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What Is Trip Cancellation Insurance?
Trip cancellation insurance provides prepaid, nonrefundable reimbursem*nt for trip expenses if you must cancel a trip due to an unforeseen circ*mstance such as illness, injury, or the death of the traveler or a loved one.
Prepaid and non-refundable trip expenses covered under trip cancellation insurance include airline tickets, hotel reservations, cruise bookings, prepaid tours and more. As long as the reason for cancellation is covered under your policy, you can submit a claim for reimbursem*nt up to a certain amount. Some providers offer reimbursem*nt of over 100% of your covered trip expenses, but the amount will depend on your plan choice.
What Does Trip Cancellation Insurance Cover?
Trip cancellation insurance reimburses you for nonrefundable travel expenses if an unforeseen event forces you to cancel your trip.
For example, imagine you’re planning an international vacation and have spent $5,000 on nonrefundable expenses, such as airfare and accommodations. Then, after you make your last trip payment, your appendix bursts, and you can’t go on your trip.
In this example, your hospitalization would qualify you for a refund of up to $5,000 through your trip cancellation insurance. If you did not buy travel insurance, you would lose all your nonrefundable expenses if you could not attend your vacation, regardless of the reason.
Typically, you may 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 one of your immediate family members
- Diagnosis of a serious, unforeseen medical condition or injury that prevents you from traveling
- Unforeseen weather or natural disasters that cause damage at home or make the country you’re visiting unsafe or uninhabitable
According to a recent survey from AAA Travel, 88% of U.S. residents who purchased travel insurance say travel cancellation insurance is the most important part of their policy. Some insurance providers offer trip cancellation insurance as a stand-alone policy, which is an excellent option for travelers who need protection but are on a strict budget.
However, trip cancellation protection is usually sold as a package plan that includes other travel insurance coverages. Typically, comprehensive travel insurance covers the following:
- Emergency medical: Your standard medical insurance may not apply when you travel abroad. Emergency medical coverage helps you cover the cost of medical expenses that you incur while abroad. Depending on the insurance provider, dental care and treatments may or may not be included in this coverage. Remember that if you have pre-existing conditions, your travel insurance provider may exclude these from your medical coverage.
- Emergency medical evacuation: Emergency medical evacuation services cover the cost of transporting you 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 helping you get home following a major injury or illness.
- Trip interruption: Trip interruption insurance compensates you for any portion of your nonrefundable travel expenses you don’t get to enjoy due to unforeseen circ*mstances. For example, if you’re seriously injured and need a medical evacuation abroad, trip interruption insurance will reimburse you for nonrefundable expenses you didn’t use. Some policies include trip interruption coverage limits above the value of your vacation. This extension covers sudden-evacuation transportation costs, which are significantly more expensive than standard airfare. You can also use your trip interruption insurance if you’re ordered to evacuate an international location.
Do not assume that you have any of the above coverages unless they are explicitly defined in your trip cancellation policy. If you aren’t sure what is and isn’t included in a policy, speak with a representative before you sign on for 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 you’re entitled to reimbursem*nt. If there’s a chance you won’t take your trip due to a foreseeable event, you may consider purchasing Cancel For Any Reason coverage (CFAR). As the name suggests, CFAR policies allow you to claim a reimbursem*nt no matter why you need to cancel.
Depending on the insurance company, CFAR coverage might be a stand-alone policy or may be sold as an add-on to your travel insurance benefits for an additional cost. While CFAR insurance provides you with more flexibility, it’ll also make your insurance significantly 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 circ*mstances force you to cancel your trip. Trip cancellation policies usually exclude certain types of injuries and unique situations from coverage.
The following are some exclusions you’re likely to see in your travel insurance policy:
- Acts of war and terrorism
- Any elective medical procedure
- 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
Cancel For Any Reason Travel Insurance
Cancel for any reason (CFAR) travel insurance allows you to cancel your trip for virtually any reason. As mentioned, a standard policy typically excludes this coverage, so you will need to purchase it as an add-on. If you want CFAR insurance, expect your overall plan costs to increase.
While CFAR coverage and trip cancellation insurance have similarities — namely, covering you if you need to cancel your trip — there is one main difference between the two. Trip cancellation insurance does not cover cancellations for any reason. If you cancel your vacation for a reason not covered by your policy, you cannot claim reimbursem*nt for prepaid travel-related expenses.
