COVID-19 has forever changed the way we travel. While the world is yet to recover from the devastating impact of the pandemic, the “new normal” for travel is a flurry of ever-changing restriction policies, scrupulous safety protocols and guidelines, and strict requirements for travellers. It’s riskier to travel now more than ever–which means it’s also more important than ever to keep yourself protected.
Travel insurance providers are just catching up in the face of all the uncertainty brought about by the pandemic. Depending upon factors such as your flight carrier, accommodation, or tour operator, cancellation fees may apply (and in some cases, no refunds are given at all). Recognizing that trip cancellations or interruptions can be both financially and mentally straining, travel insurance providers have stepped up their cancellation cover policies. But what exactly does it mean for you? Here’s everything you need to know about trip cancellation insurance cover.
What is trip cancellation insurance?
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Your travel insurance cancellation cover should be your safety net when your travel plans fall through for reasons beyond your control. This means your prepaid, forfeited, and non-refundable expenses will be reimbursed if you need to cancel your trip because of unforeseen and unintentional reasons. Let’s take a closer look at two benefits that will cover a canceled trip:
Trip cancellation cover is a basic offering in every comprehensive travel insurance policy, although the terms and extent of coverage may vary between policies. Simply, it covers the prepaid, non-refundable costs of your trip, along with any cancellation fees that may apply. This is particularly important if you’re flying (the majority of airlines have a 100% penalty for tickets regardless of departure date), or if you’re going on a cruise (significant penalties apply more than 90 days before departure).
While trip cancellation policies cover unforeseen circumstances, please do note that COVID-19 is regarded as a foreseen event, having been declared by the World Health Organization (WHO) as a pandemic in March 2020. Therefore, we recommend that you always read your policy very closely to understand what is covered before making your purchase.
What is cancel for any reason (CFAR)?
CFAR is usually added on top of your insurance policy, at an extra charge. With this benefit, the reason for cancelling your trip doesn’t matter. If, for instance, you feel uncomfortable with the rising number of COVID-19 cases where you’re heading to and want to cancel your trip, it guarantees that you would still be covered. The downside is that this added policy is generally more expensive (an additional 40-60% of your base policy) and the percentage of coverage can vary across policies (typically only 50-75% of your prepaid and non-refundable trip cost will be reimbursed). For some, this additional cost may not be worth it (and the trip cancellation cover is sufficient). We recommend researching different insurance companies and their CFAR policies before making your decision.
What does trip cancellation insurance cover?
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With trip cancellation insurance, you will be able to recover prepaid, non-refundable expenses from your trip. This includes flights, visas, accommodations, tours, and prepaid meals. Depending on your policy, you might also be able to recover fees charged by travel agencies, if you booked your trip through them.
Certain providers have devised more comprehensive plans in the wake of COVID-19, including benefits in case you contract the virus before or during your trip, as well as if you’re required to be quarantined. However, do note that these policies often require detailed documentation and that some benefits are not automatically triggered once you test positive for the virus. You must to read your insurance policy thoroughly and contact your provider for updated information.
While it may vary from policy to policy, there are a few scenarios generally covered by most trip cancellation insurance plans. These include the following:
- Medical conditions that are unforeseen and serious, causing you or your travel companion to be unfit for travel
- Death of either you, your travel companion, or a non-traveling immediate family member
- Unforeseen inclement weather or natural disasters at home or at the destination
- Strikes or severe weather conditions that result in travel services being unable to operate (i.e. cancelled flights)
- Terrorist incidents at home or at the destination
- Unanticipated legal obligations (i.e. jury duty)
You may also want to read about whether trip interruption benefit and trip delay coverage is included in your trip cancellation policy. A trip interruption benefit may help cover costs if your trip is cut short due to a scenario covered by your policy. A trip delay coverage may help with short-term unforeseen travel delays, like costs for transportation, accommodations, and even meals.
Read the fine print
Injuries and illnesses, especially COVID-19, are unavoidable no matter how careful we are so it’s very important that your travel insurance has a cancellation policy. But because policies vary from company to company, and because there are several factors to consider (when the trip is cancelled, the reason for cancelling the trip, and so forth), it’s always important to review the cancellation policy very carefully. Make sure to read the covered reasons and exclusion clauses closely. Also, take note that policies with more cancellation cover tend to be more expensive.
What is not covered by trip cancellation insurance?
Key to understanding what trip cancellation insurance does not cover is determining the difference between unforeseeable and foreseeable events. Essentially, a foreseeable event is a situation that was expected before it happened. Typical scenarios include the following:
- Financial default of a carrier (such as an airline)
- Pregnancy, childbirth or elective abortion
- Mental or psychological disorders such as anxiety or depression
- Alcohol or substance use or abuse
- Intentional self-inflicted injury, suicide, or attempted suicide
- Civil unrest or riots at the destination city
How to submit a claim
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If your policy covers cancellation, the travel insurance provider will assess a claim’s payment for any prepaid expenses. While every company has different requirements for filing claims, most companies will request you to submit supporting documentation (i.e. booking receipts, letters from your doctor/consultant, medical records, and others) to process your reimbursement.
Before you cancel your trip, make sure to read through your plan so that you have an understanding of its terms and definitions. It’s also important to officially inform your travel provider of your cancellation as soon as you can. Once you’ve gathered all relevant documentation, you can submit your claim, and your insurance provider will ask you further details about the incidents or reasons for your cancellation.
