Finance

Sep 19 2016

Cancel for any reason – Coverage


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Cancel for any reason Coverage

This coverage provides up to 100% of your total trip costs if you have to cancel your trip for any reason not listed in the standard coverage.

Let us tell you a story

Madeline and her friends from college had long planned a tour of the pyramids and monuments of Egypt. On Madeline’s 50th birthday, they decided the time had come. So they scheduled flights into Cairo and purchased a package tour.

Just three weeks before their scheduled departure, however, news of political unrest and reports of rioting, looting, and gunfire flashed across their televisions. The U.S. State Department orders non essential personnel and their families to leave the country. Trip cancellation coverage does not apply to situations of political unrest, but having ‘cancel for any reason’ coverage on their travel policies meant that Madeline and her friends could recover their costs and wait for a safer time to travel.

What does ‘Cancel for any reason’ cover?

This coverage provides reimbursement (up to the covered amount) for non refundable trip payments and pre-paid trip deposits if you have to cancel your trip for any reason not covered under the trip cancellation benefit.

This benefit is separate and different from trip cancellation coverage. ‘Cancel for any reason’ coverage is considered a ‘fail-safe’ by many travel insurance buyers who worry they may have to cancel their trip for a reason that is not covered by trip cancellation coverage and want to recover at least a portion of their expenses.

Understanding Cancellation Penalties

Coverage amounts vary from 50-100% depending on the plan and, in some cases, are subject to cancellation penalties. A cancellation penalty is the amount the travel supplier will not refund you if you have to cancel. The cancellation penalty determines the percentage that travel insurance will reimburse less the amount refunded by your travel supplier.

Using the above story as our example:

  • Madeline’s trip cost $5,000 and tour operator imposes a 50% cancellation penalty if the cancellation occurs no less than two weeks prior to departure.
  • Madeline cancels and is penalized 50%, or $2,500, by the tour operator who agrees to refund half her trip cost.
  • Madeline’s travel insurance penalty schedule provides 90% reimbursement if the penalty amount is up to 50% of the trip cost.

Thanks to her ‘cancel for any reason’ coverage, Madeline’s reimbursement looks like this:


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