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What do you Need to Know About Trip Cancellation Insurance?

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Every year, Canadians take as many as 32.3 million overnight trips out of the country. From a single night in the U.S. for some cross-border shopping to several weeks on a grand adventure abroad, we like to get our move on.Often, these trips require extensive, careful planning that happens weeks or months in advance. You know what they like to say about the best-laid plans, right? They often go awry. There are steps you can take to help protect your well-earned vacation, but they require a little bit of forethought when you are making your vacation plans.

To help you avoid the stress and financial pain of losing out on deposits if an emergency forces you to cancel a planned trip, here are a few things you should know about trip cancellation insurance.

What is Covered under Trip Cancellation Insurance?

Trip cancellation insurance will help protect you, financially, if you need to cancel a trip due to unforeseen circumstances. The reasons for a cancellation can be personal ones, like illness or injury, the death or critical illness of an immediate family member, a legal obligation, or sudden unemployment that leaves you unable to travel.

Trip cancellation insurance can also apply if there is a problem at your destination, like an impending hurricane, a natural disaster, or a state of war.

Your insurance can apply to domestic and international vacations, and even if you have already left on your voyage you can be reimbursed for some of the costs of your trip if you have to return home suddenly in an emergency. In some cases, it may even cover the cost to rebook your trip at a later date.

For those who like to keep their options open, there is a type of travel insurance called “Cancel for Any Reason” that, predictably, allows you to cancel for any reason as long as it’s within 48 hours of your departure. This type of coverage is very expensive, and it may be limited to only a percentage of the total trip value, but it may be worth it if you’re not absolutely certain you will be able to make a trip.

What is NOT Covered under Trip Cancellation Insurance?

Generally, trip cancellation insurance will only apply to changes that occur due to unforeseen circumstances. Nobody can predict the future, but if you have a chronic health condition, or the disastrous circumstances at your destination of choice were already in progress, some exclusions may apply.

If you have any doubt about whether or not a scenario will be covered under trip cancellation insurance, be sure to review the policy details carefully with your insurance broker. This will help you to obtain the coverage you need, while helping you avoid purchasing insurance for a situation that may ultimately not be covered.

How to Make a Trip Cancellation Insurance Claim

Like all cases where you must cancel plans, it’s best to do so with as much notice as possible. Your insurance broker or carrier should have some way for you to contact them after hours in an emergency, whether it’s by phone or email. If you are cancelling due to a problem with your airline or cruise line, a call to your insurance carrier should be among the first you make.

One of the first things you will be asked to provide is proof of payment for your trip, so be sure to hang on to copies of your receipts when you book. If you’re bringing your smartphone with you, saving images of receipts to your phone will go a long way to help you keep things organized.

In some cases, your insurance carrier will help to make the arrangements to rebook your travel if that’s the best option. At other times, if you are already away from home, you may be required to make your own way home and submit receipts for reimbursement. This will be spelled out clearly in your policy documentation.

As for the actual filing of the claim, every insurance company has different processes. It’s best to review these
coverage details before you make your final purchase decision on trip cancellation insurance because it could affect your choice. For example, if your policy states that you must pay up front to make your way home and then submit a claim for reimbursement, and you don’t have the money to do so, you may be better off choosing a different carrier for your insurance needs.

Why are Some Trip Cancellation Insurance Claims Denied?

We’ve all heard horror stories about people having their travel insurance claims denied. Unfortunately, most of the time, trip cancellation insurance claims are denied because the traveller did not insure all of their trip expenses. It’s a simple, preventable error that everyone should take care to avoid.

Other reasons your claim may be denied include:

  • Your reason for cancellation was foreseeable. It’s no secret that there are great deals to be had on travel during seasons that are off-peak in your destination. However, if your visit is to an area that is, for example, already expecting a hurricane and you think you’ll be OK if you just get trip cancellation insurance, think again! Usually, if you book your travel after a storm is named, you won’t be able to cancel a trip because of it.
  • No doctor’s visit. If you are planning to cancel your trip because you or a member of your travel party has fallen ill, you need to see a doctor before you submit a claim under your trip cancellation policy. Claims that can’t be verified with a doctor may be denied.
  • You didn’t follow your insurer’s instructions. If your trip is cancelled because of a problem with the airline or other travel carrier, you may be tempted to hop the next outbound flight and worry about filing a claim later. The thing is, your insurance company may already be aware of the situation and making arrangements on your behalf. You have to be a little bit patient, and be sure you call your insurer before making any travel moves on your own.
  • Inadequate documentation of expenses. To be reimbursed for your travel-related expenses under your trip cancellation insurance policy, you will need to provide proof of those expenses. Unfortunately, a credit card statement won’t suffice in most cases. You will need to provide original receipts for reimbursement.
  • Your reason for cancelling isn’t covered. There are many reasons that qualify under travel trip cancellation insurance, but an argument with your travel companion or a sick pet at home aren’t among them. Before pulling the plug on your trip, be sure to review the terms, conditions, and exclusions of your policy very carefully.

Trip cancellation insurance is there to protect you from unexpected expenses that may affect your ability to travel, or to continue your trip. Taking the time to make sure you understand your policy and the conditions under which it applies will go a long way towards making sure you’re covered.

Work with an Insurance Broker to Avoid Costly Mistakes

There are a lot of travel agencies and tour operators that sell trip cancellation insurance along with your vacation package. While it is, of course, better than no insurance at all, it’s important to understand that you’re purchasing insurance from a person who specializes in travel, not an insurance expert. If there is a problem with your policy, ultimately, it won’t be the travel agent left on the hook for expenses that are not covered.

Many of the conditions that are outlined here, like failure to purchase adequate trip cancellation insurance or policies that are purchased for conditions that would ordinarily be excluded, can be avoided by choosing to work with a company that specializes in matching clients with the right policy for their highly specialized insurance coverage needs.

Insurance brokers are licenced professionals who can help you navigate the sometimes complicated process of filing an insurance claim. In the event your claim is denied, a broker can also serve as an intermediary between you and the insurance company to help you come to a conclusion that is satisfactory for everyone.

Before you purchase trip cancellation insurance for your next adventure, give us a call. We can help you understand your options and choose the right policy to make sure that if you need to cancel your trip, your financial interests will be protected.

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