Looking for travel insurance that covers your flights and accommodation if you have to cancel your trip?
What happens if you're no longer able to go on your dream trip? Will travel insurance cover your cancellation costs? Read on to find out when you'll be covered, and what to look for in a policy.
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Why do I need cancellation cover?
Why is cancellation cover such a crucial feature of travel insurance? To put it bluntly, because ‘stuff’ happens. Despite what your horoscope might tell you, it’s impossible to predict the future. Accidents, natural disasters and all other manner of unexpected events can occur at any time – and they can completely destroy your travel plans.
When this happens and you’re forced to cancel your holiday, it can end up leaving a huge dent in your bank balance thanks to:
- 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 accommodation and travel expenses if you’re unable to continue your journey
- Additional travel expenses if you need to return home partway through your trip
But with travel insurance for cancellation in place, you’ll be covered for all of the above expenses. Alternatively, your policy may cover the cost of rearranging or rescheduling your journey if this is a more viable option than completely cancelling your trip.
Cancellation cover ensures that when life throws you a curveball and turns your travel plans on their head, you won’t have to suffer the financial consequences.
What exactly does travel cancellation cover?
You’re now probably wondering in which circumstances your travel insurance policy will provide cover for trip cancellation – and if there are any situations when you won’t be covered. This is an extremely common cause of confusion among policyholders, so it’s important to be fully aware of when cover applies to ensure that you don’t end up with any nasty surprises.
While the exact policy wording varies between insurers, travel insurance only provides cancellation cover for unforeseen circumstances which are outside your control. This is a vital clarification and means that you will be covered for lost deposits and additional expenses that arise when:
- You have an accident on the way to the airport. If you’re involved in a motor vehicle, railway or marine accident that causes you to miss your flight or other pre-booked transport, travel insurance can cover the resulting costs. However, you’ll need to provide proof that the accident occurred and that there was no way you could have reached your transport on time.
- Extreme events occur. Natural disasters, riots, civil unrest and even hijacking that disrupt your travel plans are all covered. However, these events must begin after you have purchased your travel insurance policy, not before.
- Your flight is cancelled (in specific circumstances). Travel insurance provides cover if your flight is cancelled due to severe weather, natural disaster, hijacking, riot, strike or civil commotion. Note that the event in question must have begun after you take out cover. For example, if you booked flights to Bali after the Mt Rinjani eruptions and subsequent ash clouds began disrupting travel to the region, you would not be covered.
- You suffer a serious illness or injury. If you suffer an accidental injury or fall ill and you’re unfit to travel, your policy can provide crucial financial protection. This includes cover for cancellation fees and lost deposits if you cancel your trip before leaving home, or additional travel and accommodation costs if your health problem develops during your journey.
- A close relative dies or suffers a serious illness or injury. Need to cancel or cut short your trip due to the unexpected death or serious health problem of a close relative, for example your mum or dad? Travel insurance can cover your cancellation fees, lost deposits and additional expenses.
- A business partner dies or suffers a serious illness or injury. If you need to return home partway through your trip following the injury, illness or death of a business partner, you’ll be covered by your policy.
- You need to sit an exam. Unable to travel on your scheduled departure date because you’re suddenly required to sit an exam? If so, the additional travel costs you incur as a result may be covered by your insurer.
- Your passport is stolen or damaged. You’re overseas and on your way to the airport to head to your next destination when you discover your passport has been stolen. Not only can travel insurance cover the cost of replacing your passport, but it can also cover the cost of rearranging flights and accommodation.
- You need to make it to a special event on time. If your pre-booked transport is cancelled or delayed due to circumstances beyond your control, travel insurance can cover the additional transport expenses you incur to get to a special event (wedding, funeral, business conference etc) on time.
- Your home in Australia is destroyed by fire or a natural disaster. If disaster strikes and your home is destroyed, travel will probably be the last thing on your mind. The good news is that your policy can cover you if you have to cancel your trip before it starts or if you’re forced to cut your trip short and return to Australia.
