This type of travel insurance covers the non-refundable financial penalties or losses you incur when you cancel a prepaid tour or flight for an acceptable reason. These might include if:
- you, your travel partner, or a family member cannot travel due to acceptable reasons;
- your tour company or airline goes out of business or can’t perform as promised;
- a family member at home gets sick, causing you to cancel;
- for a good reason (such as a car accident, inclement weather, or a strike), you miss a flight or need an emergency flight.
In other words, if you or your travel partner accidentally breaks a leg a few days before your trip, you can both bail out without losing all the money you paid for the trip! And if, some time into your tour, you have an accident that prevents you from continuing with the group, you’ll be reimbursed for the portion of the tour you haven’t used.
Cancellation and interruption insurance can be used by people on an organized tour or cruise, as well as people travelling independently (in which case, only the prepaid expenses — such as their flight and any non-refundable hotel reservations — are covered.)
Note the difference: Trip cancellation is when you don’t go on your trip at all, and is fully covered. Trip interruption is when you begin a journey but have to cut it short; in this case, you’ll be reimbursed for the portion of the trip that you didn’t complete. Be aware that some insurers won’t cover certain airlines or tour operators.
Jittery travellers are fretful about two big unknowns: terrorist attacks and natural disasters. Ask your company for the details. You’ll likely be covered only if your departure city or a destination on your itinerary actually becomes the target of a terrorist incident within 30 days of your trip. Even then, if your tour operator offers a substitute itinerary, your coverage may become void. As for natural disasters, you’re covered only if your destination is uninhabitable (for example, your hotel is flooded or the airport is gone).
You can avoid the question of what is and what isn’t covered altogether by buying a costly “any-reason” trip cancellation policy. These offer at least partial reimbursement (generally 75 percent) no matter why you cancel the trip. But the premiums are so hefty that these policies appeal mostly to deep-pocketed nervous Nellies pre-paying for extremely expensive trips.
Before purchasing, check with your credit card issuer — yours may offer limited trip cancellation or interruption coverage for flights or tours purchased with the card.
The rugged, healthy, unattached, and gung-ho traveler will probably forgo trip cancellation coverage. I have skipped it for more than 70 trips, and my number has yet to come up. But if you’re paying out a lot of up-front money for an organized tour (which is expensive to cancel), if you have questionable health, or if you have a loved one at home in frail health, you should definitely get this travel cancellation insurance!