Everything you need to know about cancel for any reason trip insurance

Mar 2, 2020

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In January, my husband and I decided to splurge and book a suite aboard a Celebrity Cruises springtime voyage on the line’s forthcoming Apex ship. The cruise fare wasn’t insignificant, so we bought travel insurance — as we usually do for any big trip. We printed out policies from five different companies and carefully reviewed the differences.

We thought about all the things that could go wrong that might stop us from going on this cruise — the death of an elderly relative, a work conflict or a broken leg. “Pandemic” did not make our shortlist. We ultimately purchased a trip insurance package without the pricey “cancel for any reason” add-on (sometimes called CFAR). We thought we’d be just fine. Fast forward to today, with the specter of coronavirus and, boy, do we wish we’d sprung for the CFAR policy!

If you’re not sure what cancel-for-any-reason travel insurance is and when you should purchase it, here’s everything you need to know.

Visit TPG’s coronavirus hub for the latest news and advice.

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What you need to know about travel insurance

Cancel for any reason, also known as CFAR in the insurance industry, is an add-on to certain traditional trip insurance policies. Before we delve into the details, it’s useful to understand trip insurance in general. Here are some resources that explain everything you need to know about travel insurance and its benefits, from trip cancellation and interruption coverage to emergency medical to baggage delay. And, we’ve included some resources that specifically talk about coronavirus as it relates to insurance policies:

What is cancel-for-any-reason insurance?

While travel insurance policies can offer a range of inclusions (think: medical evacuation, trip cancellation due to foreign or domestic terrorism or rental car damage) not every eventuality is included in all insurance policies. For example, some trip insurance plans cover employment layoffs while others do not. Some policies may have robust emergency medical coverage while competitors don’t. That’s why it’s so important for you to select a plan that meets your specific needs for each trip.

A commonality among insurance policies is its long list of exclusions. For example, my homeowners’ insurance clearly states I’m not covered for damage caused by an alien invasion. Yes. Seriously.

When it comes to travel insurance, it’s common to see these sorts of incidents excluded from coverage: pregnancy, the illness of a pet, suicide (yours or a traveling companion) or any self-inflicted injury, psychological disorders, mountain climbing, bungee-jumping, skydiving, declared (or undeclared) war as well as epidemics and pandemics. Coronavirus is quickly inching toward the latter.

So, under normal circumstances, a travel insurance policy would not cover a trip you cancel because you’re worried about contracting coronavirus.

That’s where a cancel-for-any-reason policy comes into play. We talked with Kasara Barto of Squaremouth, a travel insurance comparison portal, to find out more about CFAR and when travelers should purchase it.

Cancel for any reason is an add-on you can purchase from some insurance providers when buying specific plans. According to Barto, Squaremouth hasn’t seen any changes to CFAR clauses in light of the coronavirus outbreak — and that’s good news. By paying extra for this coverage, you can cancel for any reason under the sun as long as you follow the policies’ purchase and cancel stipulations.

Can you add CFAR to a policy at any time?

No. In general, you need to buy CFAR fairly soon after purchasing your trip insurance policy. According to Barto, “There are no exclusions specifically for cancel-for-any-reason policies. The only restrictions [for this] policy are that the policy must be purchased within 14 to 21 days of the first trip booking and that travelers who cancel their trip must do so at least two or three days before their departure date and will only be reimbursed 75% of the trip cost.”

How much does cancel-for-any-reason insurance cost?

OK. So, CFAR insurance is sounding pretty good as a way to hedge bets against coronavirus. But, how much are you going to have to dig into your wallet to pay for it? The fee is calculated as a percentage of the price of the standard insurance policy you select. Barto said, “Adding the cancel-for-any-reason upgrade will cost an additional 40% of the insurance policy cost.”

Say your trip cost $1,000. A standard trip insurance policy is generally 7 to 10% of that cost. If the standard insurance policy costs $100 (10% of the $1,000 trip cost), you could add on CFAR protection for about an additional 40%, or $40.

Your total cost to ensure the trip, including cancel-for-any-reason coverage, would be around $140.

Will you get all your money back if you purchase CFAR coverage?

No. Generally speaking, these policies cover up to 75% of your total trip cost. Check the insurance policy terms carefully to find out how much your refund would be if you invoked the CFAR terms and canceled your insured trip.

Should you buy CFAR coverage?

Whether to travel and what level of insurance to purchase — or not — is always a personal decision. But, TPG is getting a lot of reader questions about what they should do if they have a trip booked or were about to book a trip and now don’t know what to do because of the uncertainty of the trajectory of coronavirus.

“In our experience, speaking to customers about this event, travelers are most concerned with wanting to cancel for fear or uncertainty of the outbreak, especially as the situation progresses,” Barto said. “In this regard, if cancellation coverage is the concern, the best — and only — option would be the cancel-for-any-reason upgrade. Typically Squaremouth only recommends this upgrade if a traveler has a concern that a standard policy doesn’t cover, such as fear or uncertainty. In this case, the time-sensitive [CFAR] benefit is the only option that would allow the traveler to cancel their trip and receive a partial refund if they decide they do not want to travel due to the outbreak.”

If your total trip cost is low, you may decide to forego insurance — or the additional CFAR coverage — and self-insure (i.e., eat the nonrefundable trip costs if you cancel). But, if your vacation is expensive, the additional fee for CFAR may feel like a bargain instead of potentially losing thousands of dollars if you have to cancel nonrefundable reservations.

A few more words of advice

Coronavirus is adding a layer of complexity to decisions travelers must make about going on planned trips and booking future vacations. We asked Barto to weigh in on a few specific scenarios:

What to do if you’re about to book a trip but are hesitant because of coronavirus

“If travelers are looking for cancellation coverage for their trip, Squaremouth is only recommending purchasing a cancel-for-any-reason policy. This policy will allow travelers to cancel their trip for any reason, including fear of the coronavirus outbreak.”

If you’re shopping for CFAR, check out Squaremouth’s form that will only return policy results that include that type of add-on.

What to do if you booked a trip and have insurance — but not a CFAR clause

According to Barto, “If a traveler currently has a standard travel insurance policy in place and is concerned about the coronavirus impacting their trip, there is very limited cancellation coverage available. Only a few specific instances, like a traveler being quarantined, will qualify under a standard trip cancellation-style plan. However, medical coverage is widely available on existing policies.”

What to do if you booked a trip and have no travel insurance

“If a traveler has booked their trip within the past three weeks, they may still be eligible for the time-sensitive cancel-for-any-reason update. For travelers with an upcoming trip booked outside of that window, while cancellation coverage is not available related to the coronavirus, there are still some policies available that can provide medical coverage for travelers who contract the coronavirus while traveling.”

Bottom line

Coronavirus may shift how some travelers feel about trip insurance in general and more expensive policies that allow you to cancel for any reason, specifically. If you don’t want coronavirus to derail your travel plans but want to be covered if an expensive trip must be postponed or canceled, CFAR gives you that peace of mind.

For more resources, check out Squaremouth’s guide to travel insurance for the coronavirus as well as TPG’s hub for all coronavirus news.

Featured image by damedeeso/Getty Images

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