travelling (2)-min

Travel Insurance for Trip Cancellation

Aussies spend an average of $4,900 on overseas trips. Say goodbye to a lot of that if you have to cancel… unless you have travel insurance.

Did a serious earthquake hit Bali a week before your flight? Did you dislocate your ankle playing basketball? Did your grandmother pass away? Did your home get flooded?

All of these are legitimate reasons to make a trip cancellation claim. And the right travel insurance will pay you back if you need to cancel your pre-paid trip due to something unexpected and outside of your control.

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Why do you need cancellation cover?

Let's face it: "stuff" happens. That's why cancellation cover is such a crucial part of travel insurance. You could pay in advance for all your flights, accommodations, park passes and other holiday expenses and then, boom.

An accident lays you up, a natural disaster strikes your destination or a family emergency requires you to stay home.

In short, trip cancellation cover will pay you back for the money already spent if something like this happens to you and you’re forced to cancel your holiday. It also covers you if something similar causes you to cut your holiday short mid-trip.

What exactly does travel cancellation cover?

Here are some examples of pre-paid travel expenses you can be reimbursed for under trip 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 partway through your trip
  • Tuition fees if you had paid for a course or training at your travel destination


Alternatively, you can choose to rearrange or rescheduling your journey if you don't want to cancel it outright, and your policy will cover you for that too.

What are some legitimate reasons you would be covered?

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
  • 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 playing basketball 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.
  • Your home in Australia is burgled or destroyed a natural disaster. To qualify for cover, this would need to happen within a certain time frame of your departure date, and you may need a public authority to confirm why you need to remain home.
  • 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’re called up for jury duty or to serve as a witness in court. You will need to provide evidence of this.
  • Your employer cancels your pre-approved leave. This applies if you’re a full-time employee and your boss decides to cancel leave that was already approved.
  • You're made redundant at work. This would only apply if you had no reason to believe you would be made redundant and you meet the definition of redundancy under workplace law.
  • 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).

What types of travel insurance include cancellation cover?

Cancellation cover is a standard feature on most domestic and international 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.

You can also find it on annual multi-trip policies, which are policies that cover you for multiple trips throughout a one-year period.

When should you buy travel 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.

Let's say book your trip to Bali today but decide to put off buying insurance. If a an earthquake hits Bali tomorrow making it impossible for you to travel there, you are out of luck.

Let's take it even one step further. Let's say a minor earthquake hits Bali tomorrow, but it's still safe to travel there. Now you decide to buy travel insurance. A couple days later, another earthquake hits and now it's unsafe for you to go.

You better hope the second earthquake isn't an aftershock of the first one, because if it is, you're out of luck. Even though you bought the insurance before the second quake, you bought it after the first one and it was the first one that kicked off all the damage.

What if you have to cut your trip short?

Cancellation cover also kicks in if your trip is cut short for the reasons listed above and it pays out for all of the same types of prepaid expenses: flights, accommodation, agents fees, etc.

However, if your trip is cut short, you will also be eligible for other expenses including whatever it costs you to get home to Australia or to rearrange your travel itinerary mid-trip. These other expenses and the rules surrounding them are usually found under separate sections of your policy called ‘additional expenses’, ‘alternative transport expenses’, ‘trip curtailment’ and ‘travel delay’.

Keep the above distinctions in mind when reading your travel insurance PDS to find out what is and isn’t covered.

What's not included in your travel insurance cancellation policy

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 your trip short due to situations that are unexpected and outside your control. That means no cover will be provided if:

  • You need to cancel because your visa is denied or you have passport issues. It's up to you to make sure you to have permission to enter the country you are visiting. Your insurer won't pay for your cancelled trip if you've gambled on the assumption that your visa would be granted or that your passport would arrive on time.
  • You need to cancel due to a pet illness or death. 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. Pets will almost certainly not be in this list.
  • Your best friend dies. Same as above.
  • You get reimbursed by the provider. You can't double up if you're eligible for a refund through your trip provide like your hotel. Your insurance will only pay for prepaid expenses you can't get back any other way.
  • 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 travel against your doctor's 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 or your family member had a pre-existing condition that led to the cancellation. If you or your relative got ill, injured or died and this is why you had to cancel the trip, a pre-existing condition would not be considered something "unexpected". In this case, you would not be covered.
  • You had to cancel because of business or contractual obligations. The only exceptions are when a full-time employee is made redundant or has had pre-approved leave revoked.
  • 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.
  • 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.
  • Timeshare expenses. You insurer won't cover your timeshare costs, but you'll still be eligible to claim for flights, attractions, agent fees and all of the other items typically covered under your policy's cancellation section.

