The entire travel industry is experiencing a post-pandemic surge and business-related trips are no exception. Spending on global business travel grew 47% in 2022 from the previous year and is expected to have grown 32% by the end of 2023, according to the Global Business Travel Association (GBTA). By 2027, it’s likely to become a $1.8 trillion industry.
With so much money being going towards travel costs, travelers need to understand how business travel insurance works. This is especially true as business and leisure travel (or “bleisure” for short) become increasingly blended thanks to flexible work arrangements. The Expedia 2023 Traveler Value Index reported that 76% of business travelers plan to extend their business trips for leisure purposes. But that also means your corporate coverage may not be enough to cover your entire trip.
Whether you’re traveling as an employee or as a small business owner, find out how to best prepare for your trip so you don’t have expensive bills for unexpected events like flight cancellations or medical emergencies.
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What is business travel insurance?
A travel business insurance policy covers specific events that may cause a financial loss while the covered individual is on a work-related trip. The details vary based on each specific business trip travel insurance plan — if you’re a small business owner, these are some of the coverage options you should consider when comparing policies:
- Trip cancellation or interruption coverage
- Missed connection assistance
- Lost baggage coverage
- Medical expense coverage
If you’re an employee who frequently travels for work, it’s best to check what benefits your company’s insurance policy offers. In most cases, travel insurance you’d normally buy for, say, a vacation will also cover business travel.
Who needs business travel insurance?
Travel business insurance is important whether you’re going out of town (or country) on behalf of your job or for your own business.
Corporate travelers
Larger companies with a sizable workforce likely have travel insurance for business built in for their employees’ trips.
“There’s usually a global travel manager who has relationships with different airlines and hotels, so they take control of the traveler’s itinerary, bookings, and costs,” said Beth Tofel, co-founder and president of FootPrintID, a portable personal health record platform “ They may even have emergency medical assistance built into policy.”
While that gives some peace of mind to corporate travelers, it doesn’t mean you automatically have comprehensive coverage.
Check with your travel manager or human resources representative to learn the full details of your insurance policy, particularly beyond trip cancellation or interruption coverage. You need to know if the policy also covers costs that could personally impact you, such as lost luggage or medical expenses.
If you’re extending your trip for personal purposes, you may consider getting additional personal coverage if your work policy doesn’t cover days beyond your scheduled meetings or events that bring you to your destination. While most plans are designed to be purchased before your trip, there are options available that you can purchase while you’re already on your trip. As long as your trip is paid for in full, you shouldn’t have an issue with insurers that sell policies to those already on their trips.
Small business owners
If you need personal travel insurance coverage, look online for policies that fit your specific needs. For example, you may want a family plan if you’re bringing along a spouse and kids. If you travel frequently, you may benefit from a multi-trip policy that covers several trips within a certain time frame.
As a small business owner, you’re the one responsible for sourcing and vetting business travel insurance policies. And you have more on the line, since any canceled trips directly impact your own bottom line.
While there are many different types of coverage available, perhaps the most vital one for small business owners is cancel for any reason (CFAR).
“With the rise in natural disasters, strains of illnesses, and other risk factors, canceling for any reason is an important component to have in your travel insurance policy,” said Tofel.
It’s different from a standard trip cancellation policy because there aren’t stipulations as to what types of emergencies are covered. With a typical trip cancellation policy, covered events are usually limited to a death in the family or sudden natural disaster. But getting CFAR coverage covers your costs for any cancellation reason that’s not already covered by your policy.
What does business travel insurance cover?
Every policy is different. Here are six different types of coverage you may see. Figure out which ones suit your needs in order to find the right policy for your next business trip.
Trip cancellation insurance
This coverage reimburses you or your company when you’re unable to go on your trip. Some policies list out eligible reasons and timelines; for instance, an emergency may need to take place within a certain number of days from your departure date in order to get reimbursed.
Travel delay insurance
This reimburses you or your company for missed travel or new expenses due to a covered delay, such as a major weather event preventing you from reaching the next leg of your trip. The reimbursement would cover travel expenses you couldn’t use, as well as new reservations you had to make.
Travel interruption insurance
If you have to leave a work trip early because of a covered event such as an illness, this coverage provides reimbursement for non-refundable or prepaid expenses.
Baggage insurance
This policy add-on lets you file a claim if your baggage is lost or stolen during a trip. In addition to replacing the items, you may also get reimbursed for some or all of any expenses related to replacing them while on your business trip. The airline may offer some initial coverage, but an extra policy can protect you beyond the airline’s maximum dollar amount.
Business travel accident insurance
Policy coverage may vary depending on the risk of the destination, particularly if there are political tensions at the time. Potential coverage includes accidental death and dismemberment and accidental medical expenses. Depending on the policy and the situation, it may also include legal support or emotional counseling.
Medical expense coverage
While some medical costs during a domestic trip may be covered by your health insurance company as an out-of-network charge, many business travel insurance plans also include some medical expense coverage. You may need an extended policy if you’re traveling abroad, since personal health insurance plans typically don’t cover medical events outside the country.
Tofel recommends checking your corporate policy to find out what types of medical events are covered. “You really need to find out what the medical coverage is or if you need to purchase an additional health insurance plan that covers you where you’re traveling.” This advice holds true for small business owners as well.
What are the benefits of business travel insurance?
Business travel insurance can provide peace of mind for companies of all sizes, as well as individual travelers. Here are some of the key benefits to enjoy with comprehensive coverage.
- Protect major aspects of your travels: From trip changes to lost luggage or surprise medical expenses, there are a lot of things that can go wrong while on a work trip. Business travel insurance can lower the amount of cash you have to pay out of pocket when hiccups do occur.
- Lower costs with group policies: The number of employees on a business travel policy can decrease costs. If you own a small business, consider expanding coverage as a benefit to all employees. You could end up saving in the long run.
Business travel insurance vs. other travel insurance policies
Some business credit cards offer a certain degree of travel insurance coverage, such as car rental coverage and lost baggage. However, the issue with using these perks for a business trip is that trip costs must be purchased with the credit card. So if you book through a corporate travel portal or a business credit card, your personal credit card insurance won’t apply.
If you book your travel reservations with a business credit card, you may get access to benefits like auto rental collision damage waivers and travel assistance services. But these cards typically won’t provide the level of coverage of a standard business travel insurance policy.
When purchasing a standalone travel insurance policy for a personal trip, you typically have the same options that you’d find in a business travel policy. But you may be less likely to want to pay for extra coverage, such as trip interruption or Cancel For Any Reason. It’s important to weigh the pros and cons of each policy add-on to see if it’s worth the cost.
Frequently asked questions (FAQs)
There aren’t many big differences between business travel insurance and a travel insurance policy you buy for, say, a vacation. Generally speaking, the coverages will be the same, but pricing may be different if you’re getting insured through your company and the company has negotiated group rates with the insurer.
Business travel insurance doesn’t automatically provide coverage for electronic devices. This is typically an optional coverage that will cost more to add to the policy. There’s usually a limit to how much you can spend to replace or repair your technology. You may also be reimbursed for renting new equipment for the remainder of your trip.