US travel costs hit record high as insurance gaps leave travellers exposed

American travellers are spending more than ever on trips, with average costs exceeding US$7,250 in the first quarter of 2026, according to Squaremouth’s latest Travel Trends Report. This represents a 3.6% year-on-year increase and the highest level recorded in the travel insurance marketplace’s 23-year history. Experts say there is little indication that prices will fall soon.

The rise reflects long-term trends and ongoing economic pressures, including inflation, global uncertainty, and growing demand for premium travel. Over the past decade, travel costs have climbed 23%, with experiences once considered luxury – such as safaris and expedition cruises – now becoming mainstream. Travellers are increasingly prioritising high-value, experience-driven trips, further driving up averages.

External factors are also contributing. Jet fuel prices, influenced by oil supply disruptions linked to the Iran war, have pushed airlines to raise fares, cut capacity, and increase ancillary fees. Analysts expect upward pressure on airfares to continue throughout the summer.

Despite rising risks, many travellers remain underinsured. Demand for cancel for any reason (CFAR) coverage rose 29%, yet 53% did not purchase it, often missing eligibility deadlines. Additionally, 34% of insured travellers skipped standard trip cancellation cover.

“We’re seeing a gap between how travellers feel about the growing risks and how they actually protect their trips,” said Jackie Mondelli, Chief Marketing Officer at Squaremouth. “Despite record trip costs and rising uncertainty, many travellers aren’t choosing the right or enough coverage to protect themselves.”