What is Cancel for Any Reason Travel Insurance?
A lot of people assume that travel insurance will reimburse them for all lost expenses when they cancel a trip, no matter the reason. It doesn’t quite work like that!
Most trip cancellation insurance plans offer “named peril” coverage. This means you’re protected against specific travel mishaps and problems that are named in your plan—not every possible thing that could go wrong with your trip or cause you to cancel.
“Cancel for any reason” travel insurance is different. This type of plan, often abbreviated as CFAR travel insurance, can reimburse you for most, but not all, of your lost prepaid expenses when you cancel a trip for any reason that’s not named in your plan.
Sounds great, right? It can be—but CFAR travel insurance has some drawbacks, too, and it isn’t the best choice for every trip.
How does Cancel for Any Reason travel insurance work?
Imagine that it’s five days before your Alaskan cruise, and you realize that unfortunately, you’re going to have to cancel the trip. The cruise line has a strict no-refund policy, as does your airline, so neither one is going to give you your money back. Luckily, you bought travel insurance!
If you’re canceling the trip for a covered reason—one that’s listed in your plan as a reason for trip cancellation—then your trip cancellation benefits can reimburse up to 100% of your prepaid, non-refundable expenses. Examples of covered reasons:
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The serious illness or injury of the insured traveler or traveling companion
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The serious illness or injury of your family member (if it’s life-threatening or requires hospitalization)
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You or your traveling companion is terminated or laid off from your job (conditions apply)
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You or your traveling companion are getting legally separated or divorced
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Your destination is uninhabitable
If you cancel your trip for a reason that is not specifically covered, then your “cancel for any reason” travel insurance can reimburse a percentage of the money you paid for the trip. You’ll have to file a claim with documentation for all your prepaid expenses, such as airfare, cruise fare, cruise meal and drink plans, tours and excursions, etc. Once the claim is approved, the insurance company will send your reimbursement deposit or check.
What should I know before buying Cancel for Any Reason travel insurance?
The #1 rule: Read the fine print!
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Generally, Cancel for Any Reason insurance isn’t offered as a standalone policy. Instead, you buy it as an add-on to a standard travel insurance plan.
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You must buy CFAR insurance within a specified window after making your first trip deposit, usually 10-21 days.
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You can’t cancel your trip at the very last minute. Usually, you must cancel at least 48 hours ahead of your scheduled departure.
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CFAR insurance isn’t cheap. It may add around 50% to your travel insurance costs, which in turn are based on the total cost of your trip and your age.
Is Cancel for Any Reason travel insurance worth it?
The answer depends on a few factors, including your likelihood of canceling for a non-covered reason, the cost of your trip, and your risk tolerance.
First, check the covered reasons for trip cancellation in your travel insurance plan. You can do this before you buy a plan. Just download the plan documents and read through the section on trip cancellation.
Ask yourself: Is there any likely reason you might cancel the trip that’s not included in the list? Some common reasons people cancel that are not covered reasons:
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A change in your financial situation
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A family emergency (aside from the illness or death of a loved one)
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The sudden illness or death of your pet
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The illness or death of a friend or relative who doesn’t fit the definition of a “family member” for insurance reasons
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Your travel companion is unable to go
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You have a scheduling conflict
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The concert or event you planned to attend is canceled
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Bad weather is forecasted for your destination
Then, consider the cost of your trip. Let’s say you’re paying $200 for standard travel insurance on a $4,000 trip; it might cost you an additional $100 to add CFAR protection that reimburses 75% of your prepaid, nonrefundable costs. So you’d be paying an extra $100 to get back $3,000, should you cancel for a non-covered reason.
Don’t forget to check refund policies! If your airline, tour company, vacation rental company and/or hotel will refund your money or give you a credit for a last-minute cancellation, then you may not need the extra protection of Cancel for Any Reason insurance.
Lastly, assess your own tolerance for risk, financial and otherwise. If you were to lose your prepaid trip costs, would that be OK or a catastrophe? If a travel advisory were issued for your destination, would you still go or would you decide to cancel? Risk-averse travelers may want the peace of mind that comes with Cancel for Any Reason travel insurance.