Because CFAR travel insurance allows you to cancel your trip for reasons outside a traditional policy, it’s ideal for travelers seeking added peace of mind or who foresee events that could lead to trip cancellation otherwise. If you’re solely worried about circ*mstances outside of your control halting your vacation, such as an extreme weather event, then standard trip cancellation insurance is likely enough.
How Much Does Trip Cancellation Insurance Cost?
Trip cancellation protection costs will vary depending on the specifics of your upcoming travel plans. Some factors insurance companies will consider when pricing your policy might include the following:
- Destination: The quality and cost of public services, such as health care and police services, vary dramatically worldwide. If you’re heading to a country with less extensive infrastructure, you’ll pay more for travel insurance.
- The value of your vacation: If you’re planning an expensive trip, your policy will include higher coverage limits and eligibility, increasing the price.
- Time spent abroad: The more time you spend away from home, the greater the chance you’ll need to use your insurance. Traveling for longer time frames makes insurance more expensive.
- Your age: Older travelers are more likely to be injured than younger travelers, which increases coverage costs.
To give you an idea of how much you might pay for travel insurance, we at the Guides Home Team collected insurance quotes from some of the country’s top providers. Use the chart below to estimate what you might pay for your insurance before getting your free quotes.*
| Provider | Plan Name | Trip and Traveler Age | Trip Cancellation | Trip Interruption | Baggage Delay | Cost | Visit Site |
|---|---|---|---|---|---|---|---|
| Nationwide Essential Plan | $3,000 7-day trip to Mexico; 25 years old | $3,000 | $3,750 | $100 after 12 hours of delay | $68 | EXPLORE PLANS |
| Nationwide Essential Plan | $7,000 10-day trip to France; 45 years old | $7,000 | $8,750 | $100 after 12 hours of delay | $438 | EXPLORE PLANS |
| Allianz OneTrip Prime | $3,000 7-day trip to Mexico; 25 years old | $3,000 | $4,500 | $300 after 12 hours of delay | $130 | EXPLORE PLANS |
| Allianz OneTrip Prime | $7,000 10-day trip to France; 45 years old | $7,000 | $10,500 | $300 after 12 hours of delay | $352 | EXPLORE PLANS |
| Generali Global Assistance Preferred Plan | $3,000 7-day trip to Mexico; 25 years old | $3,000 | $4,000 | $300 after 18 hours of delay | $96 | EXPLORE PLANS |
| Generali Global Assistance Preferred Plan | $7,000 10-day trip to France; 45 years old | $7,000 | $10,500 | $300 after 18 hours of delay | $266 | EXPLORE PLANS |
| Provider | Plan Name | Trip and Traveler Age | Trip Cancellation | Trip Interruption | Baggage Delay | Cost | Visit Site |
|---|---|---|---|---|---|---|---|
| Nationwide Essential Plan | $3,000 7-day trip to Mexico; 25 years old | $3,000 | $3,750 | $100 after 12 hours of delay | $68 | EXPLORE PLANS |
| Nationwide Essential Plan | $7,000 10-day trip to France; 45 years old | $7,000 | $8,750 | $100 after 12 hours of delay | $438 | EXPLORE PLANS |
| Allianz OneTrip Prime | $3,000 7-day trip to Mexico; 25 years old | $3,000 | $4,500 | $300 after 12 hours of delay | $130 | EXPLORE PLANS |
| Allianz OneTrip Prime | $7,000 10-day trip to France; 45 years old | $7,000 | $10,500 | $300 after 12 hours of delay | $352 | EXPLORE PLANS |
| Generali Global Assistance Preferred Plan | $3,000 7-day trip to Mexico; 25 years old | $3,000 | $4,000 | $300 after 18 hours of delay | $96 | EXPLORE PLANS |
| Generali Global Assistance Preferred Plan | $7,000 10-day trip to France; 45 years old | $7,000 | $10,500 | $300 after 18 hours of delay | $266 | EXPLORE PLANS |
*Quotes were received using the details above from each company’s website in December 2023.
Is Trip Cancellation Insurance Expensive?
