How Does Travel Insurance Work for Trip Cancellation?

Posted on: Mar 3, 2021 | 3 mins | Written by: HDFC ERGO Team

How Does Travel Insurance Work for Trip Cancellation?

While planning for a trip, we have to organise travel, accommodation and all expenses well in advance. Alongside that, it's also wise to prepare for unexpected events such as sudden cancellations due to unavoidable circumstances or losing baggage during the journey, which is why travel insurance exists. Trip cancellation insurance in particular, deals with a situation in which you are forced to cancel your trip or reservations due to reasons beyond your control, such as falling seriously ill or getting injured a few days before your departure. Because of this cover, you can be reimbursed for all the non-refundable travel expenses.

Trip Cancellation Insurance

Trip cancellation insurance, also known as trip interruption insurance, is a specific type of travel insurance that helps you get a refund for your trip if you must cancel it. It functions by allowing you to claim any non-refundable trip cost such as hotel bookings, flights, tours, etc which you are unable to utilise due to an occurrence of a covered event.

Some of the most typical reasons are:

1. injury

2. sickness

3. storms

4. hurricanes

5. and military calls – to list a few –

But it is recommended to review the particular policy to know how does travel insurance work for trip cancellation.

International medical travel insurance policies can include trip cancellation and lost luggage insurance, as well as medical insurance for emergencies during travel to other countries. Trip interruption insurance is an insurance cover that ensures that in the event of an occurrence that hinders one from continuing with the journey, one can get a refund for the loss instead of having to pay for an unused trip. Being aware that this coverage is available, planning for future travels is not as much of a concern.

Validity & Exclusions

Cancellation insurance coverage is applicable as long as the reason:

1. It is listed in the policy

2. Occurs after you take out insurance

3. Is unforeseen

4. Is unintentional

5. A few examples of valid cancellation scenarios would be:

6. Death of a family member

7. Severe injury or illness (applicable to you or your family)

8. Damage to residence

9. Changes to the dates of your paid leave from work

10. Terrorist attack or natural disaster at the travel destination

11. Your tourist visa is denied.

12. Having to resit an exam

13. Loss of employment or new employment

14. Theft of ID or travel ticket

If you have a query on how does travel insurance work for trip cancellation on the policy, the cancellation grounds may vary, so make sure to note the exclusion clauses. A few examples of exclusions would be:

1. Organised public transport strikes unless the period of insurance commences before a date when the strike is foreseeable.

2. Travel arrangements can be cancelled or changed by an airline, cruise line, or tour operator due to inclement weather.

3. Changes in travel plans made personally by the insured or travelling companion for any reason.

4. An adverse change in the financial circumstances of the Insured.

5. Also, refer to "General Exclusions" mentioned in the policy.

How Does Trip Cancellation Insurance Work?

Trip cancellation insurance is a form of international travel insurance that provides you with compensation for the expenses you incurred and which cannot be refunded in the event that you need to call off your trip for some reason allowed by the policy. When you take an insurance policy on your trip, it enables you to get back some or all of the money that was lost in other expenses that are incurred in the course of the trip, which may include charges that are not refundable.

International travel insurance also tends to cover trip cancellation along with medical emergencies in the foreign country. Thus if you purchase an international travel medical plan, cancellation of the trip may be included.

Trip cancellation insurance kicks in when you need to cancel your trip due to a covered reason listed in your policy, such as:

1. One of you or another travelling companion falls sick or sustains an injury

2. A family member of yours has died

3. Terrorists attack or a calamity of some form occurs in the targeted country

4. You are served a subpoena or summoned to serve on a jury

5. A natural disaster turns your home into a place you cannot stay or live in.

It will stipulate the amount to be refunded, depending on the terms of issuance of the trip cancellation insurance. This is often referred to as the utilisation limit since there is usually a maximum coverage limit. Compared to each other, the policies may vary to include reimbursement of some of the expenses such as hotel fees, tours, flights, cruises etc. Reimbursements can be full or partial.

However, the insured should be aware that trip cancellation coverage is valid for only the unforeseen circumstances or the reasons that are stated in the policy document. Conditions related to health have to be disclosed in most cases when buying something. And the cancellation must take effect before your trip. There are two categories of policies: Event or cancel-for-any-reason policies provide wider coverage but cost considerably more.

Conclusion

Cancelling a trip can occur unexpectedly, and that is why trip cancellation insurance will compensate for your loss. Travel insurance plans with trip cancellation feature pays for the amount of non-refundable expenses incurred prior to the trip including hotel accommodations, flights, tours, etc. as per the coverage limit selected in the policy.

Cancellation and interruption coverage in travel insurance is a process where you get a refund for the non-refundable trip payments when you have to cancel the trip in case of an emergency and therefore get back some of the money you had to pay for the trip. This coverage is useful for risk mitigation when planning on taking a flight or booking a hotel way in advance.

FAQ

1. What are the Exclusions for Trip Cancellation Insurance?

While travel cancellation insurance is a lifesaver, it is critical to understand what it does not cover. For example, if you were aware of a pre-existing medical condition before acquiring insurance and it flared up, cancellation due to that illness may not be reimbursed. Similarly, a mere change of heart regarding your vacation would not be eligible for compensation. Remember that this coverage is for unexpected occurrences beyond your control, not for last-minute nerves or wanderlust regrets.

2. Does travel insurance cover trip cancellations?

Be aware that not all travel insurance policies automatically provide trip cancellation coverage. It is similar to vacation packages in that some are customary, and others are optional. When obtaining travel insurance, double-check to see if trip cancellation is covered or an optional feature. With HDFC ERGO's comprehensive travel insurance policies, you can be confident that trip cancellation coverage is always included, providing you with total peace of mind.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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