Travel Insurance

What is Trip Cancellation Insurance & How Does it Work?


(Last Updated On: September 2, 2017)

An unexpected sickness, pre-existing medical condition, injury, death in the family, inclement weather, terrorist attack, bankruptcy, almost any unfortunate event can become potential reasons for an individual cancelling a trip they had not only been longing for, but paid up for.

Other than the emergency that led you to cancel your trip, the pain of letting go of all the non-refundable expenses, such as flight and hotel bookings or tour packages, end up having a longer lasting impact than the crisis itself. Is there any solution for this? Can you get your money back? With trip cancellation insurance, you can.

What is Trip Cancellation Insurance?

If you do need to cancel your trip, regardless of what the reason might be, trip cancellation insurance can help you get reimbursed for up to 100% of all prepaid, non-refundable costs you have incurred for the trip. This coverage is also available in almost every comprehensive travel insurance policy.

This type of insurance also reimburses you up to 150% of the unused value of your trip, while also paying the cost of a one-way flight, up to the plan’s limit, in case of trip interruption, if you are injured or fall ill during your trip and need to return home early.

Here is a list of reasons for trip interruption commonly covered by trip cancellation insurance:

  • Hospitalization or death of a non-travelling family member
  • Unexpected illness or injury of the policy holder and/or a travelling companion
  • Unforeseen natural disasters at home or at the destination
  • Weather or common carrier related issues mentioned in the policy
  • A legal obligation, such as being called for jury duty or to appear as a witness in court

However, to claim reimbursement, you will need to provide relevant documentation as proof of why your trip was cancelled due to a specific, unforeseen covered reason.

Opt for “Trip Cancellation for Any Reason” Coverage

When you purchase a standard trip cancellation plan, you are only reimbursed for the pre-paid, non-refundable trip costs, covered in the policy. What if your trip gets cancelled due to a reason that isn’t a part of the ‘covered reasons’? Will you have to end up losing all your hard-earned memory? Not if you have opted for ‘cancel for any reason’ coverage.

The uncertainties of life are what raise the importance of Cancel for Any Reason (CFAR), an optional travel insurance benefit, available on some of travel plans, with extended coverage. It allows you to cancel your trip and reimburses 50% to 100% of the trip costs, depending on the plan you opted for. What’s more, you won’t be questioned about it either.

However, the CFAR benefit has a few eligibility criteria, such as:

  • 100% of your pre-paid, non-refundable trip costs must be insured.
  • Reimbursement is available within 10-30 days of the initial trip payment.
  • The travel supplier should have cancelled the trip 2-3 days before the departure date.

All the best!


Having lived in 3+ countries, worked for companies small and big in USA, Middle East & India, I have a lot of stories to share about international travel, immigration and living as an NRI in the US. Add me on WhatsApp if you have any queries (+001-408-489-4785)

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