What is Trip Cancellation Insurance?

Trip cancellation insurance is a benefit that comes standard as part of many travel insurance policies. The coverage will reimburse you for any prepaid and non-refundable trip expenses, such as bookings for flights, hotel reservations, excursions, and more.

Typically, a trip cancellation benefit will reimburse you for 100% of these prepaid costs, as long as you are canceling for one of the policy’s named “covered reasons.” (We’ll discuss that in more detail below.) If you already have a travel insurance policy, it’s a good idea to check if it already includes trip cancellation coverage. If it doesn’t, you can usually purchase it as add on coverage.

What is a Trip Interruption Benefit?

Trip cancellation insurance will often include a trip interruption benefit. This will cover your costs in the event you need to cut your trip short after it has already started. Just like trip cancellation insurance, it only applies if the reason you have to prematurely end your trip is known as a covered reason.

What is Cancel for Any Reason Coverage?

Cancel for any reason coverage (CFAR) is similar to trip cancellation coverage but has some crucial differences. 

Just as the name suggests, it allows you to cancel a covered trip for any reason, usually up to 48 hours before departure. By “any reason,” it really means just that — even if you simply don’t feel like going on your trip.

CFAR coverage will reimburse you for your trip costs, but unlike trip cancellation insurance, it usually only provides a partial refund (typically up to 75%) rather than your whole trip cost. And keep in mind it will not reimburse you for any refundable costs that you get back directly from the airline or hotel, for example. So while it is super-flexible, it means you might not get your initial trip payment back in its entirety.

What is the Difference Between Trip Cancellation and Cancellation for Any Reason?

When it comes to trip cancellation vs cancel for any reason, the key difference lies in the reason you need to cancel your trip. Trip cancellation benefits require you to cancel for a “covered reason.” This generally means that the reason you are canceling is an unforeseeable event, or something you couldn’t have known about. Some examples include:

• Extreme weather events, storms, or unforeseen natural disasters that prevents travel.
• Serious injury or illness that means you can’t travel.
• Death of a family member.
• Terrorism.

If you have CFAR coverage, it means you can cancel your trip for a broader range of reasons (though there are still some caveats; more on those below). You might just not feel up to traveling, or decide you’re not interested in the destination anymore, or maybe you have a fear of flying and decide to bow out at the last minute. It provides maximum flexibility, which is why it’s more expensive.

What’s Not Covered by Trip Cancellation Insurance?

You can’t buy trip cancellation insurance after it becomes clear you already have to cancel — you must be able to go on the trip at time of purchase. In fact, it’s best to buy this coverage as soon as possible — within 72 hours — of booking your trip.

If you’re canceling for a medical-related reason, you’ll need to have proof to validate your claim, such as a note from a medical professional or proof of a hospital stay. Just saying you didn’t feel well enough to travel on your day of departure won’t be covered.

You also won’t be able to make a claim for bad weather unless that weather actually resulted in circumstances that meant you couldn’t go on your trip.
At Redpoint, for something to be considered inclement weather, it must be a severe weather condition that delays the scheduled arrival or departure of a typical commercial carrier or causes the closure of public roadways by local or government authorities, preventing you from arriving at or returning from your scheduled destination. If traffic en route to the airport is just moving slowly due to a little rain or snow and you miss your flight because of it, you probably won’t have a valid reason for coverage.

How Much Does Trip Cancellation Insurance Cost?

Trip cancellation insurance is typically included in a comprehensive travel insurance plan, as is trip interruption coverage. The total cost will depend on the nature of your trip, how long you are traveling for, and the destination you’re going to. Trip cancellation insurance is typically not as expensive as CFAR coverage, since it’s limited to the covered reasons described above.

How Much Does CFAR Coverage Cost?

CFAR is a rider to an existing travel insurance policy, not a separate stand-alone policy or set of coverages. Adding the CFAR rider will typically increase your travel insurance premium by 50%. Not all travel insurance companies offer it, so you may need to get a quote from multiple travel insurance companies and compare.

Is Trip Cancellation Insurance Worth It?

Trip cancellation insurance could be worth the investment, especially as it usually comes as part of a comprehensive travel insurance policy. You are already making an investment into your vacation or once-in-a-lifetime trip, so paying a small amount extra makes sense.

Just think of trip cancellation insurance this way: You’ll be able to recoup your non-refundable trip costs if something comes up that forces you to cancel, so it’s a way to protect your initial trip deposit and give you some peace of mind.

Is it Worth it to Buy CFAR Travel Insurance?

Whether or not it’s worth it to buy CFAR coverage depends on your trip and the type of traveler you are.

Travel insurance policies including CFAR only cover unforeseen events, so if you have a lot going on in your life, including schedule constraints or lots of family obligations, and you think there’s a chance you may not be able to go on your trip, CFAR coverage might not be the best idea for you.

For example: If you’re a lawyer and have a scheduled court date, you can’t buy a trip and insure it with a CFAR rider in the hope that your court date will change, and then have a claim paid if the court date didn’t change. Your claim would be denied because the court date was a foreseen event when you purchased your trip and your travel insurance policy.

If, on the other hand, you like the option of having maximum flexibility, especially for adventure travel, high-risk destinations, or those frequently asked to travel for business on short notice, CFAR can be a smart addition to your policy.