Trip Cancellation Insurance: How It Works

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If you travel often, you may have had to cancel your trip due to an unforeseen circumstance like a sudden injury, a nasty illness, or a hurricane that made you reconsider your paddle boarding adventure. 

In all three cases, a trip cancellation insurance policy might reimburse you for 100% of your prepaid, nonrefundable expenses. That could include your flight, accommodations, and even your paddle board lessons.  Here’s what you need to know about what it covers, what it doesn’t cover, and how to get one through your credit card. We’ll also take a look at the difference between trip cancellation, trip delay, and trip interruption insurance so you’ll be set with the right coverage for your needs.

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  • Trip cancellation insurance will reimburse you for prepaid travel expenses that can't be reimbursed if canceled for a covered reason.
  • Trip cancellation insurance covers you and your traveling companion.
  • Some credit cards have trip cancellation insurance, but you must use the card to book the travel.

What is trip cancellation insurance?

Trip cancellation insurance is a special type of insurance that can help protect your prepaid, nonrefundable travel expenses if you need to cancel your trip because extenuating circumstances prevent you from going. Examples of this are sicknesses, flight cancellations or delays, missed connections, bad weather, and optional Cancel For Any Reason (CFAR) coverage.

Let's consider a scenario where you've planned a $4,000 trip to Bali. You've already purchased flights, hotels, and a tour of Sacred Monkey Forest Sanctuary. Despite eagerly anticipating the trip for months, you receive jury duty 30 days before departure. Fortunately, trip cancellation insurance usually covers legal obligations. You can submit a claim to your provider, offering evidence of your civic duty and providing details of your eligible expenses. This action is likely to result in a full reimbursement of your $4,000.

You can purchase trip cancellation insurance through companies like VisitorsCoverage, but before you do this, check your benefits because you might already have it for free through your credit card. 

Which credit cards offer trip cancellation insurance? 

Since trip cancellation insurance is a pretty valuable benefit, it’s typically reserved for high-end travel rewards cards that charge an annual fee of $95 or more. 

Here are just some of the credit cards that include complimentary trip interruption insurance: 

It’s worth noting that not all trip cancellation benefits are the same. The difference you’ll see between cards is the coverage limits — or the maximum dollar amount you can be reimbursed. 

For example, the Capital One Venture X Rewards Credit Card will reimburse you up to $2,000 per person, per trip if something goes wrong. That’s probably enough for most folks who travel domestically and stick to a modest travel budget. 

Frequent international travelers — who fill their itineraries with cruises and juicy steaks — will likely find $2,000 insufficient. If this aligns with your travel M.O., you might want to consider the Chase Sapphire Preferred instead, which provides maximum benefits of $10,000 per person and $20,000 per trip. 

In addition, to get the benefit, you need to book your travel using that specific card. If you accidentally book your flight using your Chase Freedom instead of your Chase Sapphire Preferred, you might want to take advantage of that 24-hour cancellation window to rebook on the card with trip cancellation insurance attached. 

Finally, what happens if you book with points and the trip gets canceled? Do you get your points back? Cash? While the answer may vary between credit cards, we spoke to a Chase Claims Administrator who told us that they take the latter approach.  

“If you book with points and your trip gets canceled for a covered reason, you won’t get your points back,” they said. “Instead, you’ll get a check in the mail for the value of your points.” 

What trip cancellation covers 

Trip cancellation insurance varies by provider and policy type, but most plans will cover: 

  • Severe weather that renders your departure or destination unsafe
  • Natural disasters and mandatory evacuations
  • Change in military orders for you or your partner
  • Strikes that result in major travel disruptions
  • Legal obligations such as witness subpoenas and jury duty
  • Unforeseen illness or injury rendering you or your traveling companion unfit to travel, by order of a licensed physician
  • Hospitalization or death of a family member

As you’ve probably figured out, the list is short and exclusive. Any scenario that isn’t specifically listed out in your policy won’t be covered. 

What trip cancellation doesn’t cover

Trip cancellation helps, but it doesn’t cover everything. The following scenarios typically won’t be covered by trip cancellation insurance, so be sure to read your benefits carefully: 

  • Elective or routine medical procedures
  • Injury resulting from self-harm or high-risk behavior, such as extreme sports or drug abuse
  • Reasonably foreseeable events such as planned strikes and named hurricanes
  • Outbreaks (travel insurance companies famously denied claims en masse for reasons related to COVID-19)

Trip cancellation vs. other forms of travel insurance

Trip cancellation insurance, trip delay insurance, trip interruption insurance… it can all get a little confusing. 