Whether trip cancellation insurance is expensive largely depends on factors such as your destination, number of travelers, trip length and more. However, some travelers may find buying a plan with trip cancellation protection worth the peace of mind, as it typically only costs a small fraction of your overall trip expenses.
To help you better understand overall trip expenses compared to insurance costs, we found that travel insurance costs around 2% to 3% of the total cost for the $3,000 seven-day trip to Mexico and about 4% to 6% of the total trip costs for a $7,000 10-day trip to France. These travel insurance policies include trip cancellation coverage for 100% of the total costs of both trips.
How Do I Get Trip Cancellation Insurance?
While there are companies that specialize specifically in travel insurance, you can purchase trip cancellation insurance through 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 quote for travel insurance online in as little as five minutes. Before you sign up, collect all receipts and invoices for nonrefundable expenses to calculate how much coverage you need. You should get a few quotes from competing service providers before deciding which option suits you best.
If you booked your coverage through a travel supplier — a travel agency or cruise line, for example — an agent may be able to arrange coverage on your behalf.
Is Trip Cancellation Insurance Worth It?
The value you’ll get from your trip insurance will vary depending on the specifics of your upcoming travel plans. If you’re planning to travel within the United States or on a strict budget, you likely won’t need trip cancellation insurance.
On the other hand, if you’re preparing for an international vacation or a trip with costly airfare and lodging, you should seriously consider travel insurance. Even if you aren’t sure trip cancellation insurance is right for you, be sure to get a quote from at least three competing insurance providers — coverage might be more affordable than you think.
Country
Argentina Aruba Australia Austria Bahamas Bali Barbados Belize Bermuda Brazil British Virgin Islands Canada Chile China Colombia Costa Rica Denmark Dominican Republic Europe France Germany Greece Iceland India Ireland Italy Japan Jerusalem Mexico Netherlands New Zealand Norway Philippines Portugal Singapore Spain Sweden Switzerland Thailand Turks and Caicos United Kingdom
Frequently Asked Questions About Trip Cancellation Insurance
If you need to cancel your trip for a covered reason, prepaid and nonrefundable trip costs typically qualify for trip cancellation coverage. Covered reasons will vary by the insurance company but may include a family member’s death, job loss or an unforeseen natural disaster.
You can expect to pay between 5% and 10% of the total value of your trip for your vacation cancellation insurance coverage. For example, if you spent $5,000 on a vacation package to Mexico, most travel insurance companies will charge you between $250 and $500 for travel protection. Pricing will vary depending on the time of year you’re traveling, your age, the length of time you’ll be abroad and your trip’s value.
Trip cancellation insurance gives you the peace of mind that comes with knowing you won’t completely forfeit all of the money you spent on your upcoming vacation if you need to cancel at the last minute.
Travel insurance works the same way as most types of insurance (aside from health insurance). If you’re forced to cancel or abandon your trip due to unforeseen events, you must file a claim and submit proof of your unused, nonrefundable trip expenses to your insurance company. The insurance company will review your claim and determine your payout eligibility. The travel insurance provider will reimburse you if your policy covers your submitted expenses.
When you sign onto an insurance policy with trip cancellation coverage, your insurance provider will ask you to disclose the total monetary value of your trip. Your trip’s total reported value is the maximum coverage amount you can potentially claim from your travel insurance policy. Some insurance companies have begun offering a bit of coverage above the trip value for select trip delays and cancellations that require sudden, last-minute travel, such as an emergency that requires out-of-country medical treatment or a natural disaster.
If you have feedback or questions about this article, please email the MarketWatch Guides team ateditors@marketwatchguides.com.
Sarah HorvathAuthor
Sarah Horvath is one of the home service industry’s most accomplished writers. Her specialties include writing about home warranties, insurance, home improvement and household finances. You can find her writing published through distributors like HouseMethod, Architectural Digest, Good Housekeeping and more. When not writing, she enjoys spending time in her home in Orlando with her fiance and parrot.
Roxanne DownerEditor
Roxanne Downer has more than 15 years as a news, finance and lifestyle writer and editor. A graduate of the University of Pennsylvania, she has previously worked at Deutsche Bank, BNY Mellon, Financial Week and MSN Money.
