Gen Z, millennials are most likely to buy travel insurance products

Rome ranked second on a recent list of best travel destinations for a digital detox.

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Despite inflation, Gen Z and millennials are determined to travel this summer, even if it means spending a bit more.

While almost two-thirds, or 73%, of people are willing to pay extra fees for travel insurance or refundable booking options for their trips, Gen Zers and millennials are far more willing — at 87% and 83%, respectively — to pay extra for travel protections compared with other generations, according to a report by Bank of America. The bank surveyed 2,003 consumers in June.

“I think a lot of it goes to the lifestyle of the different generations and where they are traveling,” said Mary Hines Droesch, head of consumer and small business products at Bank of America. 

While Bank of America posed the question differently in a prior, similar report, the latest findings seem to represent an increase. When the bank surveyed 2,020 consumers about their savings and spending attitudes and behaviors in March 2022, 54% of those who planned to travel said they would purchase trip protection, including 73% of Gen Z and 65% of millennial travelers.

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Since younger generations may face tighter restrictions, from available free time to finances, they avoid risk where and when they can to ensure their travel plans go smoothly.

Why younger travelers spend more insuring trips

Many baby boomers are retired and enjoy a degree of flexibility when it comes to travel. For instance, they are the most likely cohort to travel on nonpeak days (60%) or to drive instead of fly (54%) to their destination, according to the Bank of America report. That’s less true for Gen Z, said Droesch.

“When [Gen Z] plan a trip, they’re really limited to the time that they’ve taken off from work, and especially now that there’s such a push for people to return to the office,” she said.

By opting to buy travel insurance, younger people’s plans are more protected, added Droesch. Boomers “have other options [in case] things go awry, because they don’t have the constraints of having to be at the office, at the very least, three days a week,” she said.

Roughly 20%, or 1 in 5, of customers on Hopper who generally tend to be Gen Z and millennial users, are adding the travel app’s flight disruption guarantee product as a way to protect their trips, said Hayley Berg, an economist at Hopper.

“It’s hugely popular with travelers, especially those who are worried about all the disruptions that are in the news right now,” said Berg.

Pandemic leaves travel jitters in wake

Traveling for less can mean risking less

Insurance or no insurance, opting to travel when others are staying home can mean risking less hard-earned money. Traveling during a destination’s “shoulder seasons,” or the transition period between times most popular with travelers — such as spring and fall, which bookend the summer high season, in Europe — is favorable because that’s when the best deals are usually available, said Berg. 

“January, September and October are the cheapest months of the year to travel pretty much anywhere in the world and to stay in hotels because it’s back to school, [and] most of Europe has gone back to work after their summer holidays in August,” she said.

Considering off-peak days for travel and hotel stays can help “chip away the cost of the trip.”

For more on travel insurance, check out CNBC Select’s recent ranking on the best travel insurance companies.


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