As travellers still might need to cancel upcoming vacations and reschedule trips, they may find that even though they had purchased travel insurance, the policy doesn’t cover the cost of their vacation. That is probably because an event like the coronavirus pandemic was not a reason for cancellation specified in their plan.
“Most policies cover a limited amount of peril, so there can be exclusions, such as CDC warnings and travel advisories,” according to Erin Gavin, insurance product specialist at InsureMyTrip.com, an insurance aggregator.
That’s why you should read the fine print. While many plans cover cancellation at 100% of the trip costs due to a natural disaster or a terrorist attack at the destination, most plans do not typically include a pandemic.
However, since the pandemic has disrupted the travel industry for nearly an entire year, more and more travel insurance providers are specifically offering coverage for COVID-19 medical expenses, treatments and trip interruptions in select plans.
One if the easiest ways to guarantee coverage for an event or circumstance not specified in a traditional comprehensive travel plan is to purchase the cancel for any reason (also known as CFAR) benefit.
What Is Cancel for Any Reason Travel Insurance?
The cancel for any reason benefit is an optional upgrade (available for an additional fee) with select travel insurance plans. It is time-sensitive and must be purchased once the trip is booked and an initial deposit on the trip is made. Several other eligibility requirements must be met, including cancelling the trip within a specified time frame.
If all criteria are met, the cancel for any reason upgrade allows travellers the flexibility to cancel their trip for any reason and recover part of the cost.
“The CFAR option enables the insured to cancel their trip for any reason up to 48 to 72 hours prior to their scheduled departure date and receive a partial reimbursement of their insured trip costs, depending on the plan and provider.
If you cancel within that 48 to 72 hours, only the standard trip cancellation reasons will apply,” says Stan Sandberg, co-founder of TravelInsurance.com, another insurance aggregator.
In order to qualify for the cancel for any reason benefit, travellers are also required to ensure 100% of their non-refundable, prepaid trip costs, Sandberg adds.
That amount must include any trip costs subject to a cancellation penalty, fee or other restriction, according to Sandberg.
“If someone buys a CFAR policy and then purchases additional travel arrangements, they are also required to ensure those subsequent travel arrangements in order to meet the 100% requirement. They must purchase the additional insurance within the same timeframe as the original purchase, 24 hours to 21 days, depending on the plan,” he says.
Additionally, when evaluating plans with CFAR, you should know there are major differences in reimbursement rates, especially when there are more deposits and prepaid costs involved with longer and more expensive trips. There are also per-person coverage limits.
Travellers need to keep in mind that regulations and rates vary by the insured’s state of residence as well.
When Do You Have to Buy Cancel for Any Reason Travel Insurance?
Travellers must purchase cancel for any reason insurance typically within 21 days of booking the trip or paying a deposit toward the vacation.
“All CFAR plans require that you purchase the plan and the optional upgrade within a strict timeframe from when the insured made their initial trip deposit or payment. The window ranges from 24 hours to 21 days. Once a customer is outside of the 21 days of their initial trip payment date, then CFAR is no longer available for their trip,” Sandberg says.
After that time, the only policy available for purchase would be a standard travel insurance plan.
Some companies also have tighter windows of just 10 to 15 days from when you booked or put a deposit down on a trip to be able to purchase the CFAR upgrade, so you need to compare policies carefully.
Also, if you are planning a last-minute trip, be sure to purchase the insurance with the CFAR benefit more than 48 to 72 hours prior (depending on the insurance provider) to your time of departure. You cannot buy this upgrade on the day of travel and have valid coverage.
What Does Cancel for Any Reason Travel Insurance Cover?
As long as you meet all the eligibility requirements and restrictions on timeframes as outlined above, and can purchase the CFAR upgrade, it will cover cancelling your trip for any reason. Whether you’re uncomfortable travelling because of the coronavirus or you’ve simply had a change of heart, you won’t need to explain.
Just be sure that you have documentation for the exact amount of your prepaid and non-refundable expenses that were insured to submit for your claim. Keep in mind, however, you will typically only receive 50% to 75% of the total insured trip cost as a refund.