- You’re called up for jury duty. Served with a jury duty notice you can’t get out of? Your insurer can provide cover for cancellation costs.
- Your employer cancels your pre-approved leave. If you’re a full-time employee and your boss decides to go back on her word and cancel the annual leave you arranged months ago, you’ll be covered for cancellation fees and lost deposits.
What types of travel insurance include cancellation cover?
Cancellation cover is a standard feature on most travel insurance policies, regardless of whether you choose basic cover or a comprehensive plan. However, cover limits are usually much higher on a comprehensive policy, while budget policies often won’t include the same range of cancellation benefits as comprehensive policies – for example, alternative transport expenses to make it to a special event on time will often be excluded from basic policies.
When should I buy travel insurance for my trip?
You should buy travel insurance as soon as possible after booking your trip.
Why? Because once you have a policy in place, you’ll be covered for any unexpected circumstances or events that could crop up and force you to cancel your travel plans.
For example, let’s say you book a European holiday and you’re scheduled to depart in three months. You plan on getting travel insurance straight away but as your head is filled with dreams of eating Croissants in Paris, sipping fine wine in Tuscany and hitting the ski slopes in Switzerland, you forget.
So when, two weeks out from your scheduled departure, you’re seriously injured in a car accident and unable to travel as planned, you automatically forfeit any non-refundable deposits and cancellation fees charged by airlines, tour operators and accommodation providers.
However, had you purchased travel insurance at the same time as you booked your holiday, cancellation cover would have applied immediately from the moment you bought a policy. With this in mind, make sure ‘buy travel insurance’ is at the top of your to-do list when you book your next trip.
Which parts of a travel insurance policy provide cancellation cover?
Cancellation cover is actually provided under more than one section of a comprehensive travel insurance policy. Generally speaking, the term ‘cancellation cover’ will only apply to circumstances where you need to cancel your trip before it starts:
- Cancellation before your trip starts. This cover is provided under the ‘cancellation costs’ or ‘cancellation fees and lost deposits’ section of your policy.
- Cancellation during your trip. These expenses are covered under the ‘additional expenses’, ‘alternative transport expenses’, ‘trip curtailment’ and ‘travel delay’ sections of your policy.
Keep the above distinctions in mind when reading your travel insurance PDS to find out what is and isn’t covered.
Reading the fine print: know what’s excluded
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. As we touched on above, travel insurers only cover you when you need to cancel or cut short your trip due to unforeseen circumstances which are outside your control. As a result, no cover is provided if:
- Your flight is cancelled (in specific circumstances). Some flight cancellations are covered by travel insurance and others are not. If your flight is cancelled due to a mechanical fault, required repairs, overbooking or rescheduling, it’s up to the airline to reimburse you, compensate you or find you an alternative flight – it’s not up to your travel insurer.
- You miss your flight. Left it a bit late getting to the airport and missed your flight? Travel insurance won’t cover you for delays and additional costs that arise due to your own negligence, and this includes unused accommodation costs that arise because you miss your pre-booked transport.
- You change your mind. Decided you can’t really be bothered going on a holiday after all? Your insurer won’t provide any cover for the lost deposits and cancellation fees you incur as a result.
- You don’t get the proper visa. If you’ve already paid for your flights and accommodation but then your visa application for the relevant destination is denied, no cover is available. It’s your responsibility to make sure you satisfy the correct visa requirements for entry into any country you plan on visiting.
- You travel against medical advice. If you’re advised by your 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.
- You cancel a trip due to illness but don’t see a doctor. If you or your travelling companion has to cancel your trip due to sickness, you’ll need to get this recommendation in writing from your doctor if you want your claim to be paid.
- You don’t provide the proper documentation. In order for your claim to be processed, you’ll need to provide evidence of the reason why your trip was cancelled, such as proof of your illness or that a natural disaster has made it impossible to travel. However, you also need to provide evidence of any additional expenses you incur as a result of having to cut your trip short, so make sure to keep itemised receipts for all your costs.
