Trip Cancellation Coverage Explained

Trip cancellation coverage reimburses prepaid, nonrefundable trip costs when you cancel before departure due to a covered event: flights, hotels, cruises, tours and other reservations you can't recover. Most comprehensive plans include this coverage. Cancel for any reason (CFAR) is a separate upgrade that lets you cancel for any reason but reimburses only 50% to 75% of costs.

Trip cancellation coverage comes in two forms: standard cancellation (included in most comprehensive plans) and cancel for any reason (CFAR), an optional upgrade that reimburses 50% to 75% of costs but must be purchased within 10 to 21 days of your initial deposit (timeframes vary by insurer).

• Match your coverage to your trip cost: Your coverage limit should equal your total prepaid trip cost, not just deposits. A $2,000 cruise with a $200 deposit requires $2,000 in coverage. Underinsuring results in reduced or denied claims.
• When to buy: Purchase within 14 to 21 days of your first trip deposit. This timing waives pre-existing condition exclusions and covers events after purchase. Coverage doesn't apply to situations already underway when you buy the policy.

Trip cancellation reimburses the nonrefundable portion of prepaid expenses: airline tickets, hotel or rental accommodations, cruise fare, prepaid tours, excursions and prepaid transport arrangements. If part of your booking is refundable, your insurer reimburses only the unrecoverable portion.

*Your insurer won't cover unlisted reasons unless you purchased CFAR.

• Illness before departure: You develop pneumonia three days before your trip. Your doctor confirms you can't travel. Trip cancellation reimburses your prepaid hotel and flights.
• Weather shutdown: A blizzard closes your airport, and the airline cancels your flight. You're reimbursed for all prepaid, nonrefundable costs.
• Supplier bankruptcy: When a cruise line suspends operations, supplier default coverage (if included in your plan) reimburses your nonrefundable fare.

Travel insurance reimburses nonrefundable costs when a canceled flight prevents your trip and the cause matches your policy coverage. Weather-related airport closures, airline bankruptcy, mandatory evacuation orders and illness preventing you from flying all qualify for reimbursement. Airlines sometimes refund tickets directly. When that happens, insurers reimburse only your remaining nonrefundable expenses.

Trip cancellation covers canceled flights when covered reasons prevent your trip. Flight delay and missed connection coverage are separate benefits.

• Flight delay coverage: Reimburses meals, accommodations and essentials when your departure is delayed six to 12 hours or more
• Missed connection coverage: Applies when your first flight's delay causes you to miss your connecting flight. Covers accommodation costs, rebooking fees and meals while you wait for the next available connection
• Missed flight coverage: Covers missed flights when a covered reason causes you to miss your departure, such as a car accident en route to the airport or a medical emergency. Covers nonrefundable ticket costs and rebooking expenses

Trip cancellation coverage costs 5% to 10% of your total trip cost. A $3,000 trip costs $150 to $300 to insure. Your age, trip length, destination and coverage limits affect the price. Plans with CFAR cost 40% to 60% more than standard coverage.

Trip cancellation coverage benefits you when you're paying large nonrefundable deposits, traveling during hurricane or winter storm seasons, booking cruises or fixed-schedule tours or managing family medical concerns that could force cancellation.

Skip this coverage when your bookings are fully refundable, you booked with returnable points, your trip is inexpensive or last-minute or you're comfortable absorbing a potential loss.

• You canceled before verifying your situation was covered
• Missing medical documentation proving you can't travel
• Underinsuring by covering only part of your trip cost
• The weather didn't actually prevent travel
• Fear of traveling instead of a covered reason
• You missed the insurer's filing deadlines
• Pre-existing condition exclusion applies (bought coverage too late)

*Policies list these as separate benefits with different limits. Some situations qualify for interruption coverage instead of cancellation, especially if problems arise after your trip begins.

Travel insurance providers include trip cancellation coverage in their comprehensive plans. Coverage terms, limits and optional upgrades like CFAR vary by provider and plan level.

*Trip cancellation limits vary by destination. Travelers to countries like Thailand or Japan need higher limits due to expensive flights and accommodations.