Calculating rip cost correctly is vital to finding the right travel insurance plan. Your final trip cost will have a hand in determining the price of a plan. Sometimes, travelers get tripped up when they hear trip cost, because the assumption is made it includes every expense made while traveling. However, "insurable" trip cost is not the same thing as "total" trip cost.

What does insurable trip cost mean?

Essentially, you can only add pre-paid, non-refundable expenses to a travel insurance plan. In other words, you can only insure the amount of pre-paid expenses that will not be completely refunded in the event of a covered cancellation.

Typically, these expenses are comprised of airline tickets, cruise costs, and, possibly, hotels and tours or excursions. Almost all plans will also insure expenses like event tickets or theme park admissions. Expenses like tuition or class fees, popular expenses for business trips, are also insurable, but only with specific companies.

How do I calculate trip cost?

Calculating trip cost may not be as straight forward as we would all hope. For instance, costs that you do not have to pay prior to traveling, but will be assessed in the event of a covered cancellation, can be insured. This may include the balance on a tour package or hotel stay that is scheduled to be processed upon your arrival, whether you have to cancel your trip or not. Any money that you would lose if you have to cancel your trip prior to departure, or on the day of, is what you want to insure.

If you are booking a flight using frequent flier miles, understand they most likely cannot be added to your trip cost for a travel insurance plan. In most cases, only the taxes and fees associated with them can be insured, but the miles/points may not. This is largely because the credit card or airline will have a way of reimbursing the points or miles.

The price of a travel insurance plan and the benefit eligibility rely on trip cost. In some cases, you must insure 100% of your pre-paid, non-refundable expenses to be eligible for certain benefits. Remember that you can always add trip cost to your plan after you purchase your plan. The key is to purchase a plan as soon as you make your first trip payment or book your flights. If you add prepaid, non-refundable expenses as you get closer to your departure date, you can add this to your trip cost. Any additions to your trip cost may result in a higher premium due to some benefit levels increasing.