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If you enjoy traveling often—or you book expensive vacations—you may have considered purchasing a travel insurance policy in case you have to cancel your trip. Trip cancellation insurance is one of the most popular types of travel insurance: 76% of travel insurance policies purchased in 2023 included trip cancellation benefits, according to Forbes Advisor’s analysis of travel insurance purchase data.
While trip cancellation insurance can help reimburse you in the event you have to cancel your trip, it won’t cover every possible problem. Before you purchase a policy it’s important to understand what it does and doesn’t cover.
Best Cancel For Any Reason Travel Insurance
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AXA Assistance USA
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2
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3
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What Is Trip Cancellation Insurance?
If you’re unable to take a trip due to an unforeseeable event, a trip cancellation policy will reimburse you for your prepaid, forfeited and non-refundable costs. Depending on the travel insurance plan, your policy will help cover costs up to the time and date of your departure.
Trip cancellation insurance is often sold as an optional coverage to a base travel insurance policy, but some travel insurance companies sell trip cancellation as a standalone policy. Some basic trip cancellation policies allow you to purchase additional coverage types, such as “cancel for any reason” travel insurance.
What Does Trip Cancellation Insurance Cover?
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 (by order of licensed physician).
- The death of you or your traveling companion, or the death of a non-traveling 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.
- A legal obligation such as jury duty or being served with a court order or subpoena.
Also noteworthy is that some trip cancellation insurance policies may 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.
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.
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What’s Not Covered By Trip Cancellation Insurance?
While every traveler may have a unique circumstance for canceling 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. Essentially, if you’re purchasing a policy with a certain situation in mind or an expected problem, it’s likely a foreseeable event.
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. Depending on the policy, 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
- Participation in amateur or professional sporting events and training
- Financial default of a carrier (such as an airline)
How Much Does Trip Cancellation Insurance Cost?
If you purchase a basic travel insurance policy that includes trip cancellation coverage, you can expect to pay between 5% 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.
Buying a policy with a “cancel for any reason” travel insurance upgrade typically adds 50% more to your travel insurance cost.
There are several other factors that can influence the cost of a policy:
- Age of travelers: 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 travelers: 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.
Is Trip Cancellation Insurance Worth It?
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 travelers who are concerned about safeguarding the money spent on a trip based on unforseen events such as natural disasters, an uncertain employment situation or a health condition.
“I recommend travel insurance to everyone because it’s designed to protect travelers from things they do not expect to happen leading up to a trip,” says Cassandra Brooklyn, founder of EscapingNY, an international tour operator specializing in small group tours.
Keep in mind, trip cancellation insurance only pays for problems listed in the policy. It won’t cover changing your mind or foreseeable events, such as a pandemic that was already known.
If you purchase a basic trip cancellation policy, you might not have other types of travel insurance coverage, like emergency medical coverage or lost/damaged bagged benefits. You may be able to add these types of coverages, depending on the travel insurance company.
But 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.
“If a comprehensive plan isn’t in the budget, buying a trip cancellation policy is better than not buying a policy at all,” says Brooklyn.
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How Do I Get Travel Cancellation Insurance?
If you want to look at travel cancellation insurance options, here are some starting points:
- Allianz One Trip Cancellation Plus Plan
- April Travel Protection Trip Cancellation Plan
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 we’ve found policies that give a 10-day free look and others that allow up to 21 days.
