What to Know for Travel Cancellation Insurance

What to Know for Travel Cancellation Insurance
Point Editorial

Preparing for a trip takes a lot of organization. You've bought your tickets, booked your accommodation, and planned your itinerary. The last thing you want is to be on the hook for all those expenses if something comes up and you have to cancel your travel arrangements.

That's why comprehensive travel insurance is such a crucial part of any well-planned travel budget. But knowing what your plan covers isn't always easy.

Keep reading to get tips to help you find the best trip cancellation insurance and learn the difference between regular and cancel-for-any-reason coverage.

What is trip cancellation insurance? 

A trip cancellation insurance policy covers costs you incur if you're unable to take a trip due to an unforeseeable event. It is often included in your travel insurance package alongside coverage for emergency medical, baggage loss, and identity theft.

While some insurance companies specialize in travel insurance, you can purchase trip cancellation coverage from any major insurance provider. Some credit cards also offer their own insurance coverage.

What regular cancellation insurance does and doesn't cover

If you have to cancel your travel plans, your cancellation insurance policy will reimburse you for prepaid, forfeited, and nonrefundable costs. 

Specific rules and coverage limits vary by policy type and insurer, so make sure to read the fine print before purchasing.

Most trip cancellation policies will cover cancellation due to the following situations:

  • A licensed physician deems you (or your travel companion) unfit for travel due to a serious injury or unforeseen medical condition.
  • You, your traveling companion, or a non-traveling family member dies.
  • Travel services are unable to operate due to strikes or severe weather.
  • An unforeseen natural disaster makes your home or destination uninhabitable.
  • You have a legal obligation, like jury duty or being served with a court order or subpoena.

These are some exclusions that are not covered by regular travel insurance coverage:

  • You have to participate in an amateur or professional sporting event or training.
  • The carrier or airline declares bankruptcy.
  • You require care for a normal pregnancy, fertility treatments, childbirth, or elective abortion.
  • You have to cancel due to alcohol or substance abuse or use.
  • You have to cancel because of a mental or nervous health disorder.
  • Your trip is canceled because of war or military duty.
  • You have to cancel because of intentional self-inflicted harm, suicide, or attempted suicide.

Covered reasons vs. foreseeable events 

You should also remember that travel cancellation insurance does not cover losses that arise from foreseeable events, even if the event is listed as a covered reason. A foreseeable event is generally defined as a situation that a reasonable person in similar circumstances would have known or expected to occur.

For example, suppose you purchase travel insurance for your vacation when a hurricane is already moving toward your destination. In that case, it's considered a foreseeable event, and your insurance may not cover your flight cancellation.

Cancel-for-Any-Reason (CFAR) travel insurance

If you find regular cancellation coverage to be lacking and want added peace of mind, many insurers offer an optional upgrade to "cancel-for-any-reason" (CFAR) coverage. CFAR insurance is an add-on that offers partial reimbursement when you cancel a trip for any reason that isn't covered by your regular travel insurance policy.

How it works 

After you buy your ticket or make the first payment for your trip, you usually have about 21 days to purchase a basic travel insurance plan and add CFAR coverage.

Once you have coverage, you can cancel your trip for any reason that's not already covered by your policy and be reimbursed 50-75% of your prepaid, forfeited, and nonrefundable trip costs. The policy will specify the percentage for which you're eligible. 

Keep in mind that you often have to cancel your trip at least two days before your departure to use CFAR coverage. 


CFAR coverage will usually add about 40% to your basic travel insurance price.

Eligibility requirements 

These are the general criteria to be able to use CFAR travel insurance (check your policy for specific details):

  • The plan usually has to be purchased within 21 days of your initial trip deposit.
  • You have to cancel more than 48 hours before your scheduled departure date.
  • You have to insure the total trip cost. 
  • Your claim may be ineligible for reimbursement if you accept a voucher or credit from a hotel or airline for a canceled trip. If you only receive partial credit for the trip or have leftover unreimbursed expenses, you can claim the remaining amount.

Getting travel insurance 

As with all insurance policies, you should shop around before settling on a travel insurance plan. Try to get quotes from several different insurance providers and compare them to find one that best suits your needs.

Some companies offer a "free look" period that allows you to cancel the policy within 10-21 days and receive a full refund.

Choosing the right policy 

To make sure you get the best deal on your coverage, try making a list of your needs that you can compare to the offers you receive. Pay special attention to the following details:

  • The overall coverage limit
  • The per-person coverage limit
  • The coverage percentage
  • The CFAR deadline

Coronavirus and travel insurance

COVID-19 has significantly impacted domestic and international travel, and insurance companies have adapted their policies to follow new developments. Exactly when you purchased your insurance plays an important role in whether your policy considers the pandemic a foreseeable event. 

Most providers use Jan. 21, 2020, as the date when the pandemic no longer met the requirements to be considered an unforeseeable event. That means that if you purchased your insurance after Jan. 21, 2020, your basic travel insurance might not cover cancellation due to the pandemic, even though medical expenses should still be covered.

However, CFAR coverage generally covers pandemic-related cancellations, so long as your claim meets your policy's eligibility requirements.

FAQs about CFAR travel cancellation insurance

Can I use "Cancel for Any Reason" coverage to cancel my trip due to the COVID-19 pandemic? 

Yes. Cancel-for-any-reason travel insurance includes cancellations due to the pandemic.

Will I get all my money back if I purchase CFAR coverage? 

No. Most CFAR plans reimburse 50-75% of your total insured, prepaid, nonrefundable trip cost. Check your policy for details.

Can I get a quote for CFAR coverage?

Yes. You should always shop around for quotes before buying insurance to find the best deal.

When should I purchase cancel-for-any-reason travel insurance?

​​Most trip insurance providers require you to purchase your insurance within 21 days of your initial trip payment. For cruise-specific policies, you must buy your insurance before the final payment date of your cruise. You can't add a CFAR plan if your trip has already begun.

The bottom line

Buying travel insurance gives you the peace of mind that you won't lose money if you cancel an expensive trip. If you want the best cancellation coverage, get a cancel-for-any-reason policy. The initial costs will be higher, but you can rest easy knowing you can cancel for reasons not covered by your regular plan.

For a great money-saving tool that also offers travel cancellation insurance, try PointCard™.

A transparent, easy-to-use alternative payment card, PointCard allows you to spend your own money while also receiving exclusive benefits, including unlimited cash-back on all purchases and bonus cash-back on subscriptions, food delivery, rideshare services, and coffee shop purchases. 

You also get fraud protection with zero liability, no interest rates, and rental car and phone insurance.

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