- You purchase travel insurance once an event has already occurred. Your trip is already booked but just before it’s about to begin you see media reports about significant political unrest and public protests at your destination. You decide you should buy travel insurance in case something goes wrong, but when you make a claim for trip cancellation your claim is refused. Travel insurance is designed to cover you against the unexpected, not against events you know about ahead of time.
- Your tour is underbooked. If you’ve pre-booked a tour on your holiday and then it’s cancelled due to underbooking, your policy won’t provide any cover.
Pre-existing medical conditions
If you suddenly have to cancel your trip due to your own or a family member's known pre-existing medical condition, your cover could be void. This same exclusion applies for known pregnancies.
Can I get 'cancel for any reason' coverage?
Unfortunately not. Policies that provide cover when you cancel your trip for any reason are not available in Australia. Instead, travel insurance only provides cover when you need to cancel or cut short your trip due to certain specified events, as detailed in the ‘What exactly does travel cancellation cover?’ section higher up on this page.
What do any reason policies cover?
While you're unable to get this cover in Australia, this type of policy is available in other countries. Typical conditions for any reason cancellations include:
- Policy can only bought within a window of trip being paid for e.g. 15 or 30 days
- 100% of cost of prepaid, non-refundable trip items are insured
- Cancellation with travel vendor e.g. airlines, hotels must occur a minimum time before departure e.g. two/three days
Yes. Some insurers do offer cancellation-only travel insurance policies, but these are usually only offered for travel within Australia and not for overseas holidays.
Quite often, airline carriers and insurers will offer bare-boned travel cancellation insurance with little to no medical cover. Here are some of the benefits of buying standalone travel cancellation insurance:
- A more flexible, tailored cover choice. You know how much risk you are willing to take, and you may feel like trip cancellations is the only significant financial risk in your next travel.
- Making up for shortfalls in your coverage. You could potentially combine a standalone travel cancellation policy with your existing travel insurance policy if it lacks adequate cancellation cover.
- Specialised support for lost passports, embassy referral, emergency messages, weather information and refunds.
How to choose an insurance policy that covers cancellation
Looking for a travel insurance policy that provides cancellation cover? Make sure you consider the following factors when selecting a policy:
- Your cover needs and budget. Think about how much cover you need and what you do and don’t need protection against. For example, do you want a basic policy that provides affordable cover for the essentials, or a comprehensive policy for complete peace of mind? How much are you willing to pay for covered?
- What’s covered. Check the PDS for a full rundown of the benefits provided by the policy. Does it cover all the risks you need protection against on your trip?
- Cover limits. Next, check that the maximum cover limits that apply are sufficient. For example, is a $10,000 limit to cancellation cover enough to help you recover all of your out-of-pocket expenses?
- Exclusions. Read the list of general exclusions to find out when your policy won’t provide any cover. This will prevent any unpleasant surprises if you need to make a claim.
- Options available. Can you tailor cover to your trip by purchasing extra-cost options, such as golf cover or winter sports cover?
- Claims process. How can you make a claim with the insurer? Does it have a good reputation for paying out claims and processing them as quickly as possible?
- Underwriter. Check who underwrites the policy to make sure you are dealing with a reputable insurer.
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 sufficient proof of the reasons why you had to abandon your travel plans. For example, you may need a letter from your airline explaining why a flight was cancelled, or evidence from your doctor explaining why you were unfit to travel.
- Get proof of your expenses. If you want to claim for cancellation expenses, you’ll need to be able to provide proof of those expenses to your insurer. Gather itemised bills and receipts, collect documentation of any cancellation fees and penalties, and get letters from tour operators, travel agents and the like 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 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 and your certificate of insurance is issued, so don’t delay buying a policy. If an unexpected event occurs before you have travel insurance, you won’t be covered if that event forces you to cancel your trip.