Prior to Covid, I had actually never heard of cancel for any reason travel insurance (commonly referred to as CFAR). Now? I’ve become quite familiar with this policy that allows a person to cancel a trip and receive (usually) between a 50 – 75% refund should they need/want to cancel a trip for…you got it…ANY reason.
So…during this time when travel mandates seem to change daily, and you become less confident about where and when to travel, how do you decide whether to purchase cancel for any reason travel insurance?
First, here’s a little primer on travel insurance options:
1) Travel Insurance – A common plan that covers you for many reasons if you can’t complete a trip. Examples include: you becoming ill; a family member becomes ill and you want to stay home with them; or you need to leave a trip in the middle of it. Namely, issues relating to your health or the health of someone close to you.
This type of policy also covers costs for such things as lost luggage or costs incurred due to cancelled flights. In other words, non health-related issues. Expect a general travel insurance policy to cost about 5% of the trip cost but this will vary depending on your destination, the state in which you live and your age.
Depending on the insurer, there may be options for you to file a claim for other reasons–you are required at work, for example, or you have been summoned for jury duty.
IMPORTANT – One thing to note is that if a country closes its borders and a tour is unable to take place, an insurer may not pay a claim to the insured. The thinking is that the company you’ve contracted with at the destination should either offer you a refund or reschedule the tour. This is not always the case so don’t plan on it.
However, if the country mandates that all international travelers must quarantine upon arrival, there is a possibility you can file a claim as your travels can technically take place but under unreasonable circ*mstances. Having CFAR would help mitigate this issue.
2) Evacuation insurance – This type of insurance provides coverage for an emergency evacuation should you get injured or become ill during a trip and need to get to a medical facility located far away from where the incident took place. This might be within the country you are traveling, the nearest city in another country, or your home country. For example, if you get injured hiking in Patagonia, you may need to be transported to get care at a hospital in the closest city or, perhaps even one closer to home. The cost of such an evacuation can easily exceed $60,000. Evacuation insurance would help cover those costs.
Evacuation insurance alone is fairly reasonably priced (it’s far less than travel insurance) but, again, varies depending on your destination, activities and age.
3) Cancel for Any Reason – Enter Covid-19. When the Coronavirus began to spread around the world and we saw borders close (and open and close and open and close), people started to get nervous about travel as cases receded and then spiked.
CFAR allows you to cancel a trip without having a medical reason for doing so. In essence, it gives you an out if you’re simply feeling uncomfortable about traveling. Depending on the policy and your insurance provider, CFAR you will usually cover anywhere from 50 – 75% of the non-refundable costs you’ve paid.
If you choose not to purchase insurance (including one with CFAR), we have you sign a waiver stating you understand the implications of not having insurance. A worse case scenario might be that just prior to a tour, Covid cases start to spike at your destination and you are uncomfortable traveling. If it’s close to a tour’s departure date (it varies a little based on destination–please see each tour for specifics), it’s likely we have already paid our vendors non-refundable payments for transportation, hotels and activities. In this case, we would not be able to issue refunds to our group other than what is stated in our Terms and Conditions.
For the flexibility of having insurance that includes cancel for any reason, you can expect to pay about 7 – 8% of the trip cost.
How to purchase cancel for any reason travel insurance
There are a handful of companies that offer cancel for any reason travel insurance. We’ve partnered with Travel Insured International as they seem to have the best policies available (at least for U.S. citizens) and provide upwards of 75% of the trip cost on a CFAR policy should you cancel your trip.
Something to keep in mind…
Cancel for any reason travel insurance policies are based on the amount of money you will lose should you cancel. It will cover up to 75% of what you’ve already paid for a trip that can’t be refunded.
Most travel insurance policies can be purchased up to your departure date. But cancel for any reason needs to be purchased within a window of time–usually two to three weeks–from the time you first make payment toward the trip. In other words, it’s quite time sensitive.
The beauty of it is that you can update the policy at any time if/when you’ve made additional non-refundable payments towards the trip costs (for example, paying down the cost of a trip over time, purchasing non-refundable flights or accommodations, etc.).
So, when purchasing a policy, you’ll want to initially buy it for the amount you would completely lose should you cancel. In other words, when you pay an $800 deposit to WanderTours, you would purchase a policy for the amount that is non-refundable (with WanderTours, in most cases $400 is non-refundable up to 90 days prior to the tour).
Once you make other non-refundable payments (such as the final payment to WanderTours), you’d then want to alert the insurance company so that this additional amount is then covered. There will be an increase in your premium at that time.
If you purchase a policy that includes the entire cost of the tour ($5,000, let’s say) but you’ve only paid a non-refundable amount of $400, you’re paying for a policy that is covering you for way more than you can claim should you cancel.
Here’s a typical timeline for how you might purchase your cancel for any reason travel insurance for a tour with WanderTours:
1) Book a tour by paying an $800 deposit.
2) Within the allotted time (usually two to three weeks), purchase your CFAR travel insurance, but claim only the non-refundable amount (in the case of WanderTours, this is usually $400).
3) Book your flights, accommodations and any other add-ons you want for the trip. If any of these are non-refundable, update your policy to reflect the funds you might lose. If any portions are refundable, do not claim them. If you do, you will be paying for a more expensive plan that ultimately would not cover these costs anyway as they are refundable by other service providers (ie. airlines).
4) Once you’ve made any additional payments to WanderTours or any other provider that fall within a non-refundable clause, update your policy to reflect this so you’re ensured coverage should you need to cancel closer to the departure date.
Keep in mind that during the pandemic, many airlines have implemented more liberal cancellation policies so they may provide a refund or they may credit the cost of your flights for future travel. This would not be covered under your travel insurance, so do not claim it. Again, it will increase your policy cost but you would not be able to request a refund from the insurance provider for it.
Cancel for any reason isn’t necessarily for everyone. If you’re fairly risk tolerant and are confident that you will not cancel on a trip should it go forward no matter what, then a regular travel insurance policy may be your best option. If, however, you are a bit concerned about traveling during the pandemic and there’s even the slightest possibility that you might cancel because you have personal concerns about the trip, then cancel for any reason is the way to go!
We have seen enough people cancel close to a tour departure date and lose all of their funds as a result of their last-minute cancellation, that we urge people to give serious consideration to purchasing cancel for any reason travel insurance if you are at all risk adverse.
