Is Trip Cancellation Insurance Worth It?

Planning an expensive summer tour? Don’t get caught out if your plans suddenly change, or if your target destination erupts in rioting, or if your tour operator goes belly-up. It’s not easy getting your money back.

Is trip cancellation insurance worth it? If you know what you’re buying and you’re under no illusion that everything is covered no matter what the circumstance, it can be a sound investment. But like all investments, you need to know what the downsides are. And to do that, you need to pay attention not only to what your travel specialist tells you, but what your insurance contract says. That means reading the fine print. Trip cancellation insurance can be complicated.

Many policies, for example, will not cover a tour that is cancelled because the air carrier, cruise ship, or tour operator goes bankrupt and drops out of business—although you may get recourse from your credit card company, or the receivership handling the bankruptcy, or an industry or government regulatory body that oversees the charter or tour companies. But that gets a bit messy at times.

Travel insurers also may not cover your cancellation or trip interruption if it is caused by civil rioting or insurrection or an outburst of terrorism, so make sure you stay abreast of affairs in and around your planned tour destination. For example, if you’re planning on a tour of the Middle East, or Greece (which is in a dicey monetary crisis), or if you’re planning to visit relatives in Chechnya this summer, don’t pay any more deposits than you have to and check with your official government alert system to see if any warning has been posted about travel to your chosen destination. As a rule, travel insurance purchased after your government has issued such a warning may invalidate your coverage. Virtually all trip cancellation policies now have some language about terrorism or civil unrest coverage. Read it and ask questions if you are not clear what the language means.

And then, in the summer, there are always those quirky weather events—such as hurricanes—that can blow away your vacation plans. As a rule, trip cancellation insurance will cover your deposits if the storm destroys your destination hotel, or forces cancellation of your flights. But be cautious also of your own decisions concerning travel to a hurricane-prone area. If you decide to cancel your trip at the last moment because a hurricane is brewing, but then it doesn’t ultimately hit where you thought it might; or if a storm only disrupts a part of your planned trip, say less than a third; or if government or some other official weather source fails to issue a hurricane warning for your planned destination, you may end up the loser.

I live in a hurricane-prone area and I know how fickle these big storms can be. Trying to outguess them is tricky business. My advice to people anticipating travel to such areas in the late summer or fall is to definitely get trip cancellation insurance, because it really is quite cheap compared to the costs of a week-long trip. But, if you can, try to pay as you go; keep your prepaid deposits to a minimum; and before cancelling on your own, contact your tour operator.

In an effort to make trip cancellation policies more consistent and inclusive, some insurers are now offering “Cancel for Any Reason” or “Change of Mind” policies. Their wording varies, but the intention is to cover you no matter what the circumstance. But even this is not 100 per cent coverage and you need to know about the exclusions. Some, for example, will reimburse you more if you cancel well ahead of your scheduled departure, while only a small percentage will do so if you cancel a few days before you are due to leave. And there are exclusions. But if you take the skeptical approach and understand that Nobody Covers Absolutely Everything No Matter What the Circumstance, you’ll be fine.

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