Trip Cancellation Travel Insurance (2024)

If you’re unable to take a trip due to an unforeseeable event, a trip cancellation policy will reimburse you for your prepaid, forfeited, non-transferable and non-refundable costs. Depending on the plan, your policy will help cover costs up to the time and date of your departure.

Trip cancellation insurance can be sold as a standalone policy (often as part of a trip cancellation and trip interruption plan) or as part of a comprehensive policy that also includes medical coverage. Some trip cancellation policies allow you to purchase Cancel For Any Reason (CFAR) coverage as an add-on.

While rules and coverage limits vary by policy type and insurer, here are some examples of problems commonly covered by trip cancellation insurance:

• Any serious injury or unforeseen medical condition that makes you or your travel companion unfit for travel.
• The death of you or your travelling companion, or the death of a non-travelling family member.
• Strikes or severe weather that result in travel services being unable to operate.
• Unforeseen natural disasters at home or at the destination that make them uninhabitable.
• Loss of your job without just cause.
• A legal obligation such as jury duty, or a professional summon in the case of active military or essential medical personnel.

Trip cancellation insurance policies usually include a trip delay or trip interruption benefit. With a trip delay benefit, the policy can pay for short-term unexpected delays to your travel, which can include meals, accommodations and transportation costs. A trip interruption benefit may help cover costs in the event your trip is cut short due to a problem covered by the policy.

Your trip cancellation coverage ends once your trip begins, so if something goes wrong after you leave home, that’s when trip interruption insurance or trip delay insurance kick in.

Since policies can vary drastically, it’s wise to carefully review the reasons covered by the policy to avoid surprises later. You’ll also want to understand the definition of terms in the policy. For example, “immediate family member” and “family member” may mean two completely different things under the policy’s guidelines.

While every traveller may have a unique circ*mstance for cancelling a trip, not every problem is covered. Generally, trip cancellation insurance doesn’t cover problems that arise from foreseeable events. A foreseeable event is a situation that may have been known or was expected before it happened.

For example, let’s say you purchase trip cancellation insurance for a family vacation to Cabo San Lucas when a hurricane is in the way. With most travel insurance policies, trip cancellation may not be covered.

Foreseeable events are not the only events excluded from trip cancellation insurance. Here are a few other examples of some problems typically not covered:

• Intentional self-inflicted harm, suicide or attempted suicide.
• Normal pregnancy, fertility treatments, childbirth or elective abortion.
• Alcohol or substance abuse or use.
• Mental or nervous health disorders such as depression, anxiety or psychosis.
• War (declared or undeclared), acts of war and military duty.

If you purchase a basic travel insurance policy that includes trip cancellation coverage, you can expect to pay between 4% and 10% of your trip costs. For instance, if you buy a $10,000, nine-day trip through the Greek Isles, you can expect to pay between $500 and $1,000.

Keep in mind, selecting a policy with Cancel For Any Reason coverage can cost significantly more.

There are several other factors that can influence the cost of a policy:

• Age of travellers:Typically, the older you are the higher the policy cost will be. Older travelers are seen as riskier because they often have more health problems and are more likely to make a claim.
• Trip expenses:A policy’s price is based on your nonrefundable of prepaid travel expenses. Therefore, it’s important to calculate all of the costs you’ll incur before your departure when searching for a policy. This can include airfare, hotel and excursion deposits.
• Plan selection:Basic policies with fewer coverage options will cost less. For example, basic plans tend to have lower medical emergency and trip cancellation limits. That said, it’s important to select only benefits you need so you’re not paying for coverage options you won’t use.
• The number of travellers:The more people you insure the higher your premium will be.
• Trip length:The length of the trip will make a difference in the cost of a policy.

If you’ve paid a lot of money toward nonrefundable trip expenses, it’s worth taking a look at trip cancellation insurance. Trip cancellation insurance is designed for travellers who are concerned about safeguarding the money spent on a trip based on unforseen events.

Keep in mind, trip cancellation insurance only pays for problems listed in the policy. It won’t cover changing your mind or foreseeable events.

Even if you’re on a tight budget, buying trip cancellation insurance can give you some peace of mind for unexpected events leading up to your departure. However, if you have to choose between cancellation insurance and emergency medical insurance, one thing to consider is that unforeseen medical expenses can cost you hundreds of thousands of dollars, while cancellation insurance covers known expenditures.

When shopping for a trip cancellation policy, it’s smart to get quotes from multiple travel insurance companies. This way you can select a plan that is cost-effective yet provides the most value.

If you do purchase trip cancellation insurance and change your mind shortly after, you may be able to get your money back. Many travel insurance companies offer a “free look” period, meaning you can cancel the policy within a certain time frame and get a full refund. The time frame will depend on the travel insurance company, but 10 days is fairly standard.

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