What Is Trip Cancellation Insurance?

In some situations, travelers may not have enough trip cancellation insurance.

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One of the leading reasons travelers elect to purchase travel insurance is for trip cancellation benefits. However, many of those who do purchase travel insurance often have a broken understanding of what exactly trip cancellation insurance covers. Is "trip cancellation" truly as all-encompassing as many believe?

Although trip cancellation benefits are one of the most commonly found travel insurance benefits, it is possibly the most misunderstood. While trip cancellation insurance can provide assistance in the worst case scenario, it also comes with a very strict set of rules and regulations. Before canceling your trip and filing a claim for trip cancellation, be sure to understand what this particular benefit will - and won't - cover.

What Is Trip Cancellation Insurance?

Trip cancellation insurance is nearly universally available when purchasing a travel insurance policy. The benefit does exactly what it claims to do: those travelers who are forced to cancel their trip for a qualified reason may have their non-refundable fees reimbursed through a travel insurance claim. Those specific reasons may include (but are not limited to):

  • The death of the traveler, their travel companion, or an immediate family member.
  • An accidental injury immediately before or on the way to their departure
  • An Unforeseen natural weather occurrence at the destination (before being declared a "known event")
  • A legal obligation that will interfere with the trip (such as being called for jury duty or as a witness in a trial).

However, missing from this list of commonly approved trip cancellation situations are many other life-changing situations, Employment obligations, unexpected life events (including pregnancy), and other personal situations may also be excluded from traditional trip cancellation insurance benefits. Those who are concerned about these situations affecting their travels may want to consider adding optional benefits to their plan.

Are Work Reasons Covered Under Trip Cancellation Insurance?

Under some trip cancellation insurance plans, certain employment situations may be covered. Travelers who are unexpectedly laid off or unemployed through no fault of their own may be able to recover their non-refundable deposits through their trip cancellation benefits.

However, other situations may not necessarily be covered under trip cancellation insurance. Travelers who are forced to cancel their trip due to starting a new job or are called into work during a vacation period may not necessarily be covered through trip cancellation. Those who are concerned about their employment may want to consider a travel insurance plan with a "Cancel for Work Reason" benefit. 

Cancel for Work Reasons is often an add-on benefit offered through some travel insurance plans. Adding a Cancel for Work Reasons benefit will add a nominal fee to the overall policy, while adding trip cancellation clauses, including (but not necessarily limited to): 

  • A change of work schedule, forcing the traveler to work during your scheduled trip
  • An unforeseen emergency situation, including natural disaster, fire, or vandalism
  • The traveler's company is involved in an acquisition or merger
  • The company relocates the traveler over 250 miles.

In order to submit a claim through trip cancellation insurance, travelers must provide documented proof of the event taking place. Those who cannot provide documentation run the risk of having their claim denied.

Can I Cancel for Any Reason With Trip Cancellation Insurance?

There are some life situations travelers face which make them uncomfortable about traveling. Whether it is the threat of terrorism, an active winter storm season, or a veterinary emergency, travelers can have many different reasons to consider canceling their next trip. Although trip cancellation insurance may not cover all of these unique situations, a "Cancel for Any Reason" benefit can help travelers reclaim most of their non-refundable trip costs.

In order to add a Cancel for Any Reason benefit to a travel insurance plan, travelers much purchase their travel insurance plan within days of their initial deposit (usually between 14 and 21 days) and pay an additional fee. In addition, travelers must also insure the entire cost of their trip, regardless of any other travel insurance they may have. Once added, travelers have the freedom to cancel their trip for literally any reason. When a claim is filed, travelers may be reimbursed for a portion of their non-refundable trip costs.

The most common Cancel for Any Reason benefits cover between 50 and 75 percent of the non-refundable trip costs.

While trip cancellation insurance may sound like a free pass to cancel travels, modern adventurers need to know what their travel insurance plan actually covers. By knowing what trip cancellation insurance actually covers and the difference in all trip cancellation benefits, travelers can ensure they are buying what they actually need.