Trip Cancellation Coverage in Travel Insurance

Introduction

Trip cancellation coverage is the main part of the travel insurance package. Trip cancellation insurance reimburses you for the pre-paid, non-refundable portion of your trip costs (up to the covered amount) if you need to cancel your trip due to a covered reason. Additionally, trip cancellation coverage would also typically cover a single supplement fee, which is the additional cost of the per person rates due to single occupancy, in case you are not cancelling your trip but your travel companion is.

Trip cancellation coverage starts from the next day of the purchase and lasts until you depart on your trip. Before the scheduled departure, unless you are incapable of doing so, you must notify your travel suppliers and the travel insurance company of the need to cancel your trip. Once you cancel your trip or once you depart, whichever occurs earlier, trip cancellation coverage ends. On the other hand, that is when trip interruption coverage becomes effective, while you are on your trip.

Covered Expenses

While purchasing trip cancellation insurance, many types of pre-paid, non-refundable expenses can be covered, such as:

• Airline tickets
• Cruise line payments
• Tour costs
• Event tickets
• Hotel, rental property or other accommodation costs
• Theme park passes such as for Disney World, Six Flags etc.
• Theater tickets for shows, plays etc.
• Rental car costs
• Shuttle service to the airport

Covered Reasons

Even though the actual reasons for the coverages may vary slightly based on the specific policy you purchase, the following are the usual covered reasons for trip cancellation coverage:

• Felonious Assault:

  You or your traveling companion is a victim of felonious assault within a certain duration before your scheduled departure date.

• Labor Strike:

  Unannounced labor strike disrupts or cancels flights.

• Legal Documents:

  Your passport has been lost or stolen.

• Military Duty:

  You, your traveling companion or family member, who are military personnel, are called to emergency military duty for a natural disaster relief, but not for a war. Similarly, the coverage may apply if the scheduled military leave is cancelled for similar reasons.

• Natural disaster:

  A natural disaster destroys your home, or your intended accommodations at the destination.

• Property Damage:

  Your primary place of residence, your business or your destination accommodations gets vandalized, burglarized or damaged.

• Schedule Conflicts:

  You are unable to go on your trip due to jury duty, court summons, subpoena, or school year extensions.

• Sickness, Injury or Death:

  An injury, illness or death of you, your traveling companion, your traveling or non-traveling family member, your business partner or your destination host. This is the most common reason for trip cancellation.

• Terrorism:

  A terrorist incident that occurs at your destination within a certain number of days (usually 30 days) prior to your scheduled departure date. The same city must not have experienced a terrorist incident usually within 90 days prior to the current incident.

• Traffic Accident:

  You or your traveling companions are involved in a traffic accident while en route to departure. This must be substantiated by a police report.

• Weather:

  You are unable to reach your destination because weather causes complete cessation of the common carrier you were using for transportation (such as the airline) for at least 48 consecutive hours. However, if your purchase the trip cancellation insurance after the potential natural disaster has been forecasted or a storm has been named, there will be no coverage.

• Work Reasons:

  You or your traveling companion are laid off or required to transfer to a different location.

If you need to cancel your trip for the above reasons, you will get 100% reimbursement of your pre-paid, nonrefundable trip costs. Under no circumstances, will you get more reimbursement than the loss you would otherwise incur. It is wise to familiarize yourself with covered reasons for canceling your trip so that you have realistic expectations.

Excluded Reasons

Travel insurance provides trip cancellation coverage as per the reasons listed in a respective policy. Just like the covered reasons, the excluded reasons may vary by policy, but the following reasons are usually excluded from coverage for trip cancellation:

• Medical:

  • Pre-existing medical conditions.
  • If the purpose of the trip is to seek medical treatment.
  • Due to routine medical treatment for an existing medical condition.
  • Pregnancy, child birth or an elective abortion. However, some plans may provide coverage for that and/or provide coverage for complications of pregnancy if it threatens the life of mother or child.
  • Alcohol or substance abuse.
  • Mental or psychological disorders, including depression, anxiety, panic attacks etc.
  • Intentionally self-inflicted injury, suicide or attempted suicide of you, your traveling companion, or insured/non-insured family member.
  • Traveling against the advice of a physician.
  • Illness or injury of a friend or distant relative, rather than an immediate family member.

• Weather:

  Weather is not good enough at the destination.

• Criminal:

  Unlawful acts committed by you, your traveling companion, or insured/non-insured family member.

• Personal:

  • You can no longer afford to go on your trip.
  • You just change your mind and decide not to go on your trip.
  • You feel scared to fly.
  • You don't feel safe to take the trip due to any recent incidents or outbreaks at the destination.
  • Work obligations, including unexpected meeting or job interview.
  • Failure to receive passports or visas on time for your trip.

• General:

  • There are civil riots at the destination.
  • In case of student trip, the school board canceled the trip.
  • Government regulation or prohibition.
  • You were detained by the customs officer at the airport and you missed the flight.
  • Any reason where the trip cancellation is foreseen.
  • You don't have scheduled flight or confirmed reservation and you are flying on standby basis. In that case, travel delays or not being able to travel is foreseeable.
  • Declared or undeclared war.

The above list is not exhaustive. In any case, please do not assume that 'everything is covered'.

Timely Purchase Benefits

Even though certain reasons are normally not covered, they can be covered if you purchase the insurance soon after making your initial trip deposit, ranging from within 7 days to 30 days, depending upon the plan.

• Bankruptcy or Financial Default:

  Your pre-paid travel supplier (such as tour operator, cruise line or airline) completely ceases operations due to insolvency, with or without the filing of bankruptcy. However, it does not include the bankruptcy or financial default of travel agents or other resellers from whom you purchase your trip.

  Some travel insurance plans may not cover certain airlines (including major airlines) or tour operators. Therefore, make sure that the plan you purchase covers the travel supplier you are using.

• Pre-Existing Medical Conditions:

  May cover cancellation due to health reasons if your medical condition is stable for a certain duration (such as 60 days, 90 days or 180 days) prior to your scheduled departure date and there has been no change in the treatment.

• Work Reasons:

  Some plans may include this coverage automatically. Other plans may allow you to add 'cancel for work reasons' coverage at an additional cost.

Cancel for Any Reason

If you are uncomfortable with the named reasons for which the trip cancellation coverage may be obtained, and you feel that you may have to cancel the trip due to other reasons, you can purchase cancel for any reason travel insurance. However, you need to purchase the insurance soon after making your initial trip deposit, and you need to insure the entire trip cost. If you are using the cancel for any reason coverage, it must typically be submitted at least 48 hours before your intended departure date.

Tips

• You can insure an organized tour, cruise or a trip you have planned independently. However, if you are traveling independently you can only insure the pre-paid expenses, such as your airline ticket or any non-refundable reservations.
• Don't wait until it is too late. Buy trip cancellation coverage as soon as you make your initial trip deposit. The more you delay, the higher the chances are that something will happen that will cause you to cancel the trip, as well as you lose the option to purchase benefits you may have wanted.

Conclusion

It is very important to purchase travel insurance that provides trip cancellation coverage if you can not afford to lose the prepaid, nonrefundable trip costs if you had to cancel your trip. You can purchase trip cancellation insurance online by getting instant quotes from multiple insurance companies and comparing them side by side.