What exactly is trip cancellation insurance–and what’s covered when your travel plans won’t happen? Maybe more specifically, what’s NOT covered?
Buying travel insurance is almost always a good idea. You’ve spent money–and time–on your trip and want to protect your investment. A good policy provides peace of mind…along with reimbursement and assistance for any difficulties you may encounter.
What is trip cancellation insurance?
We plan big or important trips months–even years–in advance. We plunk down hefty deposits, which are usually non-refundable. Most of the time everything goes smoothly. But what if something happens? And, trust me, things happen.
Trip cancellation insurance covers:
- Serious illness or injury for you, your traveling companion, or a family member
- You or your traveling companion are terminated or laid off from your job
- Your cruise company, airline, or other carrier shuts down for at least 24 hours, due to a strike, natural disaster, or government-mandated reason
- Your destination is damaged by a natural disaster, fire, flood, or vandalism
- You must attend to an immediate family member’s birth or death
- A natural disaster strikes your home and it is uninhabitable
- A terrorist event occurs within 30 days before your scheduled departure
There are more reasons, but you get the idea. And–as with all insurance–certain conditions must be met. But these are all unplanned things that are beyond your control.
NOTE: Your policy will include trip interruption coverage, too. It works the same way, except it kicks in after your trip has started.
What is NOT covered?
Trip cancellation insurance is NOT a general “cancel for any reason” policy. (You can purchase that coverage, but it is really, really pricey!) It’s important to understand your policy and what your responsibilities are when making a claim. Even when your reason is covered, you have to follow certain steps. Here are some examples:
- If you become ill, you can’t cancel and file a claim without seeing a physician. The doctor must fill out a specific form, including documented advice to cancel the trip.
- You can’t purchase a policy when you realize you may have to cancel. If you’re headed to the Caribbean during hurricane season and a storm starts to form a week before you leave, it’s too late. That’s considered “foreseeable” and the claim will be denied.
- Similarly, if your trip is delayed or there are issues with connecting flights, you can’t just decide to cancel because it’s inconvenient or you’re frustrated. Your policy probably states that you must miss 50% of your trip before filing a claim. AND–this is important!–you must make good faith attempts to get to your destination.
- Lack of documentation will land your claim in the “denied” pile. Keep receipts, statements, unused tickets, anything related to your trip. Your tour company or travel agent has a document listing penalties and items that are non-refundable. Be sure you can access those before you file a claim.
This seems like so much! Why bother? Here’s my story…
I get it. Insurance is complicated, confusing, mind-numbing, and full of legal-speak. It’s also an extra expense for something that might not happen. As a budget traveler, how can I justify the cost?
A couple of years ago, I was supposed to take a 12-day trek to Machu Picchu. Along the “backroads,” away from the crowds. I had booked nine months in advance, through a company that specializes in adventure travel. It was expensive–the deposit was $750. I also prepaid for an extra morning at Machu Picchu. Then I bought my flight to Lima, where the tour began. All of these non-refundable expenses were almost $2,000.
Travel insurance for my trip would have been about $300. But I was certain I would go. Machu Picchu was a lifelong dream, why wouldn’t I? Well…you guessed it. Something happened. It would have been covered by a basic policy with trip cancellation insurance. The travel company wouldn’t transfer the deposit to another departure date, even though there were seven months left in the year. Except for the flight credit after the $200 penalty, I lost everything. I’m still mad at myself.
Never again. Now when I book a tour or plan an involved itinerary, I get insurance. It’s part of my travel budget. Just do it. I use and partner with Allianz Assistance for my travel insurance coverage. I like the range of policies for all types of travel, as well as their 24-Hour Hotline. I just booked a trip to Greece in April 2019–ten months away–and bought a comprehensive policy for $385.
We’ll talk about medical coverage in another blog post–that’s important, too. It’s part of your travel insurance policy, but there are reasons to purchase the policy as soon as you make your initial deposit for your trip.
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