Trip Cancellation Coverage Explained

Trip cancellation coverage reimburses prepaid, nonrefundable trip costs when you cancel before departure due to an approved event in your policy, protecting money you've already spent on flights, hotels, cruises, tours, and other reservations you can't recover. Most comprehensive plans include this coverage, which differs from Cancel For Any Reason (CFAR), which offers broader flexibility but reimburses only a portion 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 50-75% of costs but must be purchased within 10-21 days of your initial deposit.

• 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 14-21 days of your first trip deposit. This timing waives pre-existing condition exclusions and covers events that occur 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.

Common covered cancellation events include:

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

These examples show how cancellation works in practice:  

• Illness Before Departure: You develop pneumonia three days before your trip. Your doctor confirms you're unable to 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 unexpectedly 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 underlying reason 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, and when that happens, insurers reimburse only your remaining nonrefundable expenses.

Trip cancellation covers canceled flights when covered reasons prevent your trip. However, travel insurance flight delay and missed connection coverage work differently and appear as separate benefits.

• Flight Delay Coverage: Travel insurance flight delay coverage reimburses meals, accommodations, and essentials when your departure is delayed 6-12 hours or more. This doesn't require canceling your entire trip.
• Missed Connection Coverage: Travel insurance missed connection coverage applies when your first flight's delay causes you to miss your connecting flight. Your policy reimburses accommodation costs, rebooking fees, and meals while you wait for the next available connection.
• Missed Flight Coverage: Travel insurance 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. Your insurer reimburses nonrefundable ticket costs and rebooking expenses.

Trip cancellation coverage costs 5-10% of your total trip cost. A $3,000 trip typically costs $150-$300 to insure. Factors affecting price include your age, trip length, destination, and coverage limits. Plans with CFAR cost 40-60% 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.

When a covered event forces you to cancel, follow these steps:

• 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 an approved reason
• You missed the insurer's filing deadlines
• Pre-existing condition exclusion applies (bought coverage too late)

Note: 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.

Major 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.

Note: Coverage needs also vary by destination. Travelers to countries like Thailand or Japan should review destination-specific considerations when selecting trip cancellation limits.