What is trip cancellation travel insurance?

Written by Lizzie Nealon / December 15, 2022
Reviewed by Kara McGinley
Fact checked by Heidi Gollub

Key points

  • Trip cancellation insurance covers your prepaid, nonrefundable trip expenses if you’re unable to travel due to certain unforeseen circumstances, such as an illness or the death of a family member.
  • Trip cancellation insurance generally won’t cover foreseeable or preventable events, such as a hurricane that was named before you bought coverage.
  • Trip cancellation insurance typically costs between 5% and 10% of the total cost of your trip.

The average household spent more than $2,000 a year on travel before the pandemic. As traveling rebounds and you’re ready to plan your next trip, a trip cancellation policy can give you peace of mind. But it’s important to understand what trip cancellation insurance does and does not cover.  

Inside this article

  1. What is trip cancellation insurance?
  2. What trip cancellation insurance covers
  3. What trip cancellation insurance does not cover
  4. What is “cancel for any reason” coverage?
  5. How much does trip cancellation insurance cost?
  6. How to get trip cancellation insurance
  7. Credit card rewards and trip cancellation insurance
  8. Frequently asked questions

What is trip cancellation insurance?

Trip cancellation insurance is a type of travel insurance designed to reimburse you for prepaid, nonrefundable travel expenses when you cancel your trip because of a reason listed in your policy. 

Trip cancellation insurance is often part of a comprehensive travel insurance plan, but it can also be purchased separately. 

You can typically purchase trip cancellation insurance up to the day before your scheduled departure. It’s best, however, to buy a travel insurance plan as soon as you make your first trip deposit. You won’t be charged extra for buying a plan earlier, and you will be covered for a longer period of time.

What trip cancellation insurance covers

Trip cancellation insurance can reimburse you for 100% of your nonrefundable and prepaid trip costs if you cancel for a covered reason, which may include: 

  • Death of your travel companion, business partner or family member (policies differ on who is considered a family member)

  • Injury or illness of you or a travel companion (documented by a doctor)

  • Complications from pregnancy for you or your travel companion

  • Traffic accident en route to departure

  • Mechanical breakdown or other failure of your transportation

  • Mandated shutdown of an airport or air traffic control system

  • Air traffic control or airport shutdown due to fire or power outage

  • Mandatory evacuation due to an unforeseen natural disaster

  • Severe, sudden weather

  • Your home or your trip lodging is uninhabitable due to a natural disaster, vandalism or burglary

  • Hurricane warning or hurricane watch (you must have purchased the policy before the storm was named)

  • Jury duty

  • Terrorist attack

What trip cancellation insurance does not cover

While trip cancellation policies differ, most plans will not cover incidents that could be foreseen or planned around. For instance, most trip cancellation policies will not cover cancellations resulting from:

  • Alcohol or substance use

  • Committing a felony

  • Dental treatment or elective procedures

  • Harm resulting from dangerous activities such as skydiving or bungee jumping

  • Mental or nervous health disorders

  • Normal pregnancy and childbirth

  • Participation in amateur or professional sporting events

  • Self-harm 

  • War

What is “cancel for any reason” coverage?

If you want to be able to cancel your trip for any reason, not only those specified in your policy, consider buying “cancel for any reason” (CFAR) coverage. This premium upgrade will add about 50% to the cost of your trip cancellation insurance but will give you greater flexibility with your plans.  

CFAR coverage typically reimburses up to 75% of your nonrefundable trip costs when you cancel a trip. But you have to cancel at least 48 hours before your scheduled departure if you hope to file a successful CFAR claim. 

How much does trip cancellation insurance cost?

A basic travel insurance policy with trip cancellation coverage typically costs between 5% and 10% of the total cost of your trip. That means if you take a $5,000 safari trip to Tanzania, your travel insurance might cost between $250 and $500. 

How much you pay for trip cancellation insurance will depend on the travel insurance company, the plan and level of coverage you choose, the number of travelers in your party and their ages, your trip length and trip expenses. 

How to get trip cancellation insurance

Comprehensive travel insurance policies usually include trip cancellation benefits, but you can also buy a standalone trip cancellation policy. 

To shop for trip cancellation insurance, follow these steps. 

  1. Check if your credit card has travel insurance. If your credit card provides trip cancellation benefits when you pay for trip expenses with that card, you may opt to skip buying a separate trip insurance policy.

  2. Compare quotes. Choose a travel insurance company by comparing travel insurance plans and quotes online. 

  3. Buy the plan you want. You can buy travel insurance online. Be prepared to enter your travel dates and destination, the total value of your trip and information about your travel companions.

  4. Review your plan. After buying travel insurance, you typically have a free look period of 14 or 15 days. If you read the details of your plan and decide it’s not a good fit, you can cancel and request a refund during that period. 

Credit card rewards and trip cancellation insurance

The following credit cards provide complimentary travel insurance with trip cancellation benefits when you pay for your travel using the card:

  • Capital One Venture X Rewards Credit Card

  • Chase Freedom Flex

  • Chase Sapphire Preferred Card

  • Chase Sapphire Reserve 

  • Delta SkyMiles Reserve American Express Card

  • Ink Business Preferred Credit Card

  • The Business Platinum Card from American Express

  • The Platinum Card from American Express

  • United Explorer Card

  • United Club Infinite Card

Check to see if your credit card offers travel insurance with trip purchases and what coverage it provides. Travel insurance provided by credit cards isn’t usually as comprehensive as a separate policy. 

Frequently asked questions

What does trip cancellation insurance cover?

Trip cancellation insurance reimburses you for prepaid, nonrefundable expenses if you need to cancel a trip for a covered reason. Valid reasons for trip cancellation typically include unforeseen events such as a death in the family, sudden weather that leaves your destination uninhabitable or an illness that is documented by a doctor.

How does travel insurance work for trip cancellation?
What other types of travel insurance can I buy?
Article Sources
  1. https://www.forbes.com/advisor/travel-insurance/trip-cancellation/
  2. Sample travel insurance policies

About the Authors

Lizzie Nealon

Lizzie Nealon

Lizzie's commentary has been published in Bankrate, CNBC, the Washington Post, the Washington Examiner, MSN and more.

Full bio
 Kara McGinley

Kara McGinley

I am the deputy editor of insurance and an experienced journalist and editor. My work and insights have been featured in MSN, Lifehacker, Kiplinger, Propertycasualty360 and more.

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Heidi Gollub

Heidi Gollub

Heidi Gollub is the lead editor of insurance. She was previously the assistant managing editor over insurance for U.S. News & World Report.

Full bio

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