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You always expect things to go precisely to plan when planning a trip. Unfortunately, life events beyond your control could happen anytime, jeopardizing your entire trip. No one wants to spend hundreds or thousands of dollars on a trip only to cancel it at the last minute, especially when the money is non-refundable.
For that reason, it's worth getting protection for travel cancellations. Trip cancellation insurance could help you recoup the money you spent on expensive vacations and trips if you must cancel them due to unforeseen events. According to a 2023 Personal Finance Insider Survey from Business Insider, despite the benefits of trip cancellation coverage, only roughly 13% of travelers it. Continue reading to learn more about trip cancellation coverage, its costs, and what it doesn't cover.
Trip cancellation protection is a form of insurance that covers prepaid, non-refundable travel plans. It includes travel cancellations for flights, hotel reservations, and other prepaid bookings.
You could purchase trip cancellation insurance individually or as part of a comprehensive travel insurance plan. Some premium credit cards may even offer the service for free when you use them to make traveling plans, although their coverage may be quite limited. Regardless of the policy you buy and where you get it from, it will come with detailed explanations of which circumstances it covers and under what conditions.
Usually, insurance companies will reimburse up to 100% of your prepaid vacation costs. Common reimbursement events include sudden inclement weather, the death of a family member or traveling companion, and illness.
Travel insurance may include trip cancellation coverage, trip interruption protection, or both. The difference between the two options is that the first protects you from losing money before the trip begins. Trip interruption protection is for unforeseen problems that develop after you leave for your trip. With trip interruption protection, you could get a reimbursement for a portion of your trip if you must cut your travels short.
Though different insurance policies have different coverages, the following cancellation coverages are among the most common:
Not every situation qualifies for reimbursement, typical exclusions include:
As with any insurance claim, you must follow the appropriate steps to ensure a smooth process with claims approval. To do so, follow these steps:
For the ultimate flexibility, consider upgrading your travel insurance to include Cancel For Any Reason insurance. CFAR insurance is supplemental insurance. Though it won't grant you 100% reimbursement for travel expenses, it could help you recoup up to 75% of your trip.
With CFAR insurance, you must cancel your trip at least two days prior to departure. However, you can withdraw from your trip for any reason.
A potential downside to getting CFAR insurance is the cost. It offers great traveling flexibility and peace of mind, but it could raise your travel insurance premiums by up to 50%.
The cost of a trip cancellation policy depends on the type of insurance plan you get. It's reasonable to expect comprehensive travel insurance with cancellation coverage to cost 5% to 10% of a trip's total cost. Contributing factors for a vacation cancellation policy's price include:
Policies with expensive premiums include other benefits, like medical coverage and lost baggage protection. If you only need cancellation coverage without other benefits, a policy costing 5% or less of your trip's value is reasonable.
At Insurdinary, we pride ourselves on helping travelers find and lock in the best deals on trip insurance. Request a quote today and find the perfect insurance coverage for your trip.