While you probably don't want to think about canceling a trip just as you're booking it, planning ahead can go a long way toward saving money and giving you peace of mind.
You never know when the unexpected will occur, but rather than letting illnesses, family emergencies, or airline issues ruin your vacation (and waste your money), you can secure your travel budget with the right protections.
Why You Lose Money on Trip Cancellations
If you cancel part or all of a trip, such as a flight or hotel reservation, you could end up forfeiting some or all of what you already paid. You might even face cancellation fees.
Here are two reasons why this could happen.
Nonrefundable bookings
As the name implies, nonrefundable bookings have terms that prevent you from getting your money back if you cancel. Or, at the very least, they charge a fee for you to cancel.
The details vary by booking, but often the closer you get to the date of travel or activity, the less likely you are to get your money back.
But sometimes issues like illnesses don't pop up until after the cancellation window closes.
Unprepared travelers
Skipping travel insurance coverage, misunderstanding your credit card protections, or not reading the travel operator's cancellation policy can all lead to financial losses.
If you forego insurance, for example, make sure you're crystal clear on the travel provider's cancellation terms, such as the deadline for a full refund.
Some businesses might even have specific cancellation protocols to follow, such as submitting a written request.
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How To Minimize Losing Money on Cancellations
Here are some ways to minimize financial losses if you need to cancel part or all of your trip:
Purchase trip cancellation insurance early
You usually can't purchase trip cancellation immediately before your trip, because that would create an easy loophole — at that point, you probably already know you want to cancel!
Instead, travel policies with trip cancellation insurance often have to be purchased within 14-21 days from when you first book the travel.
Use refundable bookings when possible
It may sound obvious, but plenty of travelers make the mistake of ignoring refundable options.
These bookings might cost a little more but pay off in the long run. Even if you don't need to cancel, not having the stress of a nonrefundable booking can be worth it.
Plus it can give you a more enjoyable trip — if bad weather makes you want to change which day you take a walking tour, you’re covered.
That said, sometimes paying more for refundable bookings is unnecessary if you have sufficient coverage elsewhere, such as through your credit card, or if the price difference is small enough that you're willing to take the risk.
Check your credit card cancellation coverage
Another way to avoid losing money on canceled trips is to make sure you understand your credit card coverage for travel purchases.
While benefits vary by card, many providers offer trip cancellation, trip delay, and trip interruption insurance for no extra cost on eligible travel purchases, even if you bought a nonrefundable ticket.
For example, the Chase Sapphire Preferred® Card will reimburse you up to $10,000 per person ($20,000 per trip) if you need to cancel or cut your trip short for illness or bad weather.
Make sure you understand what's eligible, for how much, and how to go about canceling to get your money back.
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Combine credit card coverage with insurance
While credit card coverage can be a great way to avoid losing money on canceled trips, it can have gaps.
To best protect yourself without overpaying, study up on what your credit card specifically covers and see if there are any areas where you might want additional insurance.
For example, while many travel credit cards offer trip delay and cancellation insurance, few offer medical emergency or evacuation coverage.
You can use an online marketplace like VisitorsCoverage to compare comprehensive travel insurance quotes and buy a policy.
How To Maximize Refunds or Credits
When you have to cancel a trip, don't assume you're forfeiting money.
Before you even get to the point of involving your credit card coverage or travel insurance provider, note the following:
Do: Contact providers directly
Even if you made a nonrefundable purchase, it doesn't hurt to contact travel providers directly to see if there's any way they can help you out, especially if there's an emergency that prevented you from traveling.
If you can't get a full refund, airlines, hotels, tour operators, and other travel brands might still be willing to provide a credit or rebooking options to maintain your loyalty.
And if you did make a refundable purchase, know your rights. Don't settle for a credit, for example, if the terms of the refundable purchase allow you to get the charge reversed on your credit card.
Do: Document all communication
Keep a record of your emails and calls — along with any responses — to make the best case.
For example, maybe a tour operator said they'd let you reschedule if it rains, and having that in writing can strengthen your case if they're giving you a hard time later on.
Don’t: Ignore exclusions in policies
Most travel insurance policies and credit card benefits come with exclusions, like not covering pre-existing conditions or voluntary cancellations.
However, if you're aware of these exclusions beforehand, you might change your travel decisions or be able to purchase specific waivers.
For example, Travel Guard offers a waiver add-on for pre-existing medical conditions and Allianz Travel Insurance offers a “Cancel Anytime” upgrade on certain policies.
READ MORE: Which Situations Are Covered by Trip Cancellation Insurance?
Don’t: Wait too long to file claims
The exact timing varies by travel insurance policy or credit card provider, but in general, the sooner you file a claim, the better.
Most providers have strict cutoffs for when a claim must be made — often within three months or less — so if you miss those deadlines, you could be out of luck.
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FAQs About Canceled Trips
What types of cancellations are most commonly covered by insurance?
Unexpected, emergency cancellations such as severe weather, illness, or accidents — for yourself or an immediate family member — are often covered reasons for travel insurance policies.
Do airlines or hotels provide refunds for last-minute cancellations?
It depends on the airline or hotel. Most have cancellation cutoffs, but depending on factors such as the type of ticket or room you booked, it's possible you can make last-minute cancellations and still get a full refund or credit.
Can credit card coverage and separate insurance be used for the same trip?
Yes, combining credit card coverage and separate insurance is often a good way to optimize coverage. Pay attention to what different policies cover so you can avoid paying for overlap.
Is it worth paying extra for refundable bookings or CFAR coverage?
It depends on how much you paid for the travel and the likelihood of canceling.
In general, the more expensive the booking and the riskier the situation — such as traveling during hurricane season — the more likely it is to be worth paying for refundable bookings or cancel for any reason (CFAR) coverage.
TL;DR: Don’t Lose Money for Canceling a Trip
Life can be unpredictable, but you can prepare when it comes to canceled trips.
Carefully review your booking options, keep a record of communication, and check your credit card coverage and travel insurance policies.
Investing a little time and money early, such as with refundable bookings and insurance, can pay off to avoid financial losses down the road. And if you do have to cancel, act quickly to resolve any refunds or credits and make a claim if need be.

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Jake Safane is a content writer specializing in finance and sustainability. He has worked as a thought leadership editor at The Economist Group, and he has written for publications such as the Los Angeles Times, Business Insider, and CBS MoneyWatch. He also runs a corporate sustainability blog, Carbon Neutral Copy.
Disclosure: Opinions expressed here are the author's alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.