What gives travelers pause – and the reason ‘Cancel for any reason’ was created – is that they sometimes have to cancel their trip for a reason that’s not covered by their insurance plan.
‘Cancel for any reason’ is usually a separate benefit and sold as an optional upgrade to trip cancellation coverage. ‘Cancel for any reason’ or ‘CFAR’ is considered a fail-safe by travelers who worry that special circumstances will force them to cancel their trip for a reason that is not covered by trip cancellation coverage.
Just like standard trip cancellation coverage, ‘CFAR’ covers pre-paid trip costs and non-refundable trip payments made before the trip begins when a traveler has to cancel their trip, but there are significant differences between standard trip cancellation and ‘CFAR’ coverage.
Why Two Cancellation Options?
Many travelers make the mistake of buying their travel insurance and reading the words ‘trip cancellation’ and thinking they are covered no matter what. This isn’t true, and it’s a source of great frustration when a traveler cancels their trip, thinking that they’re covered, and finds out that the reason they cancelled their trip is not covered after all.
Hint: a careful review of your travel insurance plan document during the review period will ensure that you are not surprised like this.
Let’s review the differences between trip cancellation and ‘cancel for any reason’ coverage.
1. Early Purchase Requirements Apply to ‘CFAR’
With nearly all travel insurance plans, access to ‘Cancel for any reason’ coverage requires that the traveler purchase the plan within a certain number of days (and in some cases – hours!) after making their initial trip deposit.
Even if you don’t have all your travel plans secured yet, it’s OK to make the travel insurance purchase in time to meet the early purchase requirement and then adjust the policy to include other pre-paid trip costs later.
Just don’t forget to add those trip costs to your plan (even if it increases your premium a little) because only those costs you’ve insured are subject to reimbursement later.
2. Cancellation Timing is Critical
With standard trip cancellation, a traveler is typically covered right up until their scheduled departure. If you have a travel insurance plan and a covered reason for trip cancellation is traffic accidents on the way to your departure, you can be reimbursed for your insured trip expenses even if you have an accident on the way to the airport.
‘Cancel for any reason’ coverage requires a traveler to cancel the trip not less than a number of days or hours prior to the originally scheduled departure. The number of hours varies from plan to plan, but many have a 2-day, or 48-hour, cancellation requirement.
3. Reimbursement Amounts Vary
The coverage amounts with ‘Cancel for any reason’ vary from 50-100% depending on the plan you purchase. In all cases, trip cancellation covers 100% of a traveler’s pre-paid and non-refundable trip costs as long as the traveler cancels for a covered reason.
With ‘CFAR’, however, many plans limit the reimbursed amount – some delivering as little as 50% of a traveler’s trip costs. See a full list of plans with reimbursement amounts and more.
4. Cancellation Penalties Apply to ‘CFAR’
With some plans, the coverage amount is subject to cancellation penalties. A cancellation penalty is the amount the travel supplier will not refund you if you have to cancel.
For example, you may have reserved a hotel room that allows you to cancel up to 24 hours before arrival with the penalty of one night’s stay. The cancellation penalty determines the percentage that travel insurance will reimburse minus the amount refunded by the travel supplier – if any.
See a review and an example of cancellation penalties.
Where Trip Cancellation and ‘CFAR’ are Alike
- Just like standard trip cancellation, a traveler must insure 100% of their pre-paid travel costs, i.e., everything that is subject to cancellation penalties or restrictions by the travel supplier.
- Just like with standard trip cancellation, any amounts that are refunded by the travel supplier are deducted from the amount that will be refunded by the travel insurance plan.
- Just like standard trip cancellation, a traveler must insure all – that is 100% – of their pre-paid, non-refundable trip costs or risk invalidating their coverage or not getting the complete reimbursement amount they expected.
Should you extend your travel insurance plan and pay the extra premium to include ‘Cancel for any reason’? See this topic to decide: