What is the use of trip cancellation insurance?

Trip cancellation insurance covers you in some cases if you are obliged to cancel your trip due to unforeseeable causes beyond your control. Just imagine, you were impatiently waiting for your vacation and you break your ankle just one week before departure date… You can’t leave but you certainly would like to be reimbursed. This is when you’ll be thankful to have taken out cancellation insurance or even travel insurance.

What is trip cancellation insurance for?

You are all ready to set off on your trip and you suddenly need to cancel. Not only are you frustrated at not being able to travel but you also have to deal with the financial impact of the cancellation fee which is not reimbursed by your tour operator. The amount of the cancellation fee differs from one tour operator to another and is increased depending on how soon you were planning to travel. In other words, the nearer the departure date, the higher the cancellation fee and the lower your refund. Do get in touch with the tour operator as soon as you know you need to cancel.

Tour operators charge several types of cancellation fees. For instance, depending on when you cancel, you might simply lose your deposit or be charged a percentage of the cost of the trip. Very late cancellation and no show usually leads to an extremely high trip cancellation fee: being charged 100% of the cost of the trip is quite common.

Cancellation insurance covers the costs charged by the tour operator.

For example:  You buy a ticket for €900. A week before you are supposed to leave, you fall ill and need to cancel your trip. The tour operator charges you 75% of the cost, or €675. Cancellation insurance will reimburse the full cancellation fee charged by the tour operator, that is €675.

Remember: when purchasing airline tickets, penalties of 100% apply, often from the time of booking and in all cases once the tickets have been issued, regardless of the departure date.
For cruises, significant cancellation fees apply more than 90 days before departure!

When can I lay claim to my trip cancellation insurance?

Cancellation insurance coverage only works if the reason you cancel for:

  • is listed in the policy;
  • occurs after you took out insurance;
  • is unforseen;
  • is unintentional.

The grounds for cancellation vary depending on the policy. Make sure you take a look at the exclusion clauses! Here are some examples of cancellation scenarios which are often covered:

  • one of your family members dies;
  • you (or someone in your family) are injured or become ill;
  • some kind of damage occurs in your home;
  • you need to change the dates of your paid leave from work;
  • there is a terrorist attack or natural disaster at your destination;
  • your tourist visa is denied,
  • you are supposed to resit an exam;
  • you are made redundant or you find a job;
  • your ID or travel ticket is stolen…

To benefit from trip cancellation insurance, you must report your cancellation quickly (usually within 5 days of the event) and provide documentation proving that you are unable to travel: a medical or death certificate, a certificate from your employer…

Taking out trip cancellation insurance

You can purchase cancellation insurance at the travel agency or on the tour operator's website as you are booking your trip. The cost of the insurance is proportional to the cost of the trip and varies depending on the cover selected. It generally ranges from 4% to 7% of the price of the trip. You can also take out a more comprehensive travel insurance from an insurer specializing in travel once you have booked your trip. Thus, policies can cover medical expenses, repatriation assistance and luggage loss or theft, along with the cancellation cover. As you will only be covered for cancellation once you have taken out insurance, it’s safer to do so shortly after you book your trip.

Isn’t bank card insurance enough?

Usually, only “high-end” bank cards include trip cancellation insurance. With Visa Premier and Gold MasterCard for instance, you are covered in case of illness preventing you from travelling, death of a family member, damage in your home or redundancy. In all other circumstances, cancellation insurance isn’t valid. Bank card insurance isn’t always enough and depending on the card you hold, cancellation insurance may be non-existent.

To find out more about trip cancellation insurance:

Cancellation insurance covers quite a few events. Take a look at what is and isn’t covered on the Travel Insurance Review website.

Date of publication May 7 2012

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