You’ve certainly heard of cancellation insurance, also known as trip cancellation insurance, but are you familiar with its advantages in detail? In the following article, we’ll explain what it is, what it covers, when it’s worth getting cancellation insurance, and its cost.
What is trip cancellation insurance?
Trip cancellation insurance is a type of policy that protects you in unforeseen situations where, due to reasons beyond your control, you are unable to take your trip and must cancel it or are forced to return early. The insured amount is calculated based on the total value of the travel services paid by the insured. This policy reimburses you for some or all your costs if an unforeseen event covered by the policy occurs.
What does cancellation insurance cover?
It’s important to know that coverage conditions vary from one insurer to another, so we recommend contacting your broker for all the details. However, the most common coverages include:
- Family events: (e.g., premature birth).
- Health problems: (e.g., diagnosis of serious illness or an illness that prevents travel, accidents, death of the insured person or a first or second-degree relative).
- Damage to your home requiring your presence: (e.g., floods, fires).
- Professional situations: (e.g., redundancy).
- Other unforeseen events that can be justified with supporting documents: (e.g., necessary court appearance, theft of travel documents, filing for divorce, adverse reactions to medication/vaccines).
What does this type of insurance NOT cover
- Lack of a visa.
- Simply changing your mind – you no longer want to go on the planned trip.
- Foreseen/known events, such as pandemics or strikes.
- Other situations known before the policy were issued, such as an existing illness.
- Fraud attempt.
- Changes in your personal budget – you realize you no longer have enough money for the vacation.
When is it worth getting cancellation insurance?
Canceling a prepaid trip for reasons beyond your control, especially when many travel packages, flight tickets, or accommodations are non-refundable, can lead to significant financial losses. Cancellation insurance offers financial protection and greater security for planning your vacation with joy, not stress. The major advantage of a cancellation policy is that if you can’t travel for a serious reason, you’ll get your money back, provided you present the necessary documents (medical certificate, proof of events, etc.).
What are the risks associated with this policy?
While useful in many cases, this insurance can also come with disadvantages. Inform yourself carefully and clearly, and these can turn into advantages rather than risks. Here’s what to pay attention to:
- Availability of documents and proof of an insured event: You need to have the necessary paperwork.
- Limited coverage: Being aware of limitations (e.g., expired visa) beforehand can help you avoid issues.
- Waiting period: Some policies require a certain time before they become active. Check this with your broker.
- Claim limits: Some policies have compensation limits, regardless of how much you paid for the trip.
- Paying for a policy you won’t use: (Similar to home insurance, which we hope never to use but ensure is valid.)
Where can you get cancellation insurance and how much does it cost?
Cancellation insurance can be purchased in several ways and places, depending on your preferences and availability. Here are some options:
- Through the travel agency where you booked your travel package.
- Online or at physical agencies.
- Through your insurance broker.
To find out the exact price of cancellation insurance, discuss it with your broker or use an online calculator for an estimate. The cost of cancellation insurance is usually a fraction of the total trip value, ranging between 2% and 7% of the value of the travel package or insured services. This cost may be included in travel insurance if a cancellation clause is added.
Factors influencing the cost of trip cancellation insurance:
- Trip duration
- Destination
- Total trip value
- Age of insured people
- Number of insured people, etc.
Useful information when purchasing travel insurance
Travel insurance only covers medical problems that arise during the trip. Ensure it is valid for the country you are traveling to. The territorial coverage of insurance differs from one insurer to another, depending on the insurance offer.
Don’t rush to buy the cheapest insurance policy. Analyze several offers and choose the policy that best meets your needs. Buying a policy that doesn’t adequately cover your travel needs is like not having insurance at all!
It’s not necessary to have a printed copy of your insurance during your trip. However, it’s important to know your insurance policy number and the assistance phone number to call in case of an insured event.