So here’s a mini-glossary of the most common types of travel insurance and what they typically cover: 

  • Trip cancellation insurance reimburses you if you can’t travel at all due to sudden illness, injury, death, legal obligation, inclement weather, or other unforeseen circumstances.
  • Travel delay insurance helps cover sudden “gaps” in your travel plans. If a flight gets delayed, often a minimum of six to 12 hours, a trip delay may cover your hotel, food, and cab rides to and from impromptu accommodation.
  • Trip interruption insurance reimburses you if your trip gets cut short for many of the same reasons covered by trip cancellation, such as unforeseen illness, airline strike, and more.
  • CFAR insurance, or Cancel for Any Reason insurance, is an optional add-on that lets you cancel for any reason you want. CFAR has become a popular choice for folks who aren’t sure their passport will arrive in time, and while it sounds great, the catch is that your maximum reimbursement is typically 75% or less of your trip value.
  • Travel insurance is a blanket term for a policy that can include the above three types plus lost luggage/medical insurance. It’s like the term “car insurance,” which can include liability, collision, and more. 

Related: Flight delay compensation: What are you entitled to and how can you get it?

How to make a claim against your trip cancellation insurance

Circling back to our earlier example, let’s say you’re still holding your jury duty summons and you know that your trip to Bali will have to wait. Bummer. 

For now, let’s make sure you file a claim so you can get your $4,000 back. 

In general, the process of filing a claim against your trip cancellation insurance looks something like this:

  1. Contact your provider: There’s typically a phone number listed on your policy or within your credit card benefits for a Claims Administrator or similar title. Reach out to them for further instructions. You may also be able to submit a claim fully online.
  2. Cancel your plans and maximize your refund: You’ll need to show proof that you canceled your plans to receive reimbursement. Remember, trip cancellation insurance will only cover the non-refundable portion of your bookings, and sometimes “non-refundable” airline tickets are actually 100% refundable.
  3. Gather your documentation: The type of claim will dictate what sort of documentation you’ll need to submit. For example, if you claim a sudden illness or injury, you’ll need a physician’s statement verifying your inability to travel. You may also need to submit your full itinerary, your tour operator’s refund policy, and more.
  4. Don’t forget your companions’ expenses: As long as their name is on the bookings, too, your traveling companions may also be covered under your trip cancellation insurance. So if one of you falls ill, you may all be entitled to full or partial reimbursement under your policy.
  5. Tally up your claim amount and file within 90 days: Most trip interruption policies require you to file within 90 days of your trip to receive reimbursement. Keep in touch with your provider to ensure thorough preparation, avoiding delays or denials.

Related: Baggage delay insurance: How it works

Woman signing travel insurance form. Guide to a trip cancellation insurance.

FAQs

What's the difference between trip cancellation and trip insurance?

Trip insurance is a general term that covers a variety of travel insurance policies. Trip cancelation insurance, however, provides coverage if you can't travel at all due to a covered reason.

Can I buy travel insurance coverage?

You can buy travel insurance from private companies such as VisitorsCoverage. This is a great option if you don't have a credit card that provides coverage or if you want to supplement that coverage.  

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.

Eligibility and Benefit level varies by Card. Terms, Conditions and Limitations Apply. Please visit americanexpress.com/benefitsguide for more details. Underwritten by New Hampshire Insurance Company, an AIG Company.

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I'm an award-winning lawyer and personal finance expert featured in Inc. Magazine, CNBC, the Today Show, Business Insider and more. My mission is to make personal finance accessible for everyone. As the largest financial influencer in the world, I'm connected to a community of over 20 million followers across TikTok, Instagram, YouTube, Facebook and Twitter. I'm also the host of the podcast Erika Taught Me. You might recognize me from my viral tagline, "I read the fine print so you don't have to!"

I'm a graduate of Georgetown Law, where I founded the Georgetown Law Entrepreneurship Club, and the University of Notre Dame. I discovered my passion for personal finance after realizing I was drowning in over $200,000 of student debt and needed to take action-ultimately paying off my student loans in under 2 years. I then spent years as a corporate lawyer representing Fortune 500 companies, but I quit because I realized I wanted to have an impact; I wanted to help real people and teach them that you can create a financial future for yourself.

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Advertiser Disclosure

Our aim is to help you make financial decisions with confidence through our objective article content and reviews. Erika.com is part of an affiliate sales network and receives compensation for sending traffic to partner sites, such as MileValue.com. This compensation may impact how and where links appear on this site. This site does not include all financial companies or all available financial offers. This in no way affects our recommendations or article content.

Advertiser Disclosure

Our aim is to help you make financial decisions with confidence through our objective article content and reviews. Erika.com is part of an affiliate sales network and receives compensation for sending traffic to partner sites, such as MileValue.com. This compensation may impact how and where links appear on this site. This site does not include all financial companies or all available financial offers. This in no way affects our recommendations or article content.