What Doesn’t Cancel for Any Reason Travel Insurance Cover?
The only time the cancel for any reason benefit would not cover a claim is if the eligibility requirements are not met. As mentioned above, if you purchase the benefit within less than 24 hours of the departure time, don’t cancel the trip at least 48 to 72 hours before the departure date (as specified in the plan), or don’t correctly insure the exact dates and amount of the trip, then you won’t meet eligibility requirements.
“The insured amount must cover you from the moment you leave home to the moment you return home. You cannot cover part of a trip,” Gavin adds.
Also, the amount you insure must be specific. For example, if the total prepaid and non-refundable cost of the trip is $2,893.28, then use that figure to calculate the price of the policy, don’t round up.
How Much Does the Cancel for Any Reason Travel Insurance Benefit-Cost?
If you want to add the cancel for any reason benefit to your travel policy, how much more will it cost than a regular comprehensive travel insurance plan? Standard trip cancellation coverage without CFAR typically costs between 4% and 10% of the insured trip. With CFAR, travellers can expect to pay another 40% to 60% of the standard policy cost.
Here is an example of how much travel insurance with the cancel for any reason benefit costs. (Prices were accurate at the time of publication.)
The following rates are for a 40-year-old Florida resident travelling within the U.S. for one week in June, with a total trip expense of $3,000. The costs were calculated on TravelInsurance.com.
There were 25 plans available for a standard travel insurance policy. Rates ranged from a Silver Plan with one company (AXA Assistance USA) for as low as $77 and went as high as $273 for a Worldwide Trip Protector Plus Plan with another company (Travel Insured International).
Of course, the policy benefits varied depending on the price and the company.
Of the 25 options, only 11 offered the cancel for any reason upgrade. AXA was one of them, but to apply for the cancel for any reason option, travellers would need to first book a Platinum Plan at $125. The additional upgrade charge for CFAR was $63 for a total of $188.
One of the most expensive plans, from AIG Travel Guard, cost $234.21 for the Deluxe Travel insurance policy as well as an additional $19.44 for the CFAR benefit, coming to a total of $253.65.
How Much of a Refund Can I Get with Cancel for Any Reason Coverage?
The typical reimbursement benefit is between 50% and 75% of the total insured costs. The rate of reimbursement will depend on several factors, including the length and value of the trip.
It’s best to compare all the plans available to determine the best benefits for the price and to decide which CFAR plan best applies to your specific type of trip.
You also need to follow the specific requirements to ensure that you are eligible for the reimbursement.
Gavin reiterates that if you ever had to file a claim and, for example, the documentation surrounding the amount of the trip you insured wasn’t precise, it could result in a denial of the claim.
“While there are advocates that can help and mitigate the situation to where they may make an exception, you don’t want to be in that position,” she says.
Where to Buy Cancel For Any Reason Travel Insurance
Not every travel insurance company offers the cancel for any reason benefit, and the types of plans each insurance company provides vary by state.
Here are a few popular companies that currently offer the CFAR benefit:
- April Travel Protection
- Arch RoamRight
- AXA Assistance USA
- Berkshire Hathaway Travel Protection
- Generali Global Assistance
- HTH Travel Insurance
- Nationwide Insurance
- Seven Corners Inc.
- Travelex Insurance Services
- Trawick International
“Selling travel insurance has never been more important but has also never been so difficult. With an inundation of claims and differing state regulations, many companies are changing terms of new policies,” says Jack Ezon, founder and managing partner of Embark Beyond, a premier luxury travel company based in New York.
The Bottom Line
With so much uncertainty about how long the pandemic will continue to affect the travel industry-disrupting business trips, family vacations, honeymoons, destination weddings, weekend getaways and more along the way – travel insurance with the added cancel for any reason benefit may be worth the investment. While it is more expensive than standard travel insurance and it doesn’t cover 100% of the cost of the trip, it will give travellers peace of mind knowing they can cancel if necessary.