Can you get cancel-for-any-reason (CFAR) cover?

Until recently, CFAR policies weren't available in Australia, but in April 2018 insurer CoverMore became the first company to offer the product here.

It's offered as a policy add-on for CoverMore's comprehensive policy, which means you would need to buy the comprehensive policy and then pay an additional premium to have CFAR cover added.

The add-on will give you up to 75% of your prepaid expenses back if you to cancel your trip for any reason, including changing your mind or the death of a pet. But it only works if:

  • You buy the add-on within 7 days of paying for your trip
  • You cancel your trip at least 7 days before you are supposed to depart

How to find the best* cancellation cover 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 also purchased their optional ski cover. 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.

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.

Some other questions you may have

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Brad Buzzard

Brad is an insurance writer whose background in analytics makes him the perfect person to research, analyse and interpret the complex world of insurance. When not writing, you can find Brad in the nearest yoga studio.

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22 Responses

  1. Default Gravatar
    MargoOctober 21, 2018

    We would like to book our own non refundable flights from Sydney to Perth. Stay a few days at a motel that we book. Fly to Broome. Book a 4 day cruise around WA. Flight back to Perth/Sydney. Can we get cover for all these portions if we need to cancel for something unseen such as broken leg?

    • finder Customer Care
      JeniOctober 29, 2018Staff

      Hi Margo,

      Thank you for getting in touch with finder.

      Yes, non-refundable deposits for pre-booked flights and accommodation are examples of pre-paid travel expenses you can be reimbursed for under trip cancellation cover. Unexpected events which are outside of your control like serious injury, you probably be covered. 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.

      I hope this helps.

      Please feel free to reach out to us if you have any other enquiries.

      Thank you and have a wonderful day!

      Cheers,
      Jeni

  2. Default Gravatar
    KatOctober 15, 2018

    I am planning a 12 week trip for 2019 and have just been advised I may be called up for jury service until Oct 2019. Which policies cover jury service?

    • finder Customer Care
      NikkiOctober 15, 2018Staff

      Hi Kat,

      Thanks for your inquiry and for visiting finder.

      When you’re called up for jury duty or to serve as a witness in court, this is recognized 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. You will need to provide evidence of this.

      To know which insurance provider’s cover jury duty, you may use the table above. Simply enter the information needed on the fields and click GET QUOTE NOW. This will show the list of providers.

      As a friendly reminder, carefully review the Product Disclosure Statement of the product before applying. You may also contact the insurance provider should you have any questions about their policy.

      Hope this was helpful. Don’t hesitate to message us back if you have more questions.

      Regards,
      Nikki

  3. Default Gravatar
    MaggieSeptember 20, 2018

    My husband is in aged care suffering from dementia. He is physically well, apart from an inability to walk, which has him confined to a wheelchair.
    Would I be covered if say, he had a fall which caused severe injury or worse?
    He is a fall risk.

    • finder Customer Care
      JeniSeptember 20, 2018Staff

      Hi Maggie,

      Thank you for getting in touch with finder.

      As per this PAGE, the family emergency portion of your policy reimburses you for expenses incurred by you if a relative dies unexpectedly during your journey or becomes hospitalised due to illness or injury like if your husband had a fall and caused severe injury. Common exclusions include the following:

      -No cover if you had prior knowledge that such an incident would occur.
      -No cover if the illness, injury or death was the result of a pre-existing medical condition.
      -No cover if you are able to seek compensation from any other source.
      -No cover if the claim arises as a result of you or your travelling companion changing travel plans.

      I suggest that you double check this situation with your chosen insurer.

      I hope this helps.

      Please feel free to reach out to us if you have any other enquiries.

      Thank you and have a wonderful day!

      Cheers,
      Jeni

  4. Default Gravatar
    BarryApril 28, 2018

    I plan to go on a trip for 10 days from July 11 to July 20. Deposit is due May 8. When taking out travel insurance on May 8 should the period of insurance be from May 8 to July 20 or from July 11 to July 20.

