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Trip Cancellation Insurance: Your Essential Guide to Secure Travelling

Thursday, 7 December 2023

Going on a vacation and travelling the world can make for thrilling adventures and amazing memories. However, no matter how much planning you put into place beforehand, the unexpected can occur. Whether you have to end your trip early or call it off entirely, sometimes life just gets in the way.

This is why trip cancellation insurance is an item that should be on every traveller’s packing list. It provides a safety net and helps you recover financial losses incurred due to unforeseen circumstances. In this blog, we’ll explore the different types of trip cancellation insurance, their benefits and limitations, and how you can choose the right coverage for your needs.

What is Trip Cancellation Insurance?

As the name suggests, trip cancellation insurance is a specialized form of insurance that protects you financially if you need to cancel your travel plans due to a variety of reasons. Keep in mind not all reasons for cancelling a trip are covered, so it’s wise to learn how and when it can come in use.

Types of Trip Cancellation Insurance

Trip Cancellation Insurance

Let’s say you booked a vacation a few months ago and have spent the weeks since planning out your itinerary. Fast forward to the days leading up to your trip, and suddenly something serious comes up, and you are now unable to travel. If you have a trip cancellation insurance policy in place, you will be eligible to receive a reimbursement for any non-refundable expenses that are insured within your policy. This can include airline tickets, hotel accommodations, and excursion packages.

Trip Interruption Insurance

Now, imagine you made it to your destination and are enjoying your much-needed getaway. All of the sudden you need to call off the rest of your trip so that you can get home as soon as possible. Depending on the reason for ending your trip, a travel interruption policy will come into effect and reimburse you for the unused portion of prepaid expenses and additional costs to return home.

Flight Cancellation Insurance

This form of travel insurance provides coverage in the event you need to call off or change your flight plans due to unforeseen circumstances that are beyond your control. Like any insurance, flight cancellation insurance has exclusions. Common exclusions may include pre-existing medical conditions, certain high-risk activities, or events that are foreseeable when the policy is purchased.

Comprehensive Coverage: Trip Cancellation and Interruption Insurance

What is Covered Under Trip Cancellation and Interruption Insurance

When bundled together, trip cancellation and interruption insurance can provide peace of mind for travellers before and during their trip.

A wide range of situations are covered by trip cancellation insurance. This includes but is not limited to:

  • If you, a family member or a travelling companion becomes ill or injured before the trip.
  • Job-related issues such as unexpected work commitments or job loss.
  • Coverage for the death or serious illness of a close family member.
  • Trip cancellation due to severe weather conditions, such as hurricanes, that affect your travel plans.
  • Coverage for cancellations due to unforeseen events like terrorist attacks or political unrest in the destination.
  • Some policies may cover trip cancellations if you are required to serve on jury duty or receive a court summons.

Many of the situations listed above are also deemed eligible reasons to be covered by trip interruption insurance, but some additional reasons might include:

  • Significant delays or cancellations of transportation services (flights, trains, buses) due to reasons beyond your control, forcing you to change your itinerary.
  • If essential travel documents, like passports or visas, are stolen, leading to the need to interrupt the trip.
  • Significant damage to your home or property while you're away, requiring you to return early.
  • If your personal vehicle breaks down during a road trip, and repairs cannot be completed in a reasonable time, causing the need to interrupt your journey.

As a reminder, you should always review your travel insurance policy to have a better understanding of what is covered in your specific policy and if there are any exclusions that you should be aware of.

Differences Between Trip Cancellation and Trip Interruption Insurance

While both of these forms of coverage address disruptions to your travel plans, trip cancellation insurance focuses on events leading up to your departure for your trip, whereas trip interruption insurance deals with incidents that occur during the journey.

Trip Cancellation Insurance for Any Reason

What Does 'For Any Reason' Coverage Mean?

'For Any Reason' coverage is an additional benefit or optional upgrade that provides policyholders with a higher degree of flexibility when it comes to trip cancellations. This type of coverage allows you to cancel your trip for reasons that may not be explicitly listed or covered under standard trip cancellation or interruption insurance. While the specific details can vary between insurance providers, there are some key benefits and limitations to it.

Benefits and Limitations

The main benefit of having trip cancellation insurance for any reason is that it provides you with broad coverage. This means you might be able to cancel your trip for personal reasons that are important to you, even if they are not traditionally covered. This could include concerns about safety, changes in work plans, or simply a change of mind. Keep in mind that with this flexibility comes higher premiums compared to standard policies.
It’s important to note that it usually doesn’t offer 100% reimbursement. Typically, it reimburses a percentage of the non-refundable trip costs, often around 50-75%, depending on the policy. Additionally, there are often specific time limitations, and you may need to purchase this coverage shortly after making your initial trip deposit. There may be a deadline by which you need to cancel the trip.

Flight-Specific Cancellation Insurance

Cancellation Insurance for Flights Vs. General Travel Insurance

Cancellation insurance for flights is specifically tailored to protect your financial investment in non-refundable airline tickets. It addresses the unique risks associated with air travel, such as flight cancellations, delays, or other disruptions.
General travel insurance offers a broader scope of coverage, encompassing various aspects of your trip. This can include medical emergencies, trip interruptions, lost baggage, travel delays, and more. It is designed to provide comprehensive protection for various travel-related risks and is more versatile as it can be beneficial for different types of travel, whether by air, land, or sea.

Credit Card Trip Cancellation Insurance

Having a credit card with trip cancellation insurance is a benefit certain travellers might have. While it can offer cost savings and convenience for eligible cardholders, this coverage may have limitations compared to standalone policies, including potential restrictions on eligibility and less comprehensive coverage.
Standalone trip cancellation insurance, on the other hand, provides more extensive and customizable coverage options, allowing travellers to tailor coverage based on specific trip concerns and doesn't require meeting credit card usage criteria.
Travellers should carefully assess the terms and coverage of both credit card-provided and standalone insurance options to determine the best fit for their individual needs and travel plans.

How to Choose the Right Trip Cancellation Insurance

Selecting the right trip cancellation insurance requires much thought and attention to detail. You should assess your specific needs based on the nature of your trip. When considering a policy, carefully review the covered reasons for cancellation to ensure they align with potential risks you may face. You should also evaluate policy limits, exclusions, and premiums to gauge the extent of financial protection offered.
Explore optional add-ons or endorsements that may enhance coverage based on your requirements. Compare multiple insurance providers and maintain clear communication with the insurance providers to fully understand your options and the claims process before finalizing your decision. These tips will help you make an informed choice and secure the most suitable trip cancellation insurance for your travel plans.

Book travel with peace of mind, thanks to BIG

If you are going on a vacation, trip cancellation insurance is definitely worth consideration. Whether you opt for basic coverage or a more comprehensive policy, having a plan in place provides ample peace of mind when travelling. If you require assistance in comparing different policies or need guidance on the best coverage for your trip, contact a BIG broker. They will guide you through the process and help you make a decision so you can focus on the fun and start planning your dream getaway.

By: Devon Gribble