How to Calculate Trip Cost for Trip Insurance

  • Angela Borden
| Feb 14, 2019

When you buy a trip insurance plan you will be asked to provide your trip cost, and that amount will be used to calculate the premium, or cost of the plan.

To ensure you have the amount of coverage you need, It’s important to understand what to include when you calculate the trip cost you provide to the insurance company. This amount is your insurable trip cost. Depending on your situation, it may not be correct to include every single dollar you spent  as part of your insurable trip cost.  

What types of trip expenses should you include in your insurable trip cost?

Common Trip Expenses

Typical trip expenses include airfare, the cost of a cruise, hotel cost, entertainment and excursions, rental of a house or condo, and other similar items.

To know what expenses to include as your insurable trip cost, you first need to understand a little about how a trip insurance plan works. It is designed to reimburse you for the amount of published penalties and unused nonrefundable prepaid payments or deposits you paid for your trip.

This means that if part of your trip cost is refundable if you need to cancel, interrupt, or delay your trip, you do not need to buy trip insurance coverage for it.

Why? Because another party (your airline, cruise line, hotel, excursion provider) is going to refund you the money you spent, so there is no need to insure that amount on a trip insurance plan.


Dave is planning a trip to Bermuda. Here are his expenses:

Airfare $800 
Hotel $2,000  ($200 is refundable if he needs to cancel)
Excursions $500
Total expenses $3,300

What is Dave’s insurable trip cost?
It’s $3,100. 

This represents the total expenses of $3,300 minus the $200 refundable amount for his hotel. He should not buy coverage for trip expenses that are refundable.  


What about Free Items?

The same idea applies to free items. If you receive a part of your trip for free (maybe an excursion was thrown in for free as part of your booking), then don’t include it as part of your insurable trip cost. Why? If you must cancel, delay, or interrupt your trip and miss the excursion, you are not out any money, so that item is not insurable.

What about Frequent Flier Miles?  

You technically didn’t pay any money for your frequent flier miles, so it is difficult to put a cost on them. You should not include them as part of your insurable trip cost.

Most trip insurance plans will provide limited coverage for the cost of airline imposed fees to rebank frequent flyer miles for air flights. For example, RoundTrip Elite provides up to $75 toward fees to rebank frequent flyer miles.

Trip Costs are Per Person

Claims are paid per person up to the amount of insurance you buy. The best way to ensure you buy the correct amount of trip insurance is to calculate the cost of the trip for each person according to what he or she paid.

Remember:  Each traveler is covered up to the lesser of their insurable trip cost listed on the insurance plan or their nonrefundable, unused trip costs.  


Bob and Tom are taking a trip, and they are buying one trip insurance plan for both of them. Bob paid $1,000 and Tom paid $2,000. When they buy their trip insurance plan, Bob should provide $1,000 as his insurable trip cost, and Tom should provide $2,000 as his insurable trip cost.

If they split the cost evenly and insured $1,500 each, then Tom would only receive $1,500 instead of the $2,000 he actually paid. Why? He didn’t buy coverage for $2,000.  

What about Shared Reservations?

An example of a shared booking is a rental house because there is one fee for the entire group.

It’s up to the travelers to decide how to split up the expense to pay for it. If the group shared equally in paying for the booking, then the amount should be divided between the group equally.  

Example 1:  If the house rental fee is $1,000, and there are five people going, and each of them paid $200, they should each list $200 as their insurable trip cost. If each person is not named on the booking, they may need to provide proof they paid the $200. 

Example 2:  If the rental fee is $1,000, there are five people going, but one person (Sue) paid the full $1,000, then Sue should buy a trip insurance plan and provide $1,000 as her insurable trip cost.

You can Adjust Your Insurable Trip Cost

If you buy excursions or add additional travel to your trip after your initial trip purchase, this could increase your insurable trip cost. In this case, you want to let the insurance company know so you have proper coverage. Contact them and provide the additional expenses to them.

This is very important if you purchased Cancel for any Reason (CFAR), Cancel for Work Reasons, or if you wish to have coverage for pre-existing conditions.

Cancel for any Reason 

CFAR is an optional benefit that requires you to insure 100% of your prepaid, nonrefundable trip expenses in order to utilize the benefit. It also typically requires you to notify the insurance company within a set amount of time if you incur additional trip expenses. If you want to buy the CFAR option, make sure you understand the requirements.

Pre-existing Conditions

Pre-existing conditions can be covered in some situations if you meet the requirements for coverage stated in the plan document. One of these requirements includes insuring all pre-paid costs that are subject to cancellation penalties or restrictions and also insuring the cost of additional travel arrangements within a specified number of days of the payment or deposit for them. For example, some plans require you to insure expenses within 20 days of the date you pay for them.

Receipts and Evidence of Payment

Keep a record of each trip expense payment you make, because you will likely be asked to produce proof of payment if you file a claim.

Most travel insurance companies will accept a credit card statement and the front and back of a negotiated check as proof of payment. 

Confused? Need Help? 

Correctly calculating our insurable trip cost is important. If you have any questions, contact your agent or our inside sale team. They can help you sort through detailed expenses so you buy the correct amount of trip insurance.

Email sales@sevencorners.com or call the numbers below.

Toll free  1-800-335-0611

Worldwide  317-575-2652

Collect   317-818-2809

About the Author

angela borden

Angela Borden has been a member of the Seven Corners team since 2007. She originally joined as an underwriter, later transitioning to marketing to explore her passion for making all things insurance less confusing and more fun. (Is that possible?) When she's not working, Angela loves traveling and spending time with her family, including her two adorable dogs.

Read more of Angela’s blogs

This website and various social media updates provided by Seven Corners contain content, information, articles, videos, and links to websites created by third parties. Seven Corners, its owners, and its employees neither endorse nor are responsible for the accuracy, timeliness, or reliability of any third-party information, statements, opinions, or advice and are not liable for any loss, harm, or damage caused by your reliance upon them. Use of such information or the linked websites is entirely at your risk. Concerns regarding this third-party content should be directed to the third party. Seek professional advice, as appropriate, regarding your use of the such information and websites.

Because the information on this website and in Seven Corners’ blogs and other social media is written and compiled using knowledge and information available at a certain point in time, it may become outdated. For that reason, information, events, legal requirements, and product changes (including benefits, limitations, exclusions, and services) may not be up-to-date, complete, or accurate at the point in time it is being read. Again, use of such information is at your risk.