What is Trip Cancellation Insurance?
Trip cancellation insurance is a policy that is designed to protect you from paying all or part of the cost of your trip, in case the trip is cancelled or cut short. There are quite a few reasons why this may occur, such as:
- Illness preventing travel
- Family medical emergency
- Flight cancellation due to weather
- Jury duty summons
- Bankruptcy of tour operator, airline, or resorts
- Natural disaster at home
- Travel advisory regarding destination
- Travel interruption
With trip cancellation insurance you aren’t financially responsible for your trip if an insured incident prevents you from going away or staying the entire duration of your vacation.
When to Buy Trip Cancellation Insurance
Most policies require that you purchase trip cancellation insurance at least 48 hours before you are scheduled to depart, or within a certain amount of time after you purchase your trip. However, there are a few insurance companies that may waive this clause if you are willing to sign a statement affirming that you know of no reason at the time of purchase why the trip would be cancelled (ie: you are in good health).
What does the Policy Cover?
Generally, if you have to cancel your entire trip then your insurance policy will cover the non-refundable portion of the cost of your trip, including airfare, hotel, tours, and taxes. It is important that travellers find out exactly how much of their trip is non-refundable prior to purchasing a policy; otherwise they may find themselves having to pay for the difference.
These policies typically include a trip interruption policy, which provides coverage if something should happen to disrupt your trip. Situations that can occur include missing a flight connection or a medical emergency that forces you to return home early. Sometimes this type of policy can be purchased on its own, which may be ideal if your trip is already fully refundable before departure, or if you used rewards points to buy it. Trip interruption insurance is a great idea to protect travellers from the costs associated with flight cancellations and carrier bankruptcy.
What Additional Coverage Can Trip Cancellation Insurance Provide?
Some policies may also cover loss of baggage or baggage delay, which is important for any airline flights – especially if you are travelling on more than one plane. Losing your baggage or having it arrive days later is a significant inconvenience for most trips, and the costs to replace your belongings can be substantial. This can be the case even if they find your bag and it arrives late – especially when purchasing your replacements in a foreign country in conditions that may seem like a small emergency. Generally the cost for baggage coverage is only a small addition to the cost of your travel insurance, and can provide up to $2000 worth of coverage (sometimes more) in case your baggage doesn’t arrive when and where you do!
Other riders that can be added to the trip cancellation insurance policy can include accidental death and dismemberment, and flight accident coverage. These may be good options to consider for travellers who don’t already have accidental death and dismemberment coverage or life insurance through another policy.
What about Multiple Trips?
For travellers who are planning two or more separate trips outside of the country, it may be a good idea to purchase an annual travel insurance policy. The same coverage for trip cancellation is typically provided as with a single trip policy, however the cost of the policy, when spread over the number of trips that will be covered usually works out to be less per trip. Purchasing an annual policy also reduces the amount of time and effort required to secure coverage for each trip – as a single policy will cover each trip. This can be especially convenient for travellers who travel last minute and may not meet the minimum time requirements for purchasing single policies for each trip.
Combining Trip Cancellation Insurance with Medical Travel Insurance
Insurance companies that offer both types of policies typically offer a combined or comprehensive travel policy that offers both types of coverage. Most of the time it is less expensive to purchase both policies together so that you and any travel companions will be fully covered in case of a cancellation, interruption, or medical emergency while you’re away. As with all types of insurance, when you purchase insurance policies together can save you money on both policies, letting you compound your savings and spend a little more while you’re enjoying your trip!