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What is cancellation cover?
Cancellation is one of the biggest reasons travellers buy travel insurance. They want to make sure they're covered for any prepaid expenses to avoid being left out of pocket in case things don't go according to plan. It can either be featured in a policy or purchased as a stand-alone.
Travel insurance cancellation cover options
You can get cancellation cover in a few different ways;
Some insurers offer policies that specifically cover cancellation only. Policies like this are useful if you've spent a good amount of money on your trip and you're not concerned about medical cover.
For example, you're going a weekend trip to Melbourne, and have spent hundreds on your flights, accommodation and activities. Before you leave, you fall ill and the doctor advises against travel which forces you to cancel your trip. This type of policy could save you from out-of-pocket expenses.
We've researched through our partners and have found 3 options if you need cancellation only.
You'll find that most comprehensive policies will include unlimited cancellation cover or at least between $20,000 - $50,000. For peace of mind, it would be the easiest option to just choose a policy with unlimited cancellation, however you could think about the value of your trip and if you've actually spent more than $20,000 in the first place. If you haven't, you could be paying for a benefit that you don't actually need.
For peace of mind, these are our partnered brands that offer unlimited cancellation cover.
If you value flexibility and want to get the most out of your benefits, this option could be suitable for you. These policies either exclude cancellation cover or provide minimal cover in the base policy. At time of purchase, you then have the option to choose what level of cancellation cover is best for your trip, and you pay for that amount. This means, if you don't need much cancellation cover, you won't have to pay for it.
We did the research and found these Finder partners who offer policies that allow you to choose your level of cancellation cover.
Please note that Cover-More has announced a suspension of any new Cancel For Any Reason (CFAR) policies as of 5pm AEST on Friday 13 March 2020 in Australia and New Zealand, in the face of the global coronavirus crisis. If you've already purchased CFAR before this date, you'll still be covered as per the usual terms and conditions.
This is not common in Australia, but CoverMore offers an optional add-on if you purchase its International Plus, Inbound or Domestic policy. The catch is that you can only get this cover through travel agents like Flight Centre, Helloworld, Magellan and Travellers Choice and some other independent travel consultants and brokers. CoverMore will cover up to 75% of $10,000 (you choose the amount) if you have to cancel your trip for a reason that isn't normally covered. Here are a few other considerations;
You have to have bought the policy within 7 days of the first payment of your trip
If you cancel, you need to do it at least 7 days prior to your departure
If you book more travel after you purchased the policy, you will have to cancel more than 14 days before you depart if you want to be covered for the additional booking
What exactly does travel cancellation insurance cover?
Here are some examples of pre-paid travel expenses you can claim back on cancellation cover:
Cancellation fees charged by airlines, hotels, tour operators, rental car companies and more
Non-refundable deposits for pre-booked flights, accommodation, tours and more
Travel agent cancellation fees
Lost frequent flyer points that cannot be recovered
Additional travel expenses if you need to return home early from your trip
Tuition fees if you had paid for a course or training at your travel destination
What are some reasons you could be covered by cancellation cover?
Some insurers come right out and tell you what they'll cover, while others only tell you what they won't cover (these are called exclusions and we'll touch on them later). At any rate, what the covered events all have in common are that they are unexpected and outside of your control.
Below are some situations that are commonly recognised as qualifying for cover, as long as there's no way you could have seen them coming (ie, unexpected). Just make sure you check your insurer's policy documents because not every insurer treats these situations exactly the same.
Cancellation due to a close relative's illness or death. This usually applies to immediate family members (including step-family) and extends to include grandparents, grandkids, in-laws, fiancés, de facto partners and official guardians. Some policies will also include first cousins, aunts, uncles, nieces and nephews and even business partners. However, if one of them had a serious illness before you bought the policy, you probably won't be covered.
You die or suffer a serious illness or injury. Similar to above. If you come down with pneumonia, break your ankle or suffer some other serious illness or injury, you will be covered as long as it's not caused by a pre-existing condition or you weren't acting recklessly when it happened. If you die, the funds will be paid to your estate.
A natural disaster batters your destination. This means an extreme event like an earthquake, hurricane, blizzard or tornado makes it unsafe to travel to your destination. Your insurer may want to see evidence of an official government declaration, such as a state of emergency or an official travel warning. You might not be covered if the natural disaster was already a known event (i.e. already reported by the government or media).
A course you were to attend got cancelled. You're only eligible to claim for this under trip cancellation if the cancelled course was the sole purpose of your trip. If that's the case, you can be reimbursed for the cost of the course, plus all of the travel and accommodation costs.
You become pregnant. This only applies if you become pregnant after you took out the policy and you've progressed in your pregnancy beyond a certain point by the time you were supposed to depart (for example, you are 32 weeks pregnant when you were supposed to leave), or if you experience pregnancy complications.
What's not covered by travel cancellation insurance?
