Trip cancellation insurance: what it pays and when it won't
This benefit protects the money you have already spent if something serious stops you from leaving. It only works for reasons the policy accepts, so that list matters more than anything else.
By the StarHolidays Editorial Team Updated 4 min read
Key takeaways
- It reimburses prepaid, non-refundable costs if a covered reason stops you from traveling.
- Illness or injury affecting you or a close family member is a typical covered reason, but check the wording.
- Insure only what you would really lose, and update it if you book more.
- It may pay nothing toward medical care abroad, so check medical cover separately.
On this page
How it works
You buy cover for your non-refundable trip costs. If a covered event then stops you from going, you cancel, collect evidence and claim back what your suppliers won't refund.
The CDC describes this as cover for your financial investment in the trip, such as flights, cruises or train tickets. It also warns that depending on the policy it might not cover medical care overseas. That catches people out, because the two benefits are often sold side by side.
What counts as a covered reason?
Policies list these specifically, and wording varies. Common covered reasons include:
- Serious illness, injury or death affecting you, a travel companion or a close family member
- Jury duty or a court summons
- Serious damage to your home
- Your carrier stopping operations for a covered reason, such as severe weather
- Being laid off, on some plans, usually with employment conditions attached
Check the CDC's two suggested questions for yourself: does it cover cancellation if you or a close family member becomes sick, and does it cover an outbreak at your destination, including any restrictions? Then check the policy's definition of "family member" too, because it may not include everyone you'd expect.
What usually isn't covered
- Deciding not to travel, including out of fear or for work reasons
- Pre-existing conditions that aren't accepted or waived
- Events you knew about when you bought the policy
- Costs your supplier will refund or credit
- Your government advising against travel, unless the policy says so
If you need more flexibility, look at cancel for any reason, which is the upgrade made for this.
How much cover do you need?
Add up everything prepaid and non-refundable, per person. Then consider:
| Cost | Include it? |
|---|---|
| Non-refundable flights | Yes |
| Tour or cruise deposits and balances | Yes |
| Free-cancellation hotels | No, until they become non-refundable |
| Fully refundable fares | No |
| Future non-refundable bookings | Add them when you make them |
| Spending money you haven't yet spent | No |
Example: two people book a $6,400 cruise and $1,400 of non-refundable flights, with $600 of refundable hotels. They should insure $7,800 between them, not the full $8,400.
Over-insuring costs you more without increasing what you could claim, while under-insuring might leave you short or, on some plans, affect optional benefits. Add new bookings to your policy if your insurer requires it.
When cover starts
Cancellation protection generally runs from when you buy it until you start your trip. That's why it's best to buy soon after your first deposit: see when to buy travel insurance. If you buy two weeks before departure, you've got two weeks of cover, however expensive the policy.
If you need to cancel
- Get the evidence first. See a doctor where relevant, and ask for a dated note saying you can't travel.
- Cancel promptly. Suppliers often charge more as departure approaches, and insurers may refuse the extra cost if you delayed without reason.
- Claim every refund or credit available. Your insurer will ask.
- Tell the insurer within the time your policy allows.
- Submit your paperwork. See our claims guide.
Do you need it if you already have some protection?
Before you buy, look at the cover you may already have. Each of these can reduce what you need, although none works quite the same way:
- Refundable bookings. If you can cancel for free, there's nothing for this benefit to protect until the free period ends.
- A tour operator's own scheme. Operators may offer a waiver, which can be helpful, but it may only give you a credit and it may fail if the operator itself gets into trouble.
- Your credit card. Card cover often includes a cancellation benefit, with a limit that may be lower than your trip's cost.
- Package protections. Schemes such as ATOL in the UK deal with company failure. They don't help if you get sick and can't travel.
Compare your cover with your full non-refundable amount, and buy only what fills the gap.
Credits and vouchers
If an airline or tour company offers you a credit rather than a refund, read your policy to see how it's treated. Some insurers don't pay cash for costs that were converted to a credit, so ask before you accept a voucher if you intend to claim.
Frequently asked questions
Is trip cancellation insurance worth it?
It is usually worth it when you have prepaid a large amount you could not recover and could not comfortably lose. It matters less when your bookings are refundable.
Can I cancel because of a work emergency?
Standard policies generally do not include this, although some plans offer limited work-related reasons. Check the covered reasons list, or consider a cancel for any reason upgrade.
Does it cover a sick parent or child?
Usually, if the policy's definition of family member includes them and the reason is otherwise covered. Check the wording, and remember pre-existing conditions of family members can also matter.
What is the difference between cancellation and interruption?
Cancellation applies before you leave. Interruption applies after your trip has begun. Both typically need a covered reason.