Looking for a trip cancellation only plan?
Stop looking. Trip cancellation only plans are not available. Neither are trip interruption only plans. All trip cancellation / interruption travel insurance plans are package plans that include some (or a lot more) medical, emergency evacuation, luggage, travel delay and other common coverages.
Here are the 2 parts of a trip cancellation travel insurance plan:
- Trip cancellation coverage (before you leave on your trip): you, a close family member or a traveling companion gets hurt or sick before you leave (and your doctor advises you against traveling). Travel insurance reimburses you the money you lose. This is especially important if you're concerned about a pre-existing medical condition.
- Trip interruption coverage (after you leave on your trip): you, a close family member including a non-traveling family member, or a traveling companion gets hurt or sick while you're on your trip and you have to return home early. Travel insurance reimburses you the unused value of your trip plus pays the cost of one-way airfare up to its limit.
How does trip cancellation travel insurance work?
You book a cruise, tour or other trip that requires you to pay money up front. Sometime before the trip, the money you paid becomes all or partially nonrefundable. What I mean by nonrefundable is, that if you were to cancel your trip, you will not get any cash refunds.
How the trip cancellation benefit works:
Let's say, you and your spouse paid $ 5,000 each for a trip to the Galapagos Islands. Two days before you're supposed to leave you're going out to get the mail and you get hit by a cement truck. In my examples, no one ever dies, but if you are hit by a cement truck i'm sure your doctor would advise you against traveling.
The fact that your cancel your trip just two days before you were supposed to leave, means that it's highly unlikely you're going to receive any refund on the $ 10,000 ($ 5,000 each) you paid for your trip. However, if you had bought a trip cancellation travel insurance plan some time in the days or weeks or months prior to being hit by a cement truck, and had insured your $ 5,000 per person trip cost, your trip cancellation travel insurance plan will reimburse you 100 % of the money you lost on the trip, or in this case the full $ 10,000.
However, let's say you only insured $ 3500 each of your $ 5,000 per person trip cost. In this case, the maximum amount of money you will receive from your trip cancellation travel insurance plan is $ 7,000 ($ 3,500 each), which is the maximum cost you had insured.
How the trip interruption benefit works:
You get to South America safely and this time, your brother-in-law (who you've never really cared for), is going out to get the mail and he gets hit by a cement truck. Even though you're sure he deserved it, out of respect you and your spouse cut your trip short and return home early.
Returning home means your interrupted trip will have some unused value as will your return plane tickets. Plus, you'll have to buy an expensive one-way last minute ticket home.
For the purposes of this example, your unused trip will be worth $ 3,000 for each of you. If you had insured your full $ 5,000 per person trip cost, your trip cancellation travel insurance plan will reimburse you up to $ 5,000 (and on some plans, a maximum of $ 7,500) of the money you lost on the trip plus the cost of the one- way last minute ticket home.
The maximum reimbursement depends on the percentage of trip cost you plan covers for trip interruption. Some plans state it as 100% of trip cost, while others cover as much as 150% of trip cost.
I hope this makes sense to you. If not, post a comment here or contact me and I'll do my best to help you understand trip cancellation travel insurance.