How to Calculate Trip Cost for Travel Insurance

Your trip cost is the foundation of your travel insurance policy. It directly affects your premium and determines the amount you can recover if you cancel or interrupt your trip. Here’s how to calculate it accurately.

1. What Counts as Trip Cost?

Trip cost refers to all prepaid, non-refundable expenses that you’d lose if you cancel your trip. These include:

• Flights, cruises, and train tickets

• Hotel or resort deposits

• Tours, excursions, and activities

• Event tickets or experiences

• Ground transportation like airport shuttles

• Travel packages and prepaid meals

• Cancellation penalties, even for unpaid balances

Exclude refundable costs, meals purchased during the trip, shopping money, and optional extras.

2. Why Accurate Trip Cost Matters

• Travel insurance usually costs between 4% and 10% of your total trip cost

• Many policies require you to insure 100% of prepaid, non-refundable costs to qualify for features like “Cancel for Any Reason” or coverage for pre-existing medical conditions

• Underreporting trip cost may result in reduced reimbursements or lost benefits

3. How to Calculate Your Trip Cost

Follow these steps:

1. List all non-refundable, prepaid expenses

2. Exclude any refundable amounts

3. Round up to the nearest dollar (better to overestimate slightly)

4. If traveling with others, calculate cost per traveler, especially for shared expenses

5. If your trip evolves (e.g. you add bookings), update the total before departure

4. Example Trip Cost Estimate

You and a friend book:

• Flights: $500 per person

• Hotel: $1,200 total

• Tours: $300 per person

• Cruise deposit (non-refundable): $400 per person

Each traveler’s trip cost would be:
Flights ($500) + Hotel ($600) + Tours ($300) + Cruise ($400) = $1,800

That’s the amount each should insure.

5. How Trip Cost Affects Premiums

Using the example above:

• Trip cost = $1,800

• Travel insurance rate = ~6%

• Premium ≈ $108 per person

Higher trip costs, additional coverage, or older travelers can increase premiums.

6. Key Tips for Insuring the Right Amount

• Only include prepaid, non-refundable costs

• Be consistent across all travelers on a shared policy

• Insure 100% of trip cost for full benefits

• Buy insurance shortly after your first trip payment to qualify for early-purchase perks

• Contact your insurer if your plans change before departure

Final Takeaway

Calculating trip cost isn’t complicated:

1. Add up all prepaid, non-refundable costs

2. Divide shared expenses fairly

3. Round up to avoid underinsuring

4. Use the total to determine your policy and premium

Need help figuring out the right trip cost or getting a quote?
With 30+ years of experience and access to nearly 100 carriers, THAgency helps you find the best travel insurance for your needs—quickly, accurately, and with no guesswork. Send your request today.