Key Points
- Trip cancellation insurance reimburses prepaid, nonrefundable trip expenses if you cancel for a covered reason such as illness, severe weather, or the death of a family member.
- Trip cancellation typically does not cover foreseeable events or situations that could have been avoided, such as storms named before you bought a travel insurance policy.
- Basic travel insurance with trip cancellation coverage costs an average of 4% to 10% of your trip’s total nonrefundable expenses.
Trip cancellation insurance can be a financial lifeline when unexpected events force you to abandon a carefully planned vacation. Whether it’s a sudden illness, a family emergency, or a major storm bearing down on your destination, the right policy can reimburse up to 100% of your nonrefundable travel costs.
Here’s what you need to know before you buy.
What Is Trip Cancellation Insurance?
Trip cancellation insurance reimburses prepaid, nonrefundable trip expenses when you cancel for a reason listed in your policy.
Covered expenses may include:
- Airline tickets
- Cruises
- Hotel reservations
- Tours and excursions
- Vacation rentals
Trip cancellation coverage is often included in a comprehensive travel insurance plan.
What Trip Cancellation Insurance Covers
Most trip cancellation insurance reimburses up to 100% of prepaid, nonrefundable trip expenses if you cancel for a covered reason.
Covered reasons vary by policy but often include:
- Death of a family member, travel companion, or business partner
- Illness or injury of yourself, your traveling companion, or a close family member
- Jury duty, military obligations, or certain work-related situations
- Severe weather and natural disasters
- Terrorist attacks
- Your home or destination becomes uninhabitable due to a natural disaster, burglary, or vandalism.
What Trip Cancellation Insurance Does Not Cover
Trip cancellation insurance won’t cover anything not listed in the policy, and generally excludes foreseeable or preventable events.
Common exclusions include:
- Changing your mind about traveling
- Illness, if you were not medically able to travel when you bought travel insurance
- Storms that were named before you bought a policy
- Travel advisories that happened before you purchased coverage
- War
Cancel for Any Reason Coverage: More Flexibility at a Higher Price
If the list of covered reasons in a standard policy feels too restrictive, cancel for any reason (CFAR) coverage is an optional upgrade worth considering.
CFAR allows you to cancel a trip for any reason not covered by your base policy.
But there are a few key conditions to keep in mind:
- Reimbursement cap. CFAR typically reimburses up to 50% or up to 75% of prepaid, nonrefundable trip costs (not 100% like trip cancellation insurance).
- Timing requirement. It must be purchased shortly after your initial trip deposit.
- Full coverage required. You must insure the full cost of your trip.
- Cancellation window. You must cancel your trip at least 48 hours before departure.
How Much Does Trip Cancellation Insurance Cost?
Travel insurance with trip cancellation coverage generally runs between 4% and 10% of your total prepaid, nonrefundable trip costs. For a trip with $5,000 in nonrefundable expenses, that translates to roughly $200 to $500 in premium, depending on the policy you buy.
The cost of coverage depends on factors including:
- Coverage limits
- Destination
- Number of travelers
- Traveler age
- Trip cost
- Trip length
- Upgrades
When Should You Buy Trip Cancellation Insurance?
You can typically purchase travel insurance up to the day before your departure. However, we recommend buying coverage as soon as you make your first trip payment or deposit.
Purchasing early offers several advantages. Your deposit is protected immediately, you may qualify for time-sensitive benefits, and you may have the option to add CFAR coverage.
SOVENTURE tip: Once an event becomes foreseeable, like a named hurricane, it’s too late to buy trip cancellation coverage for that event. Buying early provides the broadest coverage.
How to Get Trip Cancellation Insurance
Here are some steps to take when considering trip cancellation insurance.
Check Your Credit Card Benefits
Some travel credit cards include trip cancellation protection when you use the card to pay for eligible travel expenses. Review your card’s benefits guide to see what’s covered before purchasing a travel insurance policy.
Compare Policies Online
When comparing travel insurance, don’t only look at price.
To find the best policy for your trip:
- Compare coverage limits
- Compare covered cancellation reasons and exclusions
- Filter policy results based on your needs
- Make sure a policy has the optional upgrades you want
Don’t Overinsure Your Trip
When determining the trip value to insure, only include prepaid, nonrefundable expenses. For example, if your flights are refundable, there is no need to include their value for trip cancellation insurance.
Understand the Free-Look Period
Many insurers offer a free-look period of 14 to 15 days after you buy a policy. Take that time to thoroughly review your policy documents and understand your coverage. If you decide the policy isn’t the right fit for your trip, you can request a refund during that window.
Trip Cancellation vs. Trip Interruption Insurance
These two coverages are similar but distinct:
- Trip cancellation insurance applies before you depart, reimbursing you if you cancel the trip entirely.
- Trip interruption insurance kicks in after your trip has started and can reimburse unused expenses or additional transportation costs if you need to cut the trip short due to a covered event.
Frequently Asked Questions
What Does Trip Cancellation Insurance Cover?
Trip cancellation insurance reimburses prepaid, nonrefundable expenses if you cancel your trip for a covered reason such as illness, severe weather, a death in the family, or certain transportation disruptions.
Does Trip Cancellation Insurance Cover Any Reason for Canceling?
No. Trip cancellation insurance only covers reasons specifically listed in the policy. If you want more flexibility to cancel your trip, consider cancel for any reason coverage.
Does Travel Insurance Cover Hurricanes?
Many travel insurance policies cover hurricane-related cancellations if the policy is purchased before the storm is officially named.
Can I Buy Trip Cancellation Insurance After Booking a Trip?
Yes. You can generally buy coverage until shortly before departure, though purchasing early may provide access to additional benefits and upgrades.
How Much Does Trip Cancellation Insurance Cost?
A comprehensive travel insurance policy with trip cancellation insurance typically costs between 4% and 10% of your trip’s total nonrefundable expenses.
Does My Credit Card Include Trip Cancellation Coverage?
Some travel credit cards include trip cancellation benefits when eligible travel purchases are made with the card. You should review your card’s benefit details carefully to understand what’s covered.
Disclaimer: The information contained in this article serves as a general overview of benefits and should only be used for informational purposes. Refer to your individual certificate of insurance for specific coverages, exclusions and benefits. When in doubt, please contact one of our licensed agents for additional assistance.
