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Trip cancellation insurance
Trip cancellation insurance covers the non-refundable portion of your travel expenses in the event you must cancel your trip due to an unexpected or unplanned event. You are going on vacation in three weeks and your trip is already paid for, but there was an incident and you broke your ankle… Obviously, you can’t go anymore and you would like to be reimbursed. What are the advantages of purchasing trip cancellation insurance?
What is the use for trip cancellation insurance?
You put a lot of time in preparing for your trip, unfortunately you must cancel. You are greatly disappointed and this adds to the financial impact the non-refundable cancellation fees incurred with the travel agent or the airline. The amount for cancellation fees vary from one company to another and the closer you get to the departure date, the more limited your refund amount will be. So it is really important to inform the company of your cancellation as soon as possible. There are many different rate tables which vary depending on the agencies, tour operators and airlines. Please refer to your policy for the exact terms and conditions. Here is an example of cancellation fees a travel agent may charge:
- non-refundable deposit
- 44 to 30 days prior to departure: 50%
- 29 to 7 days prior to departure: 75%
- 6 days or less prior to departure: 100%
The purpose of trip cancellation insurance is to obtain a refund of the fees retained by the travel agent, the travel agency or the airline.
For example: You purchased a group travel at a cost of $2,600. You fell ill 8 days before your departure and the travel agent will only reimburse 25% of the fees you have already disbursed, namely $1,950. Trip cancellation insurance will reimburse in full the cancellation fees retained by the travel agent, namely $650. Therefore, you will get a full refund on the amount disbursed.
Please note: in the case you have purchased plane tickets, there is a penalty of 100%, often at the time of reservation, in every case at the time when the tickets are issued, no matter how long until departure. For cruises, great fees apply often more than 90 days from departure!
In which cases does trip cancellation insurance apply?
The reasons covered by trip cancellation insurance vary according to the policy. Be aware of the benefits and the exclusions! Here is a non-exhaustive list of cancellation reasons often covered:
- The death of a relative;
- You or a family member suffer an injury or sickness;
- You are unable to leave due to your residence being uninhabitable or your place of business inoperative;
- There is a travel advisory from the Canadian government warning against travel to your country or region of destination;
- The non-issuance of your visa;
- You get a new job;
- Your identification and travel documents have been stolen…
It is important to declare your cancellation rapidly, generally the same day or within five days following the cancellation. The insurer will require you to provide proof of your inability to travel: a medical or death certificate, a letter from your employer…
Trip cancellation insurance purchase
You can purchase trip cancellation insurance directly from the travel agent or on the company website when you purchase your trip. The cost for coverage is proportional to the cost of the trip and can vary based on your age. You also have the option to purchase a more complete travel insurance coverage from an insurance broker after you bought your trip. In addition to cancellation coverage, policies usually offer coverage for medical expenses, repatriation assistance, loss or theft of baggage… Considering that the coverage for cancellation only starts after you purchase a travel insurance policy, it is in your best interest to purchase insurance as soon as possible.
Will your credit card coverage suffice?
Only “high end” credit cards offer trip cancellation insurance. Generally, the policy covers you for health problems keeping you from traveling, the death of a family member or if your residence is rendered uninhabitable. For any other reasons, trip cancellation insurance will not be valid. There may also be a refund limit, so should the cost of your trip be over that limit, you could lose the exceeding amount.
Therefore, the credit card coverage is often not sufficient, even non-existing. Make sure you find out the details and compare the coverage with an insurance broker such as April International Canada.
For more information on trip cancellation insurance:
More information for travellers is available on the Better Business Bureau website.