    • finder Customer Care
      JhezelynApril 28, 2018Staff

      Hello Barry,

      Thank you for your comment.

      Generally, booking a travel insurance as soon as possible means you can benefit from cancellation cover. Once you’ve purchased a policy, cover for cancellation costs starts straight away. I hope this helps.

      Regards,
      Jhezelyn

  5. Default Gravatar
    AshleySeptember 19, 2017

    Will cancellation cover be valid in the event that lessees of a business default and we, as landlords, have to cancel all commitments and holidays to operate the business?

    • finder Customer Care
      JoanneSeptember 19, 2017Staff

      Hi Ashley,

      Thanks for reaching out.
      It does say on this page that cancellation fees charged by airlines, hotels, tour operators, rental car companies and more is covered by travel insurance however, it would still be best if you reach out directly to your specific insurance to get a more accurate information.

      Cheers,
      Joanne

  6. Default Gravatar
    WendyApril 7, 2017

    can you get insurance to cover your deposit for a cruise which is not going until mid next year? How do I ensure I don’t lose my deposit for any reason

    • finder Customer Care
      ZubairApril 11, 2017Staff

      Hi Wendy,

      Thank you for your question.

      finder.com.au is a comparison and information service and we are not permitted to provide our users with personalised financial advice or product recommendations.

      Generally, most travel insurance brands won’t allow you to take out cover more than one year in advance, insurers do this to minimise their own risk. However, It could be a good idea to check with your trip provider to see if they have any cancellation cover options.

      All the best,
      Zubair

  7. Default Gravatar
    RogerFebruary 17, 2017

    My son is looking at doing the Youth World Challenge through his school. The cost is approx. $8,600, which has to be raise by the school, family and students. However a deposit and regular payments are required at regular intervals with a lump sum due near the date. As the dates are not set, and that the time has been reduced from 15mths to 9mths for the payment, if we have to cancel due to not being able to raise the funds, will the cost be covered by insurance?

    • finder Customer Care
      ZubairFebruary 20, 2017Staff

      Hi Roger,

      Thank you for your question.

      Generally, travel insurance does not provide cover for cancellation due to financial, contractual or other business obligations. For more clarification on this matter best to consult the product disclosure statement or insurer directly.

      Cheers,
      Zubair

  8. Default Gravatar
    January 6, 2017

    I bought Travel Insurance with Insure and GO on the 2nd September 2016 for a trip which commences on the 27th September 2017 for 32 days.
    They charged me $690 for two adults which included an extra $427 surcharge for a pre-medical condition.

    The airline are willing to refund in full because they changed my flight details so the only other cost for the holiday is about $200 for accommodation for a stop over each way.

    There is an excess of $100 per claim on the policy.

    Can I claim any of the pre-medical declaration costs as these will not apply until travel begins as we now cannot travel due to my wife having a serious illness which was not diagnosed until December last.

    • finder Customer Care
      RichardJanuary 9, 2017Staff

      Hi Peter,

      Thanks for getting in touch. You will need to contact InsureandGo’s claims department about these matters.

      All the best,
      Richard

  9. Default Gravatar
    LmshortieNovember 23, 2015

    HI, We are planning a family trip to NZ for a family birthday and my husband runs a small business and works everyday can you get insurance to cover if he is unable to come with us do to work issues or is it only medical issues? Thanks

    • finder Customer Care
      RichardNovember 23, 2015Staff

      Hi Lmshortie,

      Thanks for your question. You may be able to find cover but it would depend on the policy and the reason for cancellation. For example, if he was unable to travel due to an unforeseen incident befalling a business partner, he may be able to make a claim. These conditions vary from provider to provider so you’ll need to ask them about your specific concerns prior to taking out cover.

      I hope this was helpful,
      Richard

  10. Default Gravatar
    MinnaNovember 21, 2015

    We are planning to hire a car in Europe next year. We will need to make a number of payments for flights, car hire etc. the main concern is an elderly family member aged 87, who may pass away at that time. Most policies will not cover a family member dying if they are over the age of 80 – 85. Can you recommend a policy that will cover us?

    • finder Customer Care
      RichardNovember 23, 2015Staff

      Hi Minna,

      Thanks for your question. finder.com.au is a comparison service and we are not permitted to provide personalised financial advice or product recommendations. Unfortunately we do not have access to that kind of information.

      All the best,
      Richard

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