3 Costly Travel Insurance Mistakes to Avoid in 2025

As travel costs continue to rise, many travelers are looking for ways to save money, including on travel insurance. However, cutting corners on coverage can lead to significant financial losses. Squaremouth, a leading travel insurance comparison site, highlights three common mistakes that can cost travelers more than they expect.

Skipping Trip Cancellation Coverage

In 2024, over 40% of travel insurance claims were related to canceled or shortened trips, with an average payout exceeding $2,000. With trip costs up 24% in 2025, skipping this coverage could leave travelers vulnerable to major financial losses due to illness, severe weather, or travel disruptions. Experts advise insuring prepaid, non-refundable expenses to protect against unexpected trip cancellations.

Overestimating Non-Refundable Trip Costs

While trip cancellation insurance is crucial, over-insuring can unnecessarily increase premiums. Coverage only applies to prepaid, non-refundable expenses, so travelers should carefully calculate the amount they'd actually lose in case of cancellation. For example, if a hotel has a 50% cancellation fee, only that portion should be insured to reduce policy costs.

Ignoring Affordable Policy Options

Many travelers assume higher-priced insurance offers better coverage, but this isn’t always the case. Some of the least expensive policies provide the same protection as costlier alternatives. Comparing different plans can help travelers find the best coverage at the lowest price.

By avoiding these common mistakes, travelers can secure reliable protection without overspending, ensuring peace of mind as they plan their trips in 2025.