Just because your travel insurance policy includes cancellation cover, don't assume that you will be covered if you cancel your trip for any reason (unless you bought that policy). As we touched on above, travel insurers only cover you when you need to cancel or cut your trip short due to situations that are unexpected and outside your control. That means no cover will be provided if:
You change your mind. You can't cancel your trip 'just because' and expect to get reimbursed. Changing your mind is neither unexpected nor outside of your control.
You need to cancel because your visa is denied or you have passport issues. It's up to you to make sure you have permission to enter the country you are visiting. Your insurer won't pay for your cancelled trip if you've made the assumption that your visa would be granted or that your passport would arrive on time.
Your best friend dies. Most policies clearly state that you can only claim for cancellation if it is a relative who dies, and they will make it clear in the fine print what they mean by relative.
You get reimbursed by the provider. You can't double up if you're eligible for a refund through your trip provider like your hotel. Your insurance will only pay for prepaid expenses you can't get back any other way.
You travel against your doctor's advice. If you're advised by a medical practitioner not to go on your journey but you travel anyway, your policy won't provide any cover. Travelling against medical advice is a key exclusion on all policies; however, if you cancel your trip because your doctor says you're unfit to travel, you'll be covered for cancellation fees and lost deposits.
Your tour is under-booked. If you've pre-booked a tour on your holiday and then it's cancelled due to under-booking, your policy won't provide any cover. It will be up to the tour provider to either reschedule your trip or provide a refund.
You purchase after something happens or there's been a warning. Your insurer won't cover you if you bought your insurance after there had been reports of an approaching hurricane, social unrest or whatever it is you are trying to claim for.
How to find the best travel cancellation insurance for you
The best policy for one person might not be the best policy for another, so your ideal policy really just comes down to your specific requirements. Here are some tips on how to settle on the right policy:
Determine your needs and budget. You can find policies with unlimited cancellation cover and policies with only a couple thousand in cancellation cover. Weigh up how much you are spending on your trip with the likelihood you will have to cancel and how much it would hurt to lose that money if you did cancel. This will help you decide how much cancellation cover to get.
Look at what is covered. Check the policy documents of a few policies to find out what exactly they'll accept for a cancellation claim. For example, some insurers will cover you if you cancel because your first cousin or aunt passes away. Others limit it to immediate family.
Look at what's not covered. Read through the exclusions of a few policies to see if there are any that concern you. For example, some policies won't cover you if you have to cancel because you were injured skiing if you haven't purchased their optional ski cover as well. Having ski cover wouldn't make sense if you were going to the tropics, so you'd have to watch yourself on the slopes prior to departing.
When looking for cancellation cover, enter your trip details into our search engine. You can then select "Cancellation fees" on the sidebar or have a look at the second column in the table to show specific amounts.
Tips on getting your travel insurance cancellation claim paid
If you're making a travel insurance claim for cancellation, there are a few simple things you can do to improve the chances of your claim being paid:
Get proof of the reason for cancellation. If you need to cancel your trip due to a covered event, make sure you can provide evidence that the event actually happened. For example, you may need a letter from your doctor explaining why you were unfit to travel.
Get proof of the expenses you're claiming for. If you want paid for unused travel expenses, you'll have to show that you actually paid for them and aren't eligible for a refund. Save all your receipts and itemised bills; collect documentation outlining your cancellation fees and penalties; and get letters from tour operators and travel agents detailing any non-refundable deposits.
Read the fine print. As we've touched on above, travel insurance doesn't cover you if you cancel your trip for just any reason. Exclusions, terms and conditions apply, so familiarise yourself with them before you cancel your trip.
Buy travel insurance ASAP. Travel insurance can provide cancellation cover from the moment you purchase a policy, so don't delay buying it. If an unexpected event occurs before you purchase the insurance, you won't be covered if that event forces you to cancel your trip.
Compare travel insurance policies with cancellation cover
Finally, some good news! Domestic travel is picking up, so some insurers have started offering cover again 🦘 Just remember, you won't be covered for any pandemic related claims if you do take out domestic travel insurance. International travel insurance is limited and sometimes unavailable at this point.
When should you buy travel cancellation insurance for your trip?
You should buy travel insurance as soon as possible after booking your trip because the whole purpose of travel cancellation cover is to cover you for events that happen before your trip. If you wait until the date of the trip to buy insurance, you're basically wasting your trip cancellation cover.
Some other questions you may have
Yes, all policies offer a cooling-off period during which you can cancel your cover and get a full refund. This is usually between 14 and 30 days after purchase and will only be paid if your trip hasn't yet started and you haven't already made any claims.
It will depend on the policy you choose. Some insurers will provide cover for claims related to terrorist threats while others will exclude it. You can find out who will offer cover terrorism here.
Jessica Prasida is an associate publisher for Finder specialising in travel and home insurance. She loves travelling and is a wannabe dumplings master. Jess has a Bachelor of Business from the University of Technology Sydney and a Tier 1 General Insurance qualification. She is currently studying a Master of Marketing.
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