Travel insurance is an essential component for planning any trip. Whether you are going on a short trip or an extravagant expedition, you can utilize travel insurance to protect you, your family, and your finances in case something goes awry.
But what happens if things change before you leave for your trip, and you want to salvage the money you already spent on deposits and tickets? This is where trip cancellation coverage can step in and help you get reimbursed if you cancel for a covered reason.
While standard trip cancellation coverage will offer coverage for specific covered reasons listed in the policy, some travelers may need to cancel their trip for another reason, and they’ll either forfeit their entire deposit or most of it.
Thankfully, many travel insurance companies offer a Cancel for Any Reason (CFAR) optional upgrade to their policies. If the policy purchased is eligible for CFAR coverage, consumers can protect up to 75% of their prepaid and non-refundable trip expenses.
This section will describe how CFAR coverage impacts your trip and how much you can expect to pay based on your travel insurance policy. Since CFAR is one of the only ways to get your money back if you want to cancel your trip for a reason not covered by standard trip cancellation coverage, it is worth considering if you have a considerable amount of prepaid expenses.
Understand The Difference Between Trip Cancellation and Cancel for Any Reason
Most travel insurance policies include trip cancellation coverage. While trip cancellation coverage can be a powerful protector if you and your travel party incur a covered loss, it has some limitations when it comes to your ability to cancel your trip.
Trip Cancellation Coverage
Losses reimbursed by trip cancellation generally require validation from an external third party, such as a doctor’s note stating one of the travelers is not fit to go on the trip. Other examples include carrier bankruptcies, terrorist attacks, and natural disasters. Triggering trip cancellation coverage requires an event covered under the policy to occur, which does not include the travelers changing their minds about the trip because they are worried about getting sick or just not wanting to travel.
While most trip cancellation plans will cover travelers if they contract COVID-19 prior to their trip, the plans usually exclude pandemic-related travel restrictions and fear of travel. This is where CFAR coverage comes in handy.
Cancel for Any Reason (CFAR) Coverage
Cancel For Any Reason Coverage enables policyholders to cancel their trip for any reason at all and receive reimbursem*nt up to 75% of pre-paid deposits or non-refundable expenses incurred prior to departing on a trip.
Although trip cancellation coverage can be helpful, CFAR coverage offers much more flexibility and financial protection – especially for trips with expensive deposits or large prepaid portions. At its core, CFAR coverage is a supplemental add-on to a travel insurance policy, and it cannot be purchased alone.
For example, you can purchase a travel insurance policy with or without CFAR coverage, but you cannot exclusively purchase CFAR coverage without an underlying travel insurance policy.
If you are interested in adding CFAR coverage to your policy, make sure that the carriers you consider offer it. Many travel insurance carriers offer CFAR coverage, especially since it has skyrocketed in popularity since the beginning of the COVID-19 pandemic, but there are a few that do not offer it.
Protect Your Trip with Cancel for Any Reason Coverage
The following table* shows the hypothetical quotes for two couples on a $2,500 trip to Italy. The trip dates are 3/22/22-3/31/22, with a deposit date of 3/5/22. Since traveler age is one of the most important variables for travel insurance quotes, we decided to highlight how a younger and an older couple would fare for securing a travel insurance policy with a CFAR upgrade.
| Trip Cost – Italy $2,500 | Trawick International Safe Travels Voyager – Cost for 68 Year Old Couple | Travel Insured Worldwide Trip Protector – Cost for 68 Year Old Couple | Trawick International Safe Travels Voyager – Cost for 27 Year Old Couple | Travel Insured Worldwide Trip Protector – Cost for 27 Year Old Couple |
| Travel Insurance Cost | $221.34 | $268.00 | $97.72 | $140 |
| Travel Insurance % of Trip Cost | 8.9% | 10.8% | 3.9% | 5.6% |
| CFAR Cost | $154.91 | $117.92 | $68.39 | $61.60 |
| CFAR % of Trip Cost | 6.2% | 4.7% | 2.7% | 2.5% |
| Total % of Trip Cost to Include CFAR | 15.1% | 15.5% | 6.6% | 8.1% |
Coverage Limits
Cancel For Any Reason coverage is a powerful way to protect your investment because it offers reimbursem*nt for deposits and prepaid trip expenses at your discretion. Since CFAR’s flexibility and appeal for protecting your travel investment are compelling, it’s important to understand its limits.
Timing
As you plan your trip, it’s important to consider timing and how it affects your travel insurance policy.
If you are considering CFAR coverage, you should check the coverage parameters with your insurance carrier. You are required to purchase CFAR coverage at the same time as your travel insurance policy, but most insurance carriers only offer it if you purchase the policy within 21 days or less of making your initial trip payment or deposit.
Covered Costs
CFAR will generally refund between 50%-75% of prepaid trip costs and deposits if you cancel within the specified timeframe. Most carriers require that CFAR be used more than 48-hours before the trip departure date, which means you cannot use it to cancel at the last minute.
Additionally, you must insure your entire prepaid trip cost. For example, you cannot pick and choose to cover your flights, but not your hotel booking. The insurance companies require that you insure 100% of your prepaid trip costs to be eligible for CFAR.
CFAR is also offset by any cancellation vouchers you receive from an airline or hotel chain. Cancel For Any Reason coverage is considered secondary to vendor vouchers. Suppose you booked a hotel and flight, which were both named under your CFAR coverage. If you decide to cancel your trip and inform the airline and hotel, they may offer a voucher for future redemption in lieu of a refund. If you receive a voucher from either or both vendors, your CFAR reimbursem*nt will not apply to that charge.
CFAR Pricing
Cancel For Any Reason coverage varies according to the trip cost, traveler age, destination, and more.
As shown in the table above, many CFAR policies add approximately 50%, but since they can save thousands of dollars if you choose to exercise the benefit, they are relatively affordable compared to forfeiting the entire deposit and prepaid portion of the trip.
Do I Need CFAR?
You may be wondering if CFAR is worth the premium on your travel insurance policy. Since it can increase your out-of-pocket insurance expense by up to 50%, many consumers wonder if adding the Cancel for Any Reason coverage is worth the investment. Smaller weekend getaways may only cost a few hundred dollars, but most other international trips will cost well over $1,000. If you are shelling out a considerable amount for your deposit or in non-refundable prepaid expenses, then you should seriously consider a CFAR upgrade to your policy.
Final Thoughts
Whether you are taking an extended tropical getaway or an Alpine mountaineering expedition, travel insurance should be a key part of your planning. However, you also need to be prepared in case anything goes against your plan.
Cancel For Any Reason coverage is an excellent addition to trips that may need to be canceled due to family issues, global events, or fear of travel. Since CFAR coverage offers extreme flexibility, many travelers should consider it when planning a big trip, especially due to traditional cancellation insurance being limited to specific covered reasons.