Reasons your claim can be denied
Circumstances for cancelling a trip can vary. It’s best to be prepared by knowing the steps and documentation required in case you need to cancel your trip and file a claim. Claims can, however, be denied for certain reasons. For instance, your claim can be denied if you buy your travel insurance when a weather disturbance has been forecasted around the time of your trip. It may also be denied because of lapses on your part, including failing to provide the necessary documents, failing to read the terms and conditions of your insurance plan, or failing to consult a doctor beforehand if the cancellation is health-related.
How much does trip cancellation insurance cost?
Costs will always vary from company to company, but generally, basic travel insurance can cost you anywhere from 4% to 10% of your trip. Let’s say you’re planning a 10-day tour around Spain, costing you around 8,000 USD. You can expect to pay between 320 - 800 USD for travel insurance for that trip.
Meanwhile, availing CFAR is typically more expensive; as it’s an add-on, it will cost around an additional 40% to 60% of your base policy.
Other than the overall cost of your trip, some factors that might affect the cost of your travel insurance are the following:
- Age of the travellers (those aged over 65 can especially expect increased rates, while minors can be added at no additional cost or at lower rate.)
- Number of travellers (the more travellers on your trip, the higher the rates)
- Duration of trip (a longer trip can increase rates as there’s more risk)
- Type of coverage (i.e. with CFAR or without)
Is getting trip cancellation insurance cover or CFAR worth it?
While you may feel unsure about purchasing trip cancellation insurance because of the additional costs, it is actually especially beneficial to have if you’re on a tight budget. In case any unforeseeable event occurs before your trip, you can rest assured that your costs will be covered.
Some feel that the additional cost for CFAR is not worth it. However, if you want total flexibility, and given the circumstances of traveling in the time of a pandemic, you should consider purchasing CFA in case you have a change of heart about your trip. Remember that the pandemic is seen as a foreseeable circumstance, and is thus not covered by most travel insurance policies–not to be confused, however, with contracting COVID-19 (in which case, trip cancellation cover applies).
Like most destinations, with trip cancellation insurance in Canada, you will be reimbursed for trip expenses that are prepaid, non-refundable, and non-transferable, if the trip is cancelled or interrupted due to covered reasons specified by the insurance policy. Some popular travel insurances in Canada are Allianz Canada and World Nomads.
Trip cancellation insurance in the US works the same as it does in Canada, with the policy covering prepaid, non-refundable, and non-transferable costs in case the trip is canceled for covered situations. Some popular travel insurances include Allianz, World Nomads, Travelex, Generali, and Insuremytrip.
It’s important to get to know your options before availing a travel insurance plan with trip cancellation cover. Try to get quotations from multiple insurance companies so you can easily compare the pros and cons in terms of cost and value. And, of course, make sure to go through the terms as carefully as you can before you arrive at a decision.
Here are some of the leading travel insurance companies to give you a headstart:
Allianz Global Assistance provides cancellation cover for up to 28 covered reasons, depending on the plan you select, from plans with little prepaid costs to more comprehensive coverage.
Along with travel cancellation cover, Insuremytrip also offers Cancel for Any Reason coverage, which is the only type of coverage under the provider that takes updated policies on COVID-10 into consideration.
World Nomads offers plans with travel cancellation cover, but do note that this does not apply in countries or parts of countries with travel bans. Be sure to check their FAQs and travel updates for more details.
Bonus: Check your credit cards
Some banks issue trip cancellation insurance with credit cards. Check which covered situations your bank specifies in their terms. Also, as most policies on COVID-19 vary, be sure to contact your bank.
Travel safe and secure
Certainly no one would want their travel plans to fall through, especially with the preparation and extra measures that come with traveling these days. But in this age of uncertainty, a little caution can make a world of a difference. Do check out the websites of the individual providers for more details.
1. How does cancel for any reason (CFAR) work?
Cancel for any reason (CFAR) is an add-on benefit that allows you to cancel your trip 2-3 days before your departure date and be reimbursed for 50-75% (depending on your policy) of your pre-paid and non-refundable trip costs.
2. Can I add CFAR at any time?
No. You generally need to buy CFAR soon after purchasing your travel insurance. Most travel insurance companies require you to buy CFAR within 14 - 21 days of the first trip booking, and cancellation of the trip must be at least 2-3 days prior to the departure date.
3. Can I cancel my trip using CFAR due to COVID-19?
Yes, definitely. If there’s an outbreak at your departure point or destination, you are covered if you have CFAR on your policy and will be reimbursed if you decide to cancel your trip. You can also cancel your trip with CFAR if you are simply concerned about COVID-19. Do note that with CFAR, generally only 50-75% of your prepaid and non-refundable trip cost will be reimbursed.
4. What if I don’t have CFAR coverage and want to cancel my trip because of COVID-19?
If you contract COVID-19 before or during your trip, you will be covered by regular trip cancellation insurance. However, cancelling your trip due to the pandemic (for example outbreaks at destination, general fear of travelling or contracting the virus) is not covered in regular trip cancellation insurance.
Note: The WHO declared COVID-19 as a pandemic in March 2020, so the pandemic is seen as a foreseeable event and therefore not covered by trip cancellation insurance.
5. Is fear of travelling covered by travel insurance?
If you decide to cancel your trip due to fear of travelling or fear of contracting COVID-19, you will not be covered by regular trip cancellation insurance.
6. When is the best time to buy travel insurance?
You should purchase your travel insurance within 15 days’ of making your first booking for the trip (whether it be airfare or accommodation). That way, you can maximise the coverage period in case you need to cancel your trip at any point. Some travel insurance companies also include bonus benefits if you purchase a policy within this 15-day period.
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