What You Need to Know About Trip Cancellation Insurance

Anytime you purchase a vacation trip from a travel agent, you will normally be offered trip cancellation insurance. Before you make a decision as to whether to obtain this protection, there are several things you should consider. One of the first things you will need to decide is which conditions you wish to be insured against.

The least expensive policies only provide reimbursement for the prepaid costs of the trip if you must cancel prior to departure. Even these policies contain restrictions which limit the allowable reasons for cancellation. If your concern is a pre-existing condition which may flare up and prevent travel, it probably won’t be covered.

Other common exclusions can be pregnancy complications or sports injuries. Be sure to check the approved definitions of terms such as “traveling companion,” “close family member” and “unforeseen” to insure that your needs will be covered. You should also be aware of expiration times and dates.

Some trip cancellation insurance plans include trip interruption coverage. These plans will protect you in the event of a personal or family emergency while you are on the trip. Again, be sure to read the fine print so that you will know exactly what is covered and what is not. Your hotel may be damaged by storms, or have an outbreak of an epidemic, but if it is not declared uninhabitable, you may not be covered.

There are policies which include medical insurance. These could be particularly beneficial to someone who does not have a primary health insurance policy at home. If you have such coverage, you should determine what if any costs it will cover if you become ill or injured while away from home. You may want to consider supplementing your current coverage with one that will cover repatriation should you become ill while out of the country.

Most plans do not cover “Acts of God” which, in their interpretation sometimes includes acts of terrorism, natural disasters, and other major events. They also do not cover if you lose your job and can no longer afford to travel.

One solution to all of this is a “cancel for any reason” policy. This is the most expensive type of trip cancellation insurance but it eliminates the need for concern about whether or not this or that little thing will be covered. There will still be some rules and restrictions, and you still need to read the fine print, but for the most part, this type of policy will give you the most peace of mind.

You have several choices of places to obtain trip cancellation insurance. It is sold through airlines, cruise lines, tour companies, travel agents and from online vendors. The typical policy costs between 4% and 10% of the cost of the trip for a standard policy, and between 6% and 12% of the cost for the “cancel for any reason” coverage.

With this, as with other financial decisions in your life, the most important thing is to know what you are buying before you part with your hard-earned money.