What is business travel insurance?

Key takeaways

• Business travel insurance reimburses certain unexpected expenses or financial losses that you incur before or during a business trip.

• A travel insurance policy typically covers things like trip cancellation/interruption, medical expenses, lost baggage, travel delays, accommodation costs and more.

• Business travel insurance costs often range from 5 to 7% of the total cost of the trip.

• However, if you have a business travel credit card, you probably already have at least basic travel insurance as part of your insurance policy, so you may not need to purchase additional coverage.

Many things can go wrong before or during a remote meeting, overseas conference, remote office visit, or any other planned business trip. The airport may lose or damage your luggage, your travel plans may have to be canceled suddenly due to a personal emergency, or you could simply fall ill while you are away from home.

For these reasons and more, it’s a good idea to consider purchasing business travel insurance. This coverage should protect you financially if you experience a covered setback before or during your business trip.

This guide will answer the following questions: what is business travel insurance, how does it work and what is covered, as well as who should get business travel insurance and whether it is worth it.

How does business travel insurance work?

You have home, car, and health insurance. You may even have life insurance. But where do you turn if you want to protect yourself financially in case of a business trip setback? Fortunately, you can purchase business travel insurance, also known as corporate travel insurance or business travel insurance.

“Business travel insurance is insurance coverage specifically designed to protect individuals who travel for specific business reasons. It provides comprehensive protection against unexpected incidents and expenses that may arise during a business trip,” says Mark Friedlander, director of corporate communications for the Insurance Information Institute in St. Johns, Florida.

Remember that many expenses related to an upcoming business trip must be paid well in advance and are non-refundable. This means that if something happens that prevents you from traveling, you could be on the hook for hundreds or even thousands of dollars. This is where business travel insurance comes in handy.

“You can purchase a single-trip insurance policy, which covers expenses incurred on a single trip, usually between pre-specified travel dates,” says Andrew Schrage, CEO of Money Crashers in Boston. “You can also choose an annual or multi-trip insurance policy, which covers all eligible expenses incurred during the policy’s term, usually one year, regardless of how many trips you take during that period.”

What does business travel insurance cover?

Here’s what a standard business travel insurance policy typically covers, according to Friedlander:

• Trip cancellation/interruption fees

• Travel Delay Related Expenses

• Medical bills incurred while traveling

• Missed connection assistance costs

• Costs and Hassles of Lost Luggage

• Car rental and accommodation costs

Stan Sandberg, co-founder of TravelInsurance.com, says many consumers choose business travel insurance because of the protections it offers in the event of trip cancellation or interruption.

Coverage for medical emergencies and away-from-home health care are other popular standard features in most plans.

“This is particularly useful for employees traveling abroad, where regular medical insurance may not apply. People with chronic illnesses can also benefit from coverage for flare-ups while traveling by declaring them before the business trip,” says travel industry expert Justin Albertynas.

However, a business travel insurance policy does not cover all possible expenses. Typical exclusions include:

• Reasonably anticipated events

• Acts of war

• Declared epidemics and pandemics (by the World Health Organization and/or the U.S. Centers for Disease Control and Prevention)

• Travel restrictions imposed by a government entity

Who should buy business travel insurance?

Good candidates for business travel insurance are those who travel frequently for work but are not already covered by their employer.

“Since most large employers likely have travel insurance plans in place to cover their employees’ business travel, individual business travel insurance plans are typically geared toward independent contractors and small business owners,” Friedlander adds.

Examples of business travel insurance in action

Here are three hypothetical scenarios that highlight the value of having business travel insurance:

1. You have to cancel your trip at the last minute

“Let’s say you have a single-trip business travel insurance policy with trip cancellation/interruption coverage that reimburses up to $5,000 in prepaid, nonrefundable expenses,” Schrage says. “The day before your flight, an immediate family member has a medical emergency and you have to cancel your trip to care for them. If you paid $500 for a round-trip airfare, $1,000 for a five-day hotel stay, and $300 for a five-day car rental, your insurer should honor a claim for a total of $1,800, provided the expenses are fully paid and are not reimbursable by the provider in any way.”

2. You are in a medical emergency situation

“Imagine an employee on a business trip to Germany who suddenly falls ill and needs medical attention,” says Albertynas. “Expenses incurred may include a doctor’s visit, prescription medications, hospitalization, and necessary medical tests. In this scenario, the employee’s total medical expenses could amount to €1,950 or more. Business travel insurance could cover these expenses, ensuring that the employee is not burdened with unexpected medical bills while traveling.”

3. Your luggage is delayed

Let’s say your suitcase is lost or delayed by the airline and you have to pay out of pocket for clothes, medications, and toiletries. Your insurance policy should cover your expenses up to a predetermined amount. “Just keep in mind that business travel insurance policies often have a waiting period before coverage kicks in for baggage delays, usually about 12 hours,” Albertynas continues.

The Average Cost of Business Travel Insurance

Business travel insurance policies typically cost between 5 and 7 percent of the total cost of your trip. “For example, travel insurance for a $3,000 business trip would cost between $150 and $180 in premiums,” Friedlander says.

How much you’ll pay depends on the type of insurance policy, your destination, what coverages are included, your age, and other factors. Schrage adds, “Basic trip interruption/cancellation coverage can cost $10 to $20 per day, while more comprehensive policies can cost $50 or more per day. Policies that cover voluntary cancellations, called CFAR policies, cost 50 to 100 percent more than policies that only cover involuntary cancellations.”

Choosing a higher deductible can lower your premium, but you’ll pay more up front if you have to make a claim.

“Opting for a $200 deductible, for example, means you’ll have to pay that amount before coverage begins. Copayments, coinsurance, and out-of-pocket expenses refer to costs that exceed coverage limits,” Albertynas says. “It’s important to carefully review all policy details and premium quotes and understand the tradeoffs involved so you can choose the right plan while balancing your premium, deductible, and out-of-pocket expenses.”

Do credit cards offer business travel insurance?

Buying travel insurance is almost always a good idea. But in reality, it can be an unnecessary expense if you already have free coverage included with your credit card, which some cards do.

The most common types of coverage included in business travel insurance provided by a credit card are trip interruption/cancellation, accidental death and dismemberment, and loss/damage to a rental car.

“Before assuming your trip is fully covered, look at the limits of each type of coverage and do the math. For example, if the nonrefundable portion of the trip costs $10,000 and your insurance policy only provides $5,000 in coverage for interruption or cancellation, you’ll have to pay at least $5,000 out of pocket,” Schrage warns.

The essentials

Purchasing business travel insurance is worth it if you travel frequently for work, especially if you spend a lot on business travel, travel internationally or to riskier countries and don’t already have coverage through your employer or a travel credit card.

“But not all business travel policies are the same,” Friedlander adds. “It’s a good idea to read the fine print of your insurance policy so you understand what’s covered and what’s excluded.”