In This Article: What’s Covered | What’s Not Covered | Cost | How to Get | Bottom Line | FAQs
Travel insurance has exploded in popularity following the coronavirus pandemic and the litany of canceled vacations and trips that came with it. If you’re feeling excited but hesitant to begin your next globetrotting adventure, you might consider protecting yourself with trip cancellation insurance.
Travel insurance plans are available from major insurance providers to protect you financially from unexpected changes in plans. Read on to learn everything you need to know about protecting your travel plans from unexpected cancellations.
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 preexisting 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 circumstances. 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’s 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 reimbursement. 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 reimbursement 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 circumstances 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
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 Home Media reviews 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.*
*Quotes were received using the details above from each company’s website on July 17, 2022.
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.
The Bottom Line: 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.
