Do You Need Trip Interruption and Trip Cancellation Insurance?

As the world emerges from a global pandemic, travel plans will be top of mind for thousands of Canadians. One of the most critical aspects of planning a trip is making sure you have the right travel insurance coverage in place.

This article will explain how trip cancellation and trip interruption insurance coverage works, including what’s covered and not covered. I’ll also touch on how both cancellation and interruption insurance policies have been affected by COVID-19.

As you’re reading, remember that travel insurance coverage varies by provider, as does the cost of coverage. Therefore, before you sign up for any type of travel insurance, it’s crucial that you read the policy in detail to understand what is and isn’t covered. Ready? Let’s dive in.

What Is Trip Interruption Insurance?

Trip interruption insurance covers you during your trip. It will reimburse you for any prepaid expenses should you be forced to cut your trip short. It may even cover unforeseen circumstances that require you to remain on your journey for a more extended period and include the cost of transportation, meals, and accommodation.

With a trip interruption insurance plan, the list of covered causes is narrow, so you must know how you’re protected before heading on your trip.

One of the most common scenarios that would trigger a trip interruption claim would be an unexpected medical emergency, or death, of a non-traveling family member. You would cut your trip short if faced with such a situation. In that case, your insurance provider would not only reimburse you for the non-refundable portion of your trip, but they may also cover the cost of an emergency flight home.

Making a Trip Interruption Insurance Claim

It’s important to note that time is of the essence when making a trip interruption insurance claim. Most travel insurance companies will require that you make a claim within 72 hours of notification that your trip will need to be interrupted. Therefore, the best advice is to call your insurance company as soon as something happens.

Situations Covered By Trip Interruption Insurance

Here is a more complete list of covered causes of trip interruption travel insurance.

• The medical emergency of you or your travel partner
• Hospitalization of a non-traveling immediate family member, business partner, or caregiver
• Death of an immediate family member, business partner, or caregiver
• Medical emergency or death of your travel partner’s immediate family member, business partner, or caregiver
• Death of you or your travel partner
• Complications of pregnancy occurring before 31 weeks (usually includes you, your spouse, or an immediate family member)
• Government issues a sudden travel warning/ban during your trip

What Expenses are Covered by Travel Interruption Insurance?

Depending on the situation, travel interruption insurance will cover a wide range of expenses.

• Reimburse any prepaid, unused travel expenses, less any refunds.
• The cost of an emergency flight home
• Other transportation costs
• Meals and accommodation
• Return of deceased (if a covered party dies during the trip)

What Is Trip Cancellation Insurance?

Trip cancellation insurance protects travelers who need to cancel the pre-paid portion of a trip before departure for various reasons covered under the policy. The only thing that hurts more than having to cancel a trip you’ve been looking forward to is being out the non-refundable costs, such as airfare or cruise tickets. Trip cancellation insurance protects you from having to shoulder the financial burden.

As with trip interruption insurance, you need to do the proper research before purchasing a trip cancellation insurance policy so that you know what’s covered. Basic policies tend to be narrow in scope. The good news is that most travel insurance plans allow you to add waivers to their basic plan.

Reasons Trip Cancellation Coverage Is Covered

The following is a list of causes insurance companies include in most trip cancellation policies. Keep in mind that every insurance provider has slightly different guidelines.

Personal Medical Emergency

If you or your travel companion experience a personal medical emergency before departing, trip cancellation coverage may reimburse you for any prepaid expenses.

Family Medical Emergency

Medical emergencies can extend to your immediate family members and include hospitalization or death. If a tragedy were to force you to cancel your trip, you might be covered.

Government Travel Restriction

Sometimes, the Canadian government will impose a travel advisory for a particular country or region. The advisory can come without warning due to a geopolitical or public health crisis, or a natural disaster. In this situation, you may be covered by a basic insurance policy.

Jury Duty

If you are obligated to appear in court for jury duty, it’s unlikely that the judge will deem a planned vacation to a warm destination as a valid excuse for not attending. Many basic trip cancellation policies will cover this situation.

Loss of Job

If your employer lets you go, you may be covered, depending on the timing, and as long as you weren’t let go with cause.

Examples of Trip Cancellation Waivers

Not all causes are covered under a basic trip cancellation policy. For example, while medical emergencies are covered, pre-existing medical conditions are not. You can often add this coverage for an additional cost. Also, what happens if the airline or tour company you’re using suddenly goes out of business before you leave on your trip. Will you get a refund? Probably not. This is where a trip cancellation waiver can help.

How Much Does Trip Cancellation Insurance Cost?

Trip cancellation insurance can be expensive. Some estimates are between 5%-10% of the total non-refundable costs of your trip. So, if you have paid $5000 for a cruise, your insurance premiums could range between $250 and $500, a significant amount.

Should I Buy Trip Cancellation Insurance?

If the majority of the cost of your trip is non-refundable, then trip cancellation may be worth paying for. But everyone’s situation is different, so it comes down to a personal decision. Using the previous example, if you were on the hook for a $5000 cruise, would you be willing to pay up to $500 to make sure you’re covered?

Sometimes, the prepaid expenses of a trip aren’t that high. Hotel reservations can often be fully refunded within 24 hours of arrival, and the price of airfare can be very reasonable, depending on your route.

Trip Cancellation and Interruption Insurance: Quick Tips

Here are some short pieces of advice to consider when traveling with trip cancellation or interruption coverage:

• Read the fine print before purchasing your policy.
• When traveling, always keep your policy information and contact numbers close by.
• When making a claim, don’t delay. Contact your insurer immediately.
• Keep all receipts when you travel.
• Make sure you do everything in your power to continue your trip as scheduled.

List of Canadian Trip Cancellation and Interruption Insurance Providers

There are several insurance companies in Canada offering trip cancellation and interruption insurance. Here are some of the more well-known providers in alphabetical order. You should not consider this list an endorsement of any of these companies:

• Allianz Global Assistance
• CAA Travel Insurance
• Manulife Travel Insurance
• RBC Travel Insurance
• TD Insurance
• Travel Guard Insurance
• Western Financial Group

The Impact of COVID-19 on Travel Insurance Coverage

Over the past 16 months, COVID-19 has devastated the travel and tourism industries on a global scale. Domestic and international travel has been severely curtailed, with the vast majority of non-essential trips coming to a halt.

Anyone who continues to travel needs to be aware of COVID-19 travel advisories and their impact on trip cancellation and trip interruption insurance policies.

Most insurance companies have warned that they won’t cover COVID-19 related claims if the purchase of trip cancellation and trip interruption insurance, or travel itself, was made after the government announced a COVID-19 travel advisory. In other words, understand the risks before you travel.

Final Thoughts on Trip Cancellation and Trip Interruption Insurance

Whether you have existing coverage through a travel rewards credit card or purchase a separate travel insurance policy from a travel insurance company, it’s important to make sure you are fully protected anytime you go on a trip. Unless you are prepared to cover any potential losses on your own, trip cancellation and trip interruption policies are essential, especially for more expensive trips. However, always remember to read the fine print and know what you are covered for when you go.