Cancel For Any Reason vs. Standard Trip Cancellation Coverage

Thanks to the COVID-19 vaccine, many people are looking forward to traveling again this summer and beyond. In April, TripAdvisor’s 2021 Summer Travel Index revealed that more than two-thirds of Americans were planning to travel during the season and on Memorial Day, the TSA announced that more than 1.9 million were screened at airport checkpoints throughout the U.S.

Of course, with lessons learned from the pandemic, most of us are all too aware of the importance of being covered should a trip have to be cancelled. ValuePenguin recently reported that nearly half of Americans who had their travel plans cancelled last summer lost an average of over $854 on cancellation fees and nonrefundable deposits.

Quick Stats: Lost Costs Due to COVID-19 Cancellations

• 46 percent of those with upcoming travel plans in 2020 lost money
• An average of $854.30 was lost per person due to cancellation fees and nonrefundable deposits
• 59 percent of losses came from airline tickets and 44 percent from hotel rooms

With that in mind, there has been a big uptick in the purchase of travel insurance that includes at least some kind of trip cancellation coverage. If you make non-refundable, prepaid deposits for travel within the U.S. or abroad, it can potentially save you from a big financial setback.

TravelInsurance.com data shows that more than 90 percent of policies purchased for trips in 2021 have included trip cancellation coverage. While experts say it’s something that’s been the primary driver of travel insurance purchases from the start, numbers like this have never been so high, highlighting both the desire to travel and the apprehensions about it.

Following the global shutdown, over 90% of travel insurance policies for trips in 2021 have included trip cancellation coverage. Fortunately, since the pandemic there have been a number of changes made within the travel insurance industry with a shift to more flexible, comprehensive policies, and more customer-centered services.

When purchasing travel insurance, travelers should consider whether they need standard trip cancellation coverage or an enhanced plan with optional Cancel For Any Reason coverage.

• Cancel For Any Reason (CFAR) coverage will allow you to cancel for any reason and receive reimbursement for your pre-paid and non-refundable trip costs. Most CFAR policies allow cancellations up to 48 hours in advance of the scheduled departure date, while only covering about 50 to 75 percent of trip costs.

• Trip Cancellation coverage generally covers 100 percent of your prepaid, non-refundable trip costs that you insure for specific covered reasons.

To help you make the best decision when it comes time to purchase, we’ll take a more in-depth look at each.

Cancel For Any Reason Travel Insurance

A CFAR policy is often available as an optional add-on to comprehensive travel insurance policies. These policies allow you to cancel your trip for any reason and receive a partial reimbursement of your trip costs. That means you can cancel no matter the reason, whether there are political protests with the threat of violence occurring in your destination that make you hesitate, your mother becomes ill, and you need to take care of her, or you’re faced with deciding whether to go or help out your best friend who is facing an ugly divorce. Of course, it can also be used should a COVID-19 variant cause another lockdown.

Depending on the specific policy, cancellations are usually allowed up to 48 hours in advance of your scheduled departure date. You won’t get all your money back, however. The typical reimbursement is anywhere from 50 to 75 percent of the pre-paid, non-refundable trip costs. You’ll also have to insure 100 percent of the pre-paid, non-refundable trip costs. Additionally, CFAR coverage has to be purchased within a specified time period after making the first deposit on your trip, often anywhere from 7 to 21 days.

CFAR coverage typically adds 40 percent to the cost of standard travel insurance which generally runs between 5 and 10 percent of the total trip costs. For example, if the total cost of the trip is $5,000 and the standard policy is $500, you’ll probably pay an additional $200.

Trip Cancellation Coverage

Basic trip cancellation coverage is provided in every comprehensive policy which extends coverage for the cancellation of a trip for specific covered reasons, all of which are unforeseen. Typically, those include:

• Natural disasters at home or your travel destination
• Terrorist attacks in your travel destination
• An unexpected injury, illness, or death of you or one of your traveling companions. The injury or illness must leave you unfit to travel and requires a letter by a licensed physician.
• The death or hospitalization of a family member (whether traveling with you or not)
• Weather related issues
• Legal obligations such as being called to appear as a witness in court or called for jury duty

It’s important to read the fine print as the details will vary with each plan and from provider to provider.

Also keep in mind that standard trip cancellation coverage probably won’t help if you want to cancel because you have worries or fears of traveling. Many people only discovered this after the coronavirus started to spread in early 2020. Purchasing CFAR coverage is typically the only way to get reimbursed for this reason, but as noted, it’s only partial coverage so you’ll still experience a financial loss. As every policy is different, it’s essential to thoroughly read the fine to print to determine what is and what isn’t covered.

How to Purchase CFAR or Standard Travel Insurance with Trip Cancellation Coverage

Selecting the right plan will depend on your particular circumstances, but with so many different providers and policies available today it can be almost overwhelming to compare them all. It can take hours and hours to request quotes from each provider not to mention the time and effort to sift through each one, carefully reading their policies, especially when it comes to trip cancellations.

Good to Know: Travel insurance policies all offer a 10- to 14-day “free look” period from the time of purchase. That means if you realize after buying that you’ve missed something, you can cancel and receive a refund based on those terms.

As a member of the United States Travel Insurance Association, TravelInsurance.com can make that process much easier. We work with some of the biggest and most trusted insurers in the U.S., simplifying the way you shop for and buy the best travel insurance. Rather than having to contact each insurance provider individually, TravelInsurance.com allows you to obtain quotes for travel insurance from top providers. All you’ll need to do is fill out one form, providing details like the duration and cost of your trip. That information is then sent to multiple insurance companies and in return, you’ll receive individual quotes from each that are organized in a way that makes it easy to compare their costs and coverage details.

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