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Should you purchase trip cancellation insurance before your next trip?

November 25, 2015
Arc de Triomphe
Arc de Triomphe

Arc de Triomphe

Nervous about making travel plans after the worldwide travel alert? Here are some things you should know about trip cancellation insurance.

After waking up to reports of various terror attacks over the past two weeks, many boomer travelers might be feeling antsy about booking international trips. Pundits proclaim that we can’t allow terrorists to change the way we live or we’ve allowed them to win. Experts point out that the statistical odds of being a victim of a terror attack are extremely slim, less than the odds of being hit by lightening.

But deciding whether or not to travel in a climate of escalating threats is an emotional decision—with some people being more anxious or fearful than others.

After the terrorist attacks in Paris and lockdown in Brussels, the U.S. Department of State issued a Worldwide Travel Alert on November 23, 2015 alerting “U.S. citizens to possible risks of travel due to increased terrorist threats.” The alert remains in effect until February 24, 2016. Most alerts are put into effect for a period of 90 days after which they can be renewed.

The travel alert goes on to say:

“Authorities believe the likelihood of terror attacks will continue as members of ISIL/Da’esh return from Syria and Iraq.  Additionally, there is a continuing threat from unaffiliated persons planning attacks inspired by major terrorist organizations but conducted on an individual basis.”

Canceling a trip can be costly so many travelers may want to examine their travel insurance options. Various kinds of travel insurance are available–including flight insurance, medical travel insurance, trip interruption insurance, and evacuation coverage—but “trip cancellation and interruption policies” are the ones that might be considered by ambivalent travelers who want an “out” should circumstances change or worsen.

Like most insurance policies, it’s hard to decipher the value of trip cancellation and interruption policies. Based on my reading, here are six things you should consider before purchasing a policy:

1) Travel cancellation insurance only covers certain listed unforeseen events, not those already known at the time the insurance is purchased.

2) Unlike other travel insurance policies that begin when you embark on your trip, trip cancellation insurance begins after midnight on the day the policy is purchased.

3) Standard cancellation policies don’t cover “imminent” threats. The U.S. State Department has to declare that an actual terrorist attack has taken place in a city listed on your itinerary, one that occurred within 30 days of your scheduled departure date.

4) Cancel For Any Reason (CFAR) insurance (an upgrade to travel cancellation insurance) is the only type of insurance that allows travelers to cancel an upcoming trip with reduced financial loss because they are concerned or anxious about a heightened terrorist threat.

5) CFAR policies generally must be purchased within a certain number of days after making an initial trip deposit.

6) Terms, conditions, limitations and exclusions of various CFAR policies differ so be sure to read the fine print and compare plans. If you are still unclear, raise your questions to a representative of the company offering you the insurance and ask for the answers in writing. (For example, find out specifics such as the permissible time window for canceling the trip before your departure (e.g., generally 48 hours); the proportion of the prepaid, non-refundable costs of the trip for which you’ll be reimbursed; and any maximum per person limits.)

As one might expect, travelers can expect to pay a high cost for this type of fail-safe trip cancellation insurance coverage (CFAR).


Sources: Insure My TripTrip Insurance StoreSquaremouth

Also on the Web: Travel Insurance and Terrorism

  • Reply
    Sand In My Suitcase
    November 28, 2015 at 12:59 pm

    Interesting – we hadn’t heard of CFAR cancellation insurance. Of course, we have travel medical insurance (an absolute necessity). But cancellation and interruption insurance may not be worth it. For example, with an airline ticket, if you cancel a “non-refundable” ticket before leaving, you lose some $200 or $300 of the ticket as a penalty, but usually have a year to re-use the remaining value on an another flight. With hotels, you may have up to 24 hours in advance to cancel. If it’s a full-on packaged tour, the cancellation penalties may be different, and it may be worth it if it’s not possible to re-book (with penalty) at a later date.

    • Irene S. Levine
      Reply
      Irene S. Levine
      November 28, 2015 at 4:45 pm

      I recently read that some chain hotels are becoming more restrictive about cancellation policies 🙁

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