What it means
It means making a bad situation even worse by chucking one more rotten thing on top. You say it when something's already gone sideways, then life, a company, or some cheeky idiot adds an extra slap just for the drama.
Usage examples
"The flight was cancelled, and to add insult to injury they charged us for a hotel we never even asked for."
"The train was cancelled, and to add insult to injury they charged me to rebook on the next one."
"He forgot her birthday, then, to add insult to injury, asked her to bake his cake the same week."
"My phone died, I missed the interview, and to add insult to injury it started raining the second I stepped outside."
"They lost our booking, stuck us in a tiny room, and to add insult to injury tried to call it an upgrade."
Where it comes from
It goes back to a line by the Latin writer Phaedrus, where the idea was that someone had already caused injury and then piled on insult as well. English later settled on add insult to injury, and now it fits any moment where the universe heaps extra misery onto an already lousy mess.
