American Express adds new 'cancel for any reason' coverage option on flights

If you aren't familiar with "Cancel For Any Reason" coverage, you should be. This supplement to travel insurance policies allows you to cancel a trip for nearly any reason, and as long as you follow the terms, you will be able to get a refund for a large portion of your prepaid expenses.

American Express is now adding an optional service called Trip Cancel Guard, which you can purchase when booking flights through Amex Travel. With this new benefit, you can cancel flights prior to departure and request a refund.

However, there are some key details you should know about to help you evaluate whether this is a worthwhile addition to your booking.

What is Trip Cancel Guard?

Trip Cancel Guard is a new offering from American Express that functions similarly to "cancel for any reason" coverage. However, it is not insurance. In fact, you can purchase this and travel insurance to cover your trip in different ways.

When purchased, Trip Cancel Guard provides reimbursement of up to 75% of your nonrefundable flights costs booked on AmexTravel.com — as long as you cancel at least two calendar days before your departure date.

This option is available when paying with any American Express card issued in the U.S. and must be added at the time of booking on AmexTravel.com. It's not available later as an addition to your flights and can't be purchased over the phone.

How does it work?

Trip Cancel Guard is in effect from the time you purchase it until one of three things happens:

• You cancel your benefit.
• You submit a reimbursement request for a canceled flight.
• You reach the end date for your benefit (within two calendar days of your departure date).

The benefit provides up to 75% reimbursement on nonrefundable, prepaid airfare.

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Note that receiving a voucher or similar credits from the airline when canceling your flight(s) means Trip Cancel Guard can provide reimbursement once the credit or voucher has expired or is forfeited by its own terms and conditions. You cannot receive a voucher and reimbursement when the combination would exceed your maximum coverage.

How much does it cost?

Since this is a paid benefit, let's talk about costs.

Trip Cancel Guard is priced based on the cost of your flights. The cost is 8% of the total ticket price, including all taxes and fees.

If your flight costs $1,000, then the cost of adding Trip Cancel Guard is $80. For a $500 flight, the cost is $40.

This actually compares rather favorably to traditional "cancel-for-any-reason" coverage, which is typically a supplement added to a comprehensive travel insurance policy. For starters, you'd need to purchase the comprehensive policy (which can be 4-10% of the total cost of the trip) and then add the CFAR supplement. This could add another 40-60% on to the premium.

However, Trip Cancel Guard is also more limited coverage than adding CFAR protection to a comprehensive travel insurance policy.

Key terms you should know about

First, you need to add this benefit and pay for it at the time of booking a flight at AmexTravel.com. You can't add it later or add it when booking on the phone.

Moreover, this benefit is only available on flight bookings. You can't add it to flight-plus-hotel or other combination packages, and your flight must cost $300 or more to be eligible.

You can add Trip Cancel Guard when booking and paying with an American Express card issued in the U.S. It's also available if you pay with Membership Rewards points in the Pay with Points program. However, if you transfer your points to one of the Membership Rewards transfer partners, Trip Cancel Guard isn't available on those flight bookings.

Should you use this new option?

When it comes to any form of travel insurance, everyone's situation is unique. If you want extra peace of mind when booking nonrefundable flights through Amex Travel, this new offering could make sense.

However, it's worth noting that many airlines no longer impose change or cancellation fees on most tickets. If you cancel a ticket, you'll generally receive a voucher or future flight credit for the full amount of your initial flight. The 75% reimbursement through Amex's Trip Cancel Guard will only kick in if that voucher ultimately expires.

That said, if you're considering a restrictive basic economy ticket that wouldn't otherwise allow for penalty-free cancellations, this add-on could be a great option.

Bottom line

I book a lot of flights on AmexTravel.com. Given that I'm trying to see every country in the world, I wind up on a lot of smaller, regional airlines that don't have transfer partners I can use for free flights. Thus, I book with Amex Travel. Having the option to add the ability to cancel for any reason is fantastic.

You can be reimbursed for up to 75% of the cost of your flights, which isn't perfect. However, given that there's still a lot of uncertainty in international travel right now, getting something back is much better than nothing. If you follow the terms for when to add the benefit and the deadline for canceling your flights, this new perk can be very useful.

Just be sure to carefully consider the type of ticket you're purchasing through Amex Travel, as a fee-free cancellation with a future voucher could be enough flexibility for your situation.