long security lines, and the headache of renting a car. Rather, driving to your vacation destination can induce spontaneity and create unique memories you would have missed.

Purchase travel insurance. With the rising cost of getting away, travel insurance can reimburse you if you need to cancel your trip due to a covered reason, have medical or extreme weather issues during your vacation, or if you experience lost or delayed baggage issues and more.

Protect Your Investment: The Importance of Travel Insurance in Uncertain Times

With rising travel costs, it’s more important than ever before to consider adding one or more of the following trip insurance benefits.

You can count on budgeting 5-6% of your overall trip costs for a comprehensive plan that provides peace of mind and reimbursement for travel emergencies.

Trip Cancellation

Trip insurance can protect you from unforeseeable circumstances that cause you to cancel your trip. These types of policies will reimburse you for prepaid, forfeited, and non-refundable costs if you cancel for a covered reason.

Depending on your policy, you may be covered up to the time and date of departure. Trip cancellation insurance is typically part of a comprehensive travel insurance policy.

What it can cover:

  • Unforeseen medical condition or serious injury that prohibits you or travel companions from going on your trip (must have proof from a licensed physician)
  • The death of yourself or your traveling companion, which also includes the death of a close family member that is not traveling with you.
  • Severe weather that prevents you from getting to your destination
  • Unforeseen natural disasters at your home location or vacation destination
  • Legal issues such as being called for jury duty or court-ordered subpoena
  • Terrorist attacks at your destination city
  • Financial insolvency of a tour operator or carrier

Trip Interruption

Trip interruption insurance is valid after you start your trip. It provides coverage for missing a part of your vacation and needing to return home for one of the covered reasons listed in the policy.

Coverage includes:

  • Non-refundable costs such as hotel room, original flight home
  • New travel costs to get home early due to an unforeseen event such as new flight tickets, transportation to the airport or hotel, hotel reservation (while waiting for a flight home), meals

All policies have limits. While some will reimburse you up to 200% of the cost of your original trip, other policies will cover 100-150%.

Trip Delay

Trip Delay insurance provides coverage for a set dollar amount if you experience a delay while traveling, due to a covered reason. With most travel insurance policies, Trip Delay has stipulations. For example, you must meet specific hour delay requirements, and the delay must be beyond the traveler’s control and listed in the policy as a covered reason.

If your claim is approved, you will receive reimbursement for lodging, missed excursions, and extra transportation costs due to the delay up to the maximum daily amount.

Emergency Medical Coverage

Emergency medical provides coverage for unforeseen illnesses, injuries, or accidents during your trip. Medical issues must be acute and require immediate treatment.

Typical costs covered include:

  • Doctor visit
  • Ambulance services
  • Hospital stay
  • X-rays, CT Scan, MRI
  • Lab costs
  • Surgery
  • Prescription drugs
  • Emergency dental services

Unless you get a pre-existing condition waiver before your trip, any pre-existing conditions may be denied coverage.

Baggage Loss

Traveling with expensive personal items? Baggage loss insurance will cover the cost of your personal items up to policy maximums if they are lost, damaged, or stolen during your vacation.

If you travel with laptops, cameras, or designer jewelry, adding baggage loss insurance can provide the increased coverage you need, but make sure you check with your policy to confirm the maximum benefit amount.


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