What is Trip Cancellation Insurance & How Does it Work?

An unexpected sickness, pre-existing medical condition, injury, death in the family, inclement weather, terrorist attack, bankruptcy, or 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?

Trip cancellation insurance is a type of travel insurance that reimburses you for non-refundable expenses if you are forced to cancel or interrupt your trip due to certain unforeseen circumstances such as illness, injury, severe weather, and other covered events.

It may also cover additional expenses incurred while you are away, such as medical costs, lost luggage, and emergency transportation.

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-traveling family member
  • Unexpected illness or injury of the policyholder and/or a traveling companion
  • Unforeseen natural disasters at home or at the destination
  • Whether or common carrier-related issues mentioned in the policy
  • A legal obligation, such as being called for jury duty or appearing 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.

Also read: Best trip cancellation insurance

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Cancel for Any Reason insurance

Cancel for Any Reason insurance is an optional travel insurance coverage that provides reimbursement of up to 75% of your non-refundable trip costs in the event you need to cancel a trip for any reason, such as sickness, job loss, or family emergency.

This coverage is typically offered in addition to standard Trip Cancellation insurance.

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 travel plans, with extended coverage.

It allows you to cancel your trip and reimburse 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.

What is considered trip cancellation?

Trip cancellation is when a traveler cancels a trip before departure for a variety of reasons, such as illness, job loss, weather-related issues, or a change in personal plans. It may also include when a traveler is unable to take the trip due to an emergency. Cancellation usually results in a partial or full refund of the cost of the trip.

What does trip Cancellation Cover in travel insurance?

Trip cancellation coverage in travel insurance typically reimburses you for nonrefundable trip deposits and/or prepaid trip costs if you need to cancel your trip due to certain covered reasons such as:

  • Illness, injury, or death of you, a family member, or a traveling companion
  • Natural disasters or other unexpected events that prevent you from traveling
  • Bankruptcy or financial default of the travel company
  • Mandatory jury duty or military service
  • Job loss or layoff
  • Terrorism or other security risks

What is the difference between trip cancellation and trip interruption insurance?

Trip cancellation insurance is designed to protect travelers from the financial losses associated with canceling a trip before it begins.

It typically covers pre-paid, non-refundable expenses such as airfare, hotel bookings, tours, and more in the event of an illness, injury, or another covered event.

Trip interruption insurance covers travelers who have already started their trip and have had to cut it short for reasons outside of their control, such as illness, injury, weather, or natural disasters.

This type of coverage reimburses travelers for any pre-paid, non-refundable expenses that were lost due to the interruption, such as the cost of the unused portion of the trip, transportation home, and other costs.

Does trip cancellation insurance cover canceled flights?

It depends on the policy. Generally, trip cancellation insurance covers canceled flights, but you should check with your insurer to see if your particular policy includes coverage for canceled flights.

All the best!

Recommended Plan For Your Travel

Safe Travels

Best for Visitors
Economical Plan
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Pre-Existing Conditions
First Health Network


Atlas America

Rated “A – Excellent”
COVID19 included
Covers Medical
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Trip Cancellation
Full Refund on Cancel

Mani Karthik

About the Author

Mani Karthik

Ex “NRI” and Founder of the “Back to India” movement. I share my experience about immigrating to USA here.

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