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More consumers are buying travel insurance in the course of the federal government shutdown — but these insurance policies may not offer the catch-all protection that buyers expect.
Much will depend on the high quality print, experts said.
Squaremouth, an internet platform for comparing travel insurance policies, has seen the amount of insurance quotes increase 8.5% year-over-year between Oct. 1 and 27. Sales have risen by 7.9% over the identical period.
Buyers appear to be hedging against the financial risk of the federal government shutdown upending their travel plans, experts said. Air traffic controllers and TSA agents are essential government employees working without pay, and in previous shutdowns, travel has been disrupted.
Hopper, a travel website, has seen purchases of “disruption assistance,” which offers certain protections within the event of flight cancellations or delays, increase 35% between mid-September (before the shutdown) and early October (after it began).
“We see it again and again when flight delays or cancellations are within the news loads,” Patrick Steadman, Hopper’s head of disruption assistance.
Travel delays are already mounting
Elijah Nouvelage/Bloomberg via Getty Images
“Essential” staff like air traffic controllers and TSA agents work without pay during a shutdown, while others are furloughed. That raises the percentages of staff shortages and resulting airport delays.
The shutdown, which began Oct. 1, is already the second-longest in U.S. history.
Meanwhile, the end-of-year holidays, historically among the many busiest seasons for travel, are fast-approaching. For instance, greater than 3 million people were screened at U.S. airports on the Sunday after Thanksgiving in 2024, breaking a single-day record.
About 45% of Americans plan to spend money on flights or hotels this holiday season, in response to a NerdWallet poll published in October. They expect to spend a mean $2,586 for such expenses, and a collective $311 billion, it found.
“Ultimately, [travel] is (in our mind) what probably brings this shutdown to a detailed,” Chris Krueger, a strategist at Washington Research Group, wrote in a note Oct. 29. “Once TSA begins missing paychecks, airport lines (and coverage) will likely force resolution like in previous shutdowns,” he wrote.
Air traffic controllers, already in brief supply, missed their first full paychecks on Tuesday.
The longest U.S. shutdown, during President Donald Trump’s first term in office, lasted 35 days and got here to an end after a shortage of air traffic controllers snarled air travel within the Latest York area. TSA screeners called out sick in elevated numbers as they were asked to work without pay.
What travel insurance does and doesn’t cover
Flight delays or cancellations may, in certain cases, lead consumers to shoulder unexpected costs for lodging and meals, or miss out on prepaid activities like tours, for instance.
But travel insurance won’t all the time cover consumers for such costs if the shutdown upends their itineraries.
For instance, travelers likely would not be covered in the event that they miss a flight as a consequence of being stuck in an extended airport security line, said Terra Baykal, senior marketing manager at World Nomads, a travel insurer.
She recommends people arrive a minimum of three hours before departure, even for domestic flights, because the shutdown persists to stop long lines from derailing a visit.
World Nomads typically sees its insurance sales fall right now of 12 months, but they’ve declined lower than usual with the shutdown, Baykal said.
In 2024, the corporate saw a 17% drop in U.S. travel insurance coverage sold, from the Sept. 5 to 30 period to Oct. 1 to 26. They dropped by a lesser amount, 10%, this 12 months, suggesting there’s been more demand amid the shutdown, Baykal said.
Travel insurance is basically meant to cover unforeseeable events, said Chrissy Valdez, senior director of operations at Squaremouth.
Nonetheless, the shutdown is now a foreseeable event, Valdez said. Which means policies purchased on or after Oct. 1 likely would not cover certain claims.
For instance, a federal employee who bought travel insurance after Oct. 1 after which subsequently was laid off or furloughed as a consequence of the shutdown may not have the option to cancel their trip and claim insurance advantages under a “cancel for work reasons” clause, Valdez said.
Travelers can get indirect coverage in the course of the shutdown in some cases, depending on their insurance policy and airlines’ stated rationale for a flight disruption, experts said.
Most insurers require there be a “common carrier” disruption, like a mechanical failure, so as to pay advantages, Valdez said.
So long as an airline categorizes any kind of disruption — akin to a scarcity of air traffic controllers — as a “common carrier” delay or interruption, travelers may qualify for insurance reimbursement, wrote Squaremouth spokesperson Lauren McCormick in a recent blog post.
“Even during a government shutdown, many disruptions to travel are covered under the ‘common carrier’ category,” she wrote. “Essentially, it is a loophole that will help you claim reimbursement as an indirect results of the shutdown,” she added.
There are generally caveats and limits to travel insurance policies, too, akin to dollar limits on certain advantages and the requirement that a delay last for a minimum period of time.
Certain optional policy advantages, like “cancel for any reason” provisions, may grant travelers additional flexibility in the event that they wish to cancel an upcoming trip moderately than risk the headache of a delay or cancellation, said Baykal, of World Nomads.
Nonetheless, these advantages also include caveats: For instance, many insurers require policyholders to cancel a minimum of two days before their trip starts. Insurers also generally don’t reimburse policyholders for the total cost of the trip; they could reimburse 75% of nonrefundable trip costs, for instance, Baykal said.
“We all the time recommend a customer reads through policy details if it involves the purpose of constructing a claim,” she said.
Individually, airlines have made various financial commitments to travelers who experience flight disruptions, that are detailed on a dashboard maintained by the U.S. Department of Transportation.
