Travel insurance protects you from a variety of financial risks and losses that can happen before and while you are traveling. These losses can be minor, like a lost passport or suitcase, or significant, like a medical emergency overseas.
Besides offering you financial protection, another benefit of travel insurance is access to assistant services anywhere in the world.
Types of Travel Insurance
As with any insurance, there are varying levels of coverage and reimbursement options. The two main types of travel insurance are:
- Trip Cancellation
- Foreign Medical Coverage
But you can also find policies that cover lost luggage, kidnapping, and countless other things that could go wrong while you are traveling.
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, we recommend that you understand what trip cancellation insurance will—and won’t—cover.
Trip cancellation insurance reimburses you (up to the covered amount) for pre-paid, nonrefundable travel expenses if you have to cancel your trip for a covered reason.
In other words, if you’ve bought nonrefundable airline tickets, prepaid a hotel, car rental, and other types of reservations, and you have to cancel the trip, trip cancellation insurance will reimburse you for a percentage of what you’ve spent.
Trip cancellation and emergency travel insurance coverage go into effect before you’ve even left the house. This benefit also pays for a traveling companion’s trip cancellation costs even if your trip does not suffer the same fate.
Trip Cancellation Coverage
Each provider defines what is covered under its trip cancellation policy.
The most common acceptable reasons include:
- death of the traveler, their travel companion or an immediate family member
- illness
- sudden business conflicts
- weather-related issues
Other common reasons for trip cancellations are:
- family or medical emergency
- death of a family member or host
- a hurricane bearing down on your destination
- the tour operator or cruise line going out of business
- traffic accidents
- assaults
- work conflicts
- theft or loss of passports or visas
- bankruptcy or financial default
- terrorism or mandatory evacuations
- schedule conflicts
Trip cancellation will cover you for the reasons stated above under the stipulations outlined in your policy.
In order to submit a travel insurance claim, you need to provide documented proof of the event or situation taking place and thorough documentation of every cost associated with your trip.
You must also account for any refunds you’ve already received, which includes all invoices and itemized bills, refund evidence from a travel agent, hotel, property managers or Airbnb, officially documented reason for the cancellation, originals of unused tickets, and letters from tour operators or travel agents enumerating non-refundable costs and reasons.
What’s NOT Covered?
Missing from the list above are other unforeseen events. This means that if the insurance plan doesn’t list an event, the cancellation won’t be covered.
All companies offer different coverage that may or may not include the following:
Hurricane Season
If you planned and paid for your trip when there was a storm in the vicinity that had already been named, your claim will be denied. Travel insurance is designed to protect you from unforeseen and sudden events.
Doctor Examination
If you or someone you are traveling with becomes too ill to travel, this is a valid reason to cancel your trip and receive a reimbursement from your insurer.
However, a doctor must examine you BEFORE you initiate the claim and complete a physician statement form. If you are not feeling well and cancel the trip without seeing a doctor, the claim will be denied.
Not Enough Time Passed To Qualify As A Delay
Generally, travel insurance will only cover significant delays that affect at least 50% or more of your trip. So, if you get frustrated at an airport delay, you will need to be stuck at the airport for a significant amount of time for the travel insurance to honor the claim.
Veterinary Situations
Generally, many travel insurance policies do not view veterinary situations as acceptable circumstances to cancel a trip, including rescheduling a trip because an airline cannot accommodate a pet.
In this case, you should consider adding a Cancel for Any Reason policy to your insurance plan (more on that below).
Other reasons where trip cancellation insurance won’t cover you are:
- you feel taking the trip would be unsafe
- there are civil riots at your destination
- mental or psychological disorders such as anxiety or depression
- you, your traveling companion or family member committed an unlawful act
It’s important to note, however, that some companies offer Cancel for Any Reason coverage at an additional cost, which would cover for the situations mentioned above.
Cancel for Any Reason Coverage
Cancel for Any Reason Coverage is an optional travel insurance benefit. With this, it doesn’t matter why you have to cancel your trip—you just can. However, it is subject to some restrictions.
In order to get the trip cancellation coverage under the Cancel for Any Reason benefit you must:
- purchase your travel insurance plan within days of your initial deposit (usually between 14 and 21 days) and pay an additional fee
- insure 100% of your prepaid, nonrefundable trip cost regardless of any other travel insurance you might have
- cancel with the travel supplier 48 to 72 hours before your departure date (depending on the plan)
Once added, you can cancel your trip for any reason. When the claim is filed, you may be reimbursed for a portion of your nonrefundable trip, usually between 50 and 75 percent of its cost.
However, bear in mind that it may cost extra to upgrade the travel insurance to Cancel for Any Reason.
In addition, some travel insurance providers have different policies regarding pre-existing medical conditions.
Some do not allow for them at all, and some allow for them provided it’s documented that they’ve been under control for a certain amount of time. Still, other policies will allow you to pay extra so that all pre-existing conditions are covered.
Plan Before You Travel
Before you start packing, there are a few other important things that you should know about trip cancellation insurance:
- The effective date for trip cancellation coverage begins at 12:01 a.m. the day after the premium is paid.
- The coverage ends at the earliest of either: the cancellation of your trip, or the date and time you start your trip.
- In order to cancel your trip, you must notify the plan provider before your trip departure (unless you are incapable of doing so)
We know that travel insurance can be complicated, but in many cases, it can also be a financial blessing (especially for large, nonrefundable travel expenses). Depending on your travel plan, trip cancellation protection can safeguard your investment and give you peace of mind.
If you are planning a trip and are thinking about adding trip cancellation coverage, it is essential that you familiarize yourself with different policies and read all the terms and conditions before buying a plan.