Understanding Travel Insurance Coverages

Like all insurance policies, a travel insurance policy will include many "coverages" to protect you and your investment if anything should happen to affect your travel plans. It's good to know that you're covered, but for many travelers, figuring out just what each of those "coverages" means can be one of the most confusing parts of buying and understanding travel insurance. Doing some research on the various kinds of coverage that may be offered through your travel insurance policy can help give you a little extra peace of mind as you prepare for your trip.

Trip Cancellation vs. Cancel for any Reason

There are two different benefits that will cover you to cancel your trip: Trip Cancellation and Cancel for Any Reason.

Trip Cancellation

The first and most commonly used is Trip Cancellation. Included in every comprehensive policy, Trip Cancellation covers you for specific unforeseen covered reasons that cause you to cancel your trip. The most common reasons for cancellation include:

  • - becoming unexpectedly ill or injured and being rendered unfit to travel (by order of a licensed physician)
  • - hospitalization or death of a non-traveling family member
  • - various weather or common carrier related issues (varies by policy)
  • - unforeseen natural disasters at home or the destination
  • - legal obligation, such as being called for jury duty or to appear as a witness in court
  • - work related reasons (varies heavily by policy, usually only for layoff/termination)

With Trip Cancellation, you are covered to cancel up until departure. Should you cancel, you will be reimbursed 100% of the prepaid and non-refundable trip cost for which you are insured and can provide documentation. Really its only weakness is that it covers for specific reasons.

Cancel for any Reason

Cancel for Any Reason (CFAR) is an optional benefit available on only about 12 different policies, usually for an additional charge. Unlike Trip Cancellation, Cancel for Any Reason has a few eligibility criteria:

  • - It is only available within 10-30 days of your initial trip payment (depending on the policy).
  • - You MUST insure 100% of your pre-paid and non-refundable trip cost. This is very important, you must insure to the dollar or higher.
  • - Cancellation of your travel arrangements and notification of the insurance company must occur more than 2 days before your scheduled departure date.
  • - You will not be reimbursed 100% of your trip cost. Cancel for any reason returns between 50%-80% depending on the policy.

The advantage here is that it doesn't matter why you have to cancel your trip. Some common reasons for buying CFAR include the following (all of which would never be covered with trip cancellation):

  • - political or civil unrest
  • - war
  • - declining health/death of a friend or pet (as opposed to a family member)

These are just examples though. Regardless of why you might need to cancel a trip, Cancel for Any Reason will cover it.


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