In this article: What is covered | What is not covered | Cost | How to have | Conclusion | FAQs
Travel insurance has exploded in popularity following the coronavirus pandemic and the litany of canceled vacations and trips that have accompanied it. If you’re feeling excited but hesitant to start your next globetrotting adventure, you might consider protecting yourself with trip cancellation insurance.
Travel insurance plans are available from major insurers to protect you financially against unforeseen changes in plans. Read on to learn everything you need to know about protecting your travel plans from unexpected cancellations.
What does trip cancellation insurance cover?
Trip cancellation insurance reimburses you for non-refundable travel expenses if an unforeseen event forces you to cancel your trip.
For example, imagine you are planning an international vacation and have spent $5,000 on non-reimbursable expenses, such as airfare and accommodation. Then, after you make your last trip payment, your appendix bursts and you can’t go on a trip.
In this example, your hospitalization would entitle you to reimbursement of up to $5,000 through your trip cancellation insurance. If you had not taken out travel insurance, you would lose all of your non-reimbursable expenses if you were unable to attend your vacation for any reason.
Generally, you can use your trip cancellation insurance for the following reasons:
- An unexpected legal obligation, such as jury duty or a subpoena, that prevents you from traveling
- Death of a traveling companion or a member of your immediate family
- Diagnosis of a serious and unexpected medical condition or injury that prevents you from traveling
- Unforeseen weather conditions or natural disasters that cause damage to the home or make the country you are visiting unsafe or uninhabitable
According to a recent AAA Travel survey, 88% of US residents who have purchased travel insurance say that trip cancellation insurance is the most important part of their policy. Some insurers offer trip cancellation insurance as a standalone policy, which is a great option for travelers who need protection but are on a strict budget.
However, trip cancellation protection is usually sold as a package that includes other travel insurance coverages. Typically, comprehensive travel insurance covers the following:
- Medical emergency: Your standard medical insurance may not apply when traveling overseas. Emergency medical cover helps you cover medical expenses you incur abroad. Depending on the insurance provider, dental care and treatment may or may not be included in this coverage. Remember that if you have any pre-existing conditions, your travel insurance provider may exclude them from your medical coverage.
- Emergency Medical Evacuation: Emergency medical evacuation services cover transportation costs to a medical facility if you need treatment for which there is no local access to appropriate care. This coverage will also cover the cost of returning home following a critical illness or injury.
- Trip Interruption: Trip interruption insurance compensate you for any part of your non-refundable travel expenses that you do not benefit from due to unforeseen circumstances. For example, if you are seriously injured and need a medical evacuation abroad, trip interruption insurance will reimburse you for non-reimbursable expenses that you did not use. Some policies include trip interruption coverage limits greater than the value of your vacation. This extension covers transportation costs in the event of a sudden evacuation, which are significantly more expensive than standard airline tickets. You can also use your trip interruption insurance if you are ordered to evacuate an international site.
Do not assume you have any of the above coverages unless they are explicitly set out in your trip cancellation policy. If you are unsure of what is and is not included in a policy, speak to a representative before purchasing coverage.
What is not covered by trip cancellation insurance?
Trip cancellation insurance does not cover everything. For example, deciding not to go on vacation does not mean that you are entitled to a refund. If there’s a chance you won’t take your trip due to a foreseeable event, you might consider getting Cancellation for Any Reason (CFAR) coverage. As the name suggests, CFAR policies allow you to request a refund no matter what reason you need to cancel.
Depending on the insurance company, CFAR coverage may be a stand-alone policy or may be sold as an add-on to your travel insurance benefits for an additional cost. Although CFAR insurance gives you more flexibility, it will also make your insurance much more expensive. Expect to pay between 40% and 60% more for your policy if you want to include CFAR coverage.
Without CFAR coverage, your insurance will not apply unless extenuating circumstances require you to cancel your trip. Trip cancellation policies generally exclude certain types of injuries and special situations from coverage.
Here are some exclusions you’ll likely see in your travel insurance policy:
- Acts of war and terrorism
- Any elective medical intervention
- Injuries and conditions resulting from intentional harm to the insured, participation in extreme sports, mental health disorders, alcohol or illicit substances
- Routine pregnancy needs (such as doctor’s appointments or fertility treatments)
- Storms and natural disasters already named before your departure date
How much does trip cancellation insurance cost?
Trip cancellation protection fees will vary depending on the specifics of your upcoming travel plans. Some factors that insurance companies will consider when pricing your policy may include the following:
- Destination: The quality and cost of public services, such as health care and police services, vary widely around the world. If you are going to a country with less extensive infrastructure, you will pay more for travel insurance.
- The value of your vacation: If you are planning an expensive trip, your policy will include higher coverage limits and eligibility, which will increase the price.
- Time spent abroad: The more time you spend away from home, the more you will need to use your insurance. Traveling longer makes insurance more expensive.
- Your age: Older travelers are more likely to be injured than younger travelers, increasing coverage costs.
To give you an idea of how much you could pay for travel insurance, we at Home Media’s review team have collected insurance quotes from some of the best providers in the country. Use the chart below to estimate what you might pay for your insurance before you get your free quotes.*
*Quotes were received using the details above on each company’s website on July 17, 2022.
How do I take out travel cancellation insurance?
Although there are companies that specialize specifically in travel insurance, you can purchase trip cancellation insurance from an independent insurance company. Travelers with general needs can buy insurance through companies such as Nationwide, AIG and more.
Most insurance companies now allow you to get a travel insurance quote online in as little as five minutes. Before enrolling, gather all receipts and invoices for non-reimbursable expenses to calculate the amount of coverage you need. You should get a few quotes from competing service providers before deciding which option is right for you.
If you’ve booked your coverage through a travel provider – a travel agency or cruise line, for example – an agent may be able to arrange coverage on your behalf.
The Bottom Line: Is Trip Cancellation Insurance Worth It?
The value you get from your travel insurance will vary depending on the specifics of your upcoming travel plans. If you plan to travel to the United States or on a budget, you probably won’t need trip cancellation insurance.
On the other hand, if you are preparing for an international vacation or a trip with expensive airfare and accommodation, you should seriously consider travel insurance. Even if you’re not sure if trip cancellation insurance is right for you, be sure to get quotes from at least three competing insurers – coverage might be more affordable than you think.
Frequently Asked Questions About Trip Cancellation Insurance
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