Travel Insurance for Trip Cancellation

Need travel insurance that covers your flights and accommodation if you have to cancel your trip?

Sometimes holidays simply don’t go as planned and you’re forced to cancel or cut your trip short. From serious illness or injury to natural disasters, accidents and even the death of a relative, unexpected events can wreak havoc with your trip plans and leave you significantly out of pocket.

But it’s not all bad news: if you have travel insurance, you’ll be covered for cancellation fees, lost deposits and additional expenses when unforeseen circumstances turn your trip plans upside down. Let’s take a look at how travel insurance for cancellation works and when you will and won’t be covered.

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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.

Cancellation cover is available on both domestic and international travel insurance policies, as well as on single-trip and annual multi-trip policies.

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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.

Read more about getting travel insurance with pre-existing medical conditions.

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

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Can I buy a cancellation-only travel insurance policy?

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.

Some other questions you may have

Most basic travel insurance policies offer at least one other cover feature than cancellation, this may include luggage or medical cover. You can still get cover at an affordable rate but it is rare to find cancellation only travel policies. Even policies from airlines will also generally also cover your luggage.

Unfortunately, we can't tell you what is the best policy for your situation. It will come down to your own cover requirements. There are comprehensive policies that will offer unlimited cover for trip cancellation. You will need to review the policy exclusions and benefit conditions in order to determine whats right for you. Also be clear on the excess you will be liable to pay in a claim.

No. As stated previously, you will not be covered by travel insurance if you simply change your travel plans. You are only covered for cancellation or trip amendment for reasons that are outside of your control.

Yes, all policies offer a cooling-off period from the date the policy is purchased that you can cancel your cover and get a full refund. This is usually about between 14 and 30 days and will only be paid if your policy or trip has not commenced.

You will only be covered if you can't travel because you or your travelling companion have been unexpectedly made redundant.

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.

You are only covered if you have to change your flight for reasons that are outside of your control such as unexpected illness/injury, death of family member, legal obligations and unforeseen natural disasters and bad weather.

Typically not. The actual timeshare fees themselves are not covered by travel insurance, and are typically not refundable. If you’ve planned a trip to your timeshare, but had to call it off, travel insurance might pay for peripheral expenses including prepaid travel costs, Pre-booked hotel or motel accommodation, Unexpected travel expenses associated with delays, such as reasonable accommodation costs. For direct cover the actual timeshare costs, such as membership and management fees, you will generally need a specialised timeshare travel insurance provider.

Unfortunately you will not be covered if you have to cancel your trip due to your passport not arriving on time.

No. Cancelling a trip for work reasons, whether to start a new job or because holiday has not been approved will not be covered.

Cancelling your trip due to pregnancy or childbirth is generally excluded. However, some policies will provide cover if you become pregnant after the policy has become active.

Yes, most travel insurance policies will provide cover if you are required to cancel your trip due to jury duty.

Inclement weather is generally defined as severe weather conditions that result in delays of the arrival or departure of the airline, cruise, train or other transport carrier.

Not necessarily. Most airlines will only offer you a flight credit if you can't travel due to unexpected circumstances. This is also the case if your flight is cancelled or delayed due to weather.

If the cancellation or delay is the fault of the airline, the airline will either:

  • Put you on the next scheduled service when room becomes available or reroute you to your destination with another airline at no additional cost.
  • Provide you with a refund.

Generally yes. If your flight is cancelled because the airline staff is on strike, you should receive compensation from your travel insurance policy. If your flight is reimbursed or rebooked by the airline, you will not receive any compensation from your insurance provider.

It is worth noting that some policies will only cover you if the strike is "unforeseen". If there has been ongoing strikes from the airlines staff that have been reported on in the media, you may not be liable to receive compensation. It is worth clarifying this with your insurer at the time of application.


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Richard Laycock

Richard is the insurance editor at finder.com.au. He is on a mission to make insurance easier to understand.

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14 Responses

  1. 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?

    • Staff
      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

  2. 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

    • Staff
      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

  3. 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?

    • Staff
      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

  4. 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.

    • Staff
      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

  5. 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

    • Staff
      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

  6. 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?

    • Staff
      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

  7. Default Gravatar
    PeterJune 29, 2015

    Hi there,
    I understand that it is possible to purchase travel insurance cover for cancellation for any reason. Could you tell me which companies in Australia provide this type of insurance.
    Regards,
    Peter

    • Staff
      RichardJune 29, 2015Staff

      Hi Peter,

      Thanks for your question. Many of the providers in our panel of some cover for cancellation. If you would like to compare your options, simply enter your travel details into the comparison tool. Once you have done so you will be able to view the products we compare and the level of cancellation covered by consulting the second column.

      I hope this was helpful,
      Richard

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