Travel insurance claims jumped 18% in the most recent full year of industry data, with the average payout climbing 37% to $2,609 — and the single biggest driver wasn’t a medical emergency, a lost bag, or a canceled flight. It was trip cancellations and disruptions, which together accounted for more paid claims than any other category by a wide margin, according to Squaremouth’s analysis of its own claims data. With trip costs still climbing into 2026, the pressure behind those numbers hasn’t let up.
What’s Actually Driving Claims Higher
Squaremouth, a travel insurance comparison marketplace that has tracked more than two decades of claims data, published its most recent full-year breakdown in a report distributed via PR Newswire and covered independently by the travel-insurance trade publication ITIJ. The headline number: paid claims rose 18% year-over-year, and the average payout jumped 37%, from $1,900 to $2,609 — both record levels for the company’s data set.
Emergency medical claims made up 27% of all paid claims, at an average payout of $1,654, and — notably — became the single most frequently claimed and highest-paid benefit for the first time in more than a decade, according to Squaremouth’s report. But medical claims weren’t the biggest category once you group related benefits together. Trip cancellation alone accounted for 26% of paid claims, averaging $1,456 per claim. Add in trip interruption (11% of claims, averaging $2,631) and Cancel For Any Reason claims (6%, averaging $2,092), and cancellation-related claims combined made up more than 40% of everything paid out — more than medical claims, more than travel delay claims (15%, averaging $370), and more than lost or delayed baggage claims (a combined 8%) put together.
Why Cancellations Keep Winning
The pattern makes more sense once you factor in what’s happening to trip costs. Squaremouth’s own Q1 2026 Travel Insurance Trends Report found average trip costs had climbed to $7,250, up 3.6% year-over-year and 23% over the past decade. By August 2026, that average had risen further, to $7,426. As the price of a canceled trip goes up, so does the dollar amount at stake when something goes wrong before departure — a job loss, an illness, a family emergency, or simply a change of plans.
That same report found demand for Cancel For Any Reason coverage surged 29% in the first quarter of 2026, suggesting travelers are increasingly aware of how exposed they are to cancellation-related losses. Yet Squaremouth also found a gap working in the opposite direction: 53% of travelers who searched for CFAR coverage didn’t end up purchasing it, and 34% of travelers who bought some form of travel insurance in the first quarter skipped standard trip cancellation coverage entirely. That combination — rising trip costs, rising awareness of cancellation risk, and inconsistent coverage decisions — helps explain why cancellation-related claims keep outpacing every other category.
What Counts as a “Claim” Here, and Why the Categories Matter
It’s worth being precise about what’s being measured. Squaremouth’s figures reflect the share of paid claims by benefit type, not the number of policies sold or the number of trips insured. A single trip cancellation claim, in other words, isn’t necessarily more common than a lost-bag claim because more people cancel trips than lose luggage — it’s that cancellation and interruption claims tend to represent a broader, higher-value category of “trip didn’t go as planned” events that insurers group under several related benefit lines. When you add those lines together, as ITIJ’s independent coverage of the same data confirms, cancellation and interruption benefits collectively represent the largest slice of the payout pie, ahead of medical claims even though medical claims are individually the single largest line item.
What It Means If You’re Buying a Policy This Fall
The practical takeaway for travelers is straightforward: cancellation coverage isn’t the add-on to skip. With average trip costs now well above $7,000 and cancellation-related claims eating up more than 40% of total payouts, a policy that covers emergency medical care but skimps on trip cancellation and interruption protection is missing the benefit most likely to actually pay out. Given that a third of Q1 2026 insurance buyers reportedly skipped standard cancellation coverage, that gap may already be costing some travelers money they didn’t expect to lose.
It’s also a reminder that travel insurance claims data tends to track the broader travel economy rather than moving independently of it. As trip costs keep climbing and travelers keep booking further out — locking in nonrefundable deposits months in advance — the financial stakes of a canceled trip only grow. Until trip costs level off, cancellation-related claims look likely to keep leading the pack, and travelers who want their coverage to match their actual risk should budget accordingly rather than treating it as an afterthought.
