Travel Insurance Value Calculator
Weigh a travel insurance premium against your trip's potential loss and your own estimate of the risk of disruption, using an expected-value framework.
Illness, a cancelled connection, a family emergency — be honest, not fearful
Refundable deposits, reschedulable flights
What this calculator does
Total trip cost, the insurance premium quoted, your own estimate of the probability something disrupts the trip enough to need a claim, and how much of the trip cost would already be recoverable without insurance go in. It returns the potential and expected loss without insurance, the premium as a share of trip cost, and the expected value of buying.
Expected value is a starting point, not the whole answer
This calculator’s headline number — expected value of buying — answers a narrow question: on average, across many similar trips, does the premium cost less than the expected payout. That’s a useful anchor, but it isn’t the only reason insurance exists. Insurance’s real function is capping a tail risk, not winning on average — a rational buyer can knowingly pay a premium above its expected value specifically to avoid a loss too large to absorb comfortably, the same logic behind home and auto insurance.
Why the recoverable-cost input matters so much
The potential loss this calculator starts from isn’t the full trip cost — it’s the trip cost minus whatever you’d get back anyway without insurance. A trip built entirely from refundable hotel rates and changeable flights has a much smaller true loss at risk than one built from non-refundable deposits and discount fares with no changes allowed. Estimating this input honestly, ideally by actually checking each booking’s cancellation terms rather than guessing, changes the result more than almost any other input here.
Being honest about your own risk estimate
The risk percentage is the input most people either skip past or set to a generic “a few percent,” when it should reflect specifics: your own health and that of anyone whose ability to travel depends on someone else’s health, the season and destination’s weather disruption risk, how tight any connections are, and how far in advance non-refundable payments were made relative to the trip date. A trip with real, specific risk factors deserves a materially higher input than a routine, low-risk one — plugging in the same default number regardless defeats the purpose of the calculation.
For the currency-risk side of a trip abroad, the foreign transaction cost calculator covers a different kind of trip cost, and the per diem calculator is useful for estimating the daily-spend side of the total trip cost this calculator starts from.
How this is calculated
potential loss = trip cost × (1 − recoverable %) expected loss = potential loss × your risk estimate expected value of buying = expected loss − premium
Frequently asked questions
- Is travel insurance worth it on expected value alone?
- It depends entirely on your own honest risk estimate and how much of the trip cost is already recoverable without insurance. A cheap, mostly-refundable trip rarely clears the bar on pure expected value; an expensive, mostly non-refundable trip with any meaningful disruption risk often does.
- Why buy insurance if the expected value is negative?
- Because expected value only tells you the average outcome across many similar trips, not what happens to you on this one. Insurance caps a worst-case loss that could be a real financial problem, and paying a small, certain premium to avoid a large, uncertain loss is a rational trade even when the average math is negative — that's what insurance is for.
- What counts as "recoverable without insurance"?
- Any part of the trip cost you'd get back anyway if plans changed — a refundable hotel rate, a flight that can be rescheduled for a fee rather than forfeited entirely, or a deposit with a partial-refund policy. The less recoverable the trip cost is on its own, the more a disruption would actually cost you, and the more insurance has to protect.
- How do I come up with a realistic risk estimate?
- Think about your specific situation rather than a generic number — a pre-existing health condition, an elderly relative whose health could force a cancellation, weather risk for the destination and season, or a tight connection with a real chance of a missed departure all push the honest estimate up from a baseline low single-digit percentage.