Should You Purchase Trip Cancellation Insurance Before Your Next Trip?
Nervous about making travel plans? Here are some things you should know about trip cancellation insurance.
Many of us are nervous about making long-range travel plans. Some of the reasons that give us pause: excessive heat, fires, and terrorism in so many places around the world. And yes, COVID is still around.
Because canceling a trip can be costly, many travelers may want to examine their travel insurance options.
Various kinds of travel insurance are available–including flight insurance, medical travel insurance, trip interruption insurance, and evacuation coverage—but “trip cancellation and interruption policies” are the ones that might be considered by ambivalent travelers who want an “out” should circumstances change or worsen.
Like most insurance policies, it’s hard to decipher the value of trip cancellation and interruption policies. Based on my reading, here are six things you should consider before purchasing a policy:
1) Travel cancellation insurance only covers certain listed unforeseen events, not those already known at the time the insurance is purchased.
2) Unlike other travel insurance policies that begin when you embark on your trip, trip cancellation insurance begins after midnight on the day the policy is purchased.
3) Standard cancellation policies don’t cover “imminent” threats. The U.S. State Department has to declare that an actual terrorist attack has taken place in a city listed on your itinerary, one that occurred within 30 days of your scheduled departure date.
4) Cancel For Any Reason (CFAR) insurance (an upgrade to travel cancellation insurance) is the only type of insurance that allows travelers to cancel an upcoming trip with a reduced financial loss because they are concerned or anxious about a heightened terrorist threat.
5) CFAR policies generally must be purchased within a certain number of days after making an initial trip deposit.
6) Terms, conditions, limitations and exclusions of various CFAR policies differ so be sure to read the fine print and compare plans. If you are still unclear, raise your questions to a representative of the company offering you the insurance and ask for the answers in writing. (For example, find out specifics such as the permissible time window for canceling the trip before your departure (e.g., generally 48 hours); the proportion of the prepaid, non-refundable costs of the trip for which you’ll be reimbursed; and any maximum per person limits.)
As one might expect, travelers can expect to pay a high cost for this type of fail-safe trip cancellation insurance coverage (CFAR).
Sources: Insure My Trip, Trip Insurance Store, Squaremouth
Also on the Web: Travel Insurance and Terrorism
Interesting – we hadn’t heard of CFAR cancellation insurance. Of course, we have travel medical insurance (an absolute necessity). But cancellation and interruption insurance may not be worth it. For example, with an airline ticket, if you cancel a “non-refundable” ticket before leaving, you lose some $200 or $300 of the ticket as a penalty, but usually have a year to re-use the remaining value on an another flight. With hotels, you may have up to 24 hours in advance to cancel. If it’s a full-on packaged tour, the cancellation penalties may be different, and it may be worth it if it’s not possible to re-book (with penalty) at a later date.
I recently read that some chain hotels are becoming more restrictive about cancellation policies 🙁