Trip cancellation insurance covers the non-refundable portion of your travel expenses if an unavoidable situation beyond your control force you to cancel your trip. Your vacation is scheduled to begin in 3 weeks and your trip has already been paid for, but there is an incident, an illness or a death in the family… Obviously, you can no longer leave and you would like to be refunded. What are the advantages of taking out a trip cancellation insurance?
What is the purpose of a trip cancellation insurance?
You have put a lot of time into preparing for your trip but you must unfortunately cancel. It is a great disappointment and add to this the impact of non-refundable cancellation fees by the wholesaler or airline. The amount of the cancellation fees varies from company to company and the closer you approach your departure date, the more limited your refund will be. It is therefore very important to notify the company of your need to cancel as soon as possible.
There are several cancellation grades which vary according to agencies, tour operators and airline companies. Refer to your contract to find out the exact terms and specific conditions. The following is an example of cancellation fees which could be applied by a wholesaler:
• Non-refundable deposit
• 44 to 30 days before departure: 50%
• 29 to 7 days before departure: 75%
• 6 days and less before departure: 100%
The purpose of cancellation insurance is to obtain a refund of expenses that the wholesaler, travel agency or airline will not reimburse.
Example: You buy a group trip at a price of $2,600. You fall ill 8 days before departure. The wholesaler will reimburse only 75% of the cost that you have paid, that is $1,950. The insurance will reimburse you the full cancellation fees retained by the wholesaler which is $650. You will therefore recover everything that you paid.
Warning: In the case of purchasing plane tickets, the penalties are 100% and often at time of booking. For cruises, the cancellation fees often begin more than 3 months from departure!
What is covered by the trip cancellation insurance?
What is considered as ground for cancellation varies from one contract to another. This is why it is very important that you read the guarantees and exclusions! The following is a non-exhaustive list of reasons for cancellation which are often covered:
• Death of family member;
• Illness or injury;
• Damage occurs to your home or place of business;
• An official notice from the Canadian government not to enter a particular region or country;
• Visa application denied;
• New job;
• Passport or plane tickets stolen…
It is important to declare your cancellation quickly, generally the same day or within 5 days following the reason for cancellation. The insurer will ask you to provide proof of your inability to travel: medical or death certificate, confirmation from your employer…
How to get a trip cancellation insurance?
Cancellation insurance is often available directly with the travel agency or on the tour operator’s website when purchasing. The cost of insurance is proportional to the amount that you insured and may vary according to your age. Although this type of insurance is offered by the travel agency or the tour operator, the premium is not necessarily the best on the market. You can decline their offer and compare cancellation insurance solutions which are available with specialists such as Escapade Travel Insurance.
The causes of cancellation are only covered after subscription to the insurance contract, so it is in your best interests to buy your insurance as soon as possible after purchasing your trip. There is also the All-Inclusive insurance which offers coverage for medical costs, luggage and cancellation. It may be beneficial for you to contact one of our advisors about these products.
Credit card coverage against trip cancellation
Only a few “high end” cards offer protection in cases of trip cancellation. Generally, guarantees cover you in cases of health problems which prevent you from traveling, in cases of death of a family member or serious damage to your home. For all other cases, your credit card cancellation insurance may not be valid. It could also have a refund limit, so if the cost of your trip exceeds the fixed limit, you could lose the excess amount. Credit card insurance are not always sufficient, or even non-existant.
Remember to check these details and compare the guarantees with the cancellation insurance Escapade Travel Insurance offers.
For more information on trip cancellation insurance
Other tips for travelers are available on the Consumer Protection Office website.