What Trip Cancellation Insurance Really Covers

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When planning a trip or vacation, there are a lot of things to think about.

You have to book flights. You have to find the right hotel or hostel. You probably are spending some time looking at tours or reading “must do” lists for wherever you are going.

By the time you are done planning a vacation, you might need a vacation.

One thing that always needs to be on your vacation to do list – purchase travel insurance. Frankly, it doesn’t matter where you are going. Travel insurance is always a good idea.

Most people think of travel insurance as covering unexpected medical costs while on vacation. Buying travel medical insurance for Canadians, Americans, and other travelers is very common. However, medical travel insurance is not the only type of travel insurance you might want to consider.

The more time and effort you put into planning your trip, the more you’ll want to consider getting trip cancellation insurance too.

What is Trip Cancellation Insurance?

When planning a trip, you always hope everything will go smoothly. Unfortunately, that’s not always the case. Things happen – accidents, emergencies, extreme weather – and that’s why travel insurance is so valuable.

Trip cancellation insurance, specifically, is there to protect you in case you have to cancel a trip.

When planning a vacation, there are a lot of upfront costs. You might have to purchase a flight, put down a tour deposit, book a non-refundable hotel, etc. If you have to cancel your trip, you won’t be able to get back a lot of this money.

That is, unless you have trip cancelation insurance. This type of insurance helps reimburse some or all of these upfront costs if you have to cancel a trip.

When to Purchase Trip Cancellation Insurance

Now that you know what trip cancellation insurance is, let’s talk about when to purchase it.

First, research if you might already be covered. Some Canadian and US credit card companies add “travel insurance” as a benefit for customers. However, trip cancellation insurance isn’t usually included in the actual terms.

Second, if you have already purchased a travel insurance policy, check to see if cancelation insurance is part of the package. If you purchased a basic medical travel insurance, cancelation coverage is likely not included. However, many companies bundle their coverage with medical, interruption, and trip cancellation insurance all included for one price.

If you don’t have trip cancelation insurance yet and you aren’t covered by an existing policy, you want to make your purchase soon!

Trip cancelation insurance should, ideally, be purchased at the same time or within a few days of booking any major trip expense. This includes booking a flight or making a deposit on a tour. This is important to help avoid any issues with your coverage.

Insurance companies are always on the look out for fraudulent intent. If you book a trip and don’t purchase trip cancelation insurance for weeks or months, it looks suspicious. If you do have to cancel your trip and file a claim, it looks like something maybe came up in those weeks in between.

The insurance company might assume you booked insurance after knowing you’d have to cancel in order to get back some of your upfront costs.

With the above in mind, it’s always best to purchase your trip cancelation insurance as soon as possible. If you are still looking for a good policy, you might want to check out the travel insurance price comparison tool from Insurance Hotline.

What Trip Cancellation Insurance Will Cover

Trip cancellation insurance is meant to protect you in case you have to cancel your trip for an unforeseen emergency or medical problem.

There are a lot of situations where the insurance will help cover some or even all of your non-refundable upfront travel costs. The key is that these situations need to be unforeseen, unpreventable, and serious enough to cause you to have to cancel the trip.

Different companies have slightly different terms but in general, a good trip cancellation insurance will cover you for –

  • Serious illness or injury that prevents you from traveling
  • Medical emergency in your immediate family
  • Death of a travel companion or close family member
  • Jury duty summons
  • New travel advisory warnings for the destination
  • Terrorist attack at the destination
  • Natural disasters
  • Severe weather that prevents you from traveling
  • Flood or fire at your home before leaving
  • Airline or tour company shuts down

This is not an all inclusive list. Many other situations might be covered by your trip cancelation insurance. The key is to closely read and compare the travel insurance policies you are considering before purchasing. That way, you can be sure you are well covered.

What Trip Cancellation Insurance Won’t Cover

Trip cancellation insurance is a great way to protect yourself. However, it won’t cover every possible situation that might require you to cancel a trip. The insurance is designed to cover unforeseen emergencies but not every problem that might pop up.

Here are a few situations where trip cancellation insurance will usually NOT help cover the cost of your cancelled trip –

  • If you get sick but don’t go to the doctor – You need to have documented proof that a doctor advised you not to travel.
  • You book the insurance right before a big storm – You need to have the insurance before a natural disaster is anticipated. The cut off is usually before a tropical storm has been named or before the NOAA has issued a warning.
  • You get laid off – Most trip cancellation insurance policies will not cover you in this situation. They also won’t cover you if you just run out of money before the trip.
  • You have an unexpected personal or work commitment – Trip cancellation insurance won’t cover you if something comes up at work or your cousin plans her wedding for the same weekend.

These are just a few examples of situations not covered by most trip cancellation insurance policies. Of course, you should always read the details on any policy before purchasing so you know what is and isn’t covered.

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