Buying travel insurance isn’t just a question of whether you have coverage. The amount of coverage matters too.

A policy with limits that are too low may leave you responsible for a large expense. But buying the highest limits available isn’t automatically necessary either.

The goal is to match your coverage to the financial risks of your particular trip.

Start With Your Nonrefundable Trip Cost

First, determine how much money you could actually lose if you had to cancel your trip.

Add up prepaid expenses that aren’t refundable, such as eligible flights, hotels, cruises, tours, or vacation packages.

Don’t automatically insure the entire price of the trip if some expenses can be refunded.

For example, if a $5,000 trip includes $2,000 in fully refundable reservations, your actual nonrefundable exposure may be closer to $3,000.

Look at the Trip Cancellation Limit

Trip cancellation coverage generally has a maximum amount the policy will reimburse for covered losses.

Compare that limit with the nonrefundable expenses you identified.

A policy may sound comprehensive but still leave a gap if its cancellation limit is substantially below the amount you have at risk.

Also remember that cancellation coverage doesn’t mean you can cancel for any reason. The reason for cancellation generally must meet the policy’s requirements unless you’ve purchased coverage that specifically provides broader cancellation benefits.

Consider the Medical Coverage Limit

Medical expenses are harder to estimate because you don’t know what kind of treatment you might need.

Instead of trying to predict a medical emergency, look at the policy’s maximum medical benefit and consider where you’re traveling and what protection you already have.

A minor illness and a serious hospitalization create very different expenses.

This is an area where the coverage limit matters much more than simply seeing “emergency medical” on the benefits list.

Pay Particular Attention to Medical Evacuation

Emergency medical evacuation can be separate from ordinary medical coverage.

If appropriate treatment isn’t available where you are, transportation to another medical facility can become extremely expensive—particularly from remote locations.

Look at the evacuation limit separately rather than assuming it’s included within the medical limit.

Also check who determines whether an evacuation is medically necessary and where the policy allows you to be transported.

Check the Limits on Individual Benefits

A policy may advertise a large overall amount of coverage while placing much smaller limits on particular benefits.

That can apply to things such as:

• Baggage
• Individual valuable items
• Travel delays
• Baggage delays
• Dental emergencies
• Certain transportation expenses

If one of these benefits is particularly important to you, check its individual limit.

The headline number doesn’t always tell the whole story.

Coverage limits are only part of the picture. It’s also important to understand what travel insurance does not cover.

Think About the Destination and the Trip

The same amount of coverage won’t necessarily make sense for every journey.

A short trip to a nearby city presents different financial considerations from an international trip involving several countries, expensive reservations, or remote destinations.

Consider where you’re going, how long you’ll be away, the cost of the trip, and how difficult it could be to handle a serious disruption.

Those details provide a much better starting point than simply choosing the policy with the biggest numbers.

If you’re still deciding whether the financial risk justifies buying coverage, see Is Travel Insurance Worth It?

More Coverage Isn’t Always Better

Higher limits can be useful, but only when they protect against risks that matter to you.

Paying extra for unusually high baggage coverage may offer little value if you’re traveling with inexpensive belongings.

On the other hand, choosing inadequate medical or evacuation limits simply to reduce the premium could expose you to a much larger financial risk.

The objective isn’t to maximize every coverage limit.

It’s to make sure the important limits are appropriate for your trip.

So, How Much Coverage Do You Need?

There isn’t one coverage amount that’s right for every traveler.

Start with what you can calculate: your nonrefundable trip expenses.

Then evaluate the harder-to-predict risks, particularly medical treatment and evacuation, based on your destination, existing insurance, and circumstances.

Finally, look at the individual benefit limits that matter to you.

That gives you a much more useful answer than simply choosing the policy with the highest overall coverage.

Ready to compare your options? See our Travel Insurance comparison to compare providers and the coverage options available.