An unexpected flight interruption could blow up your travel budget like a balloon. A sudden storm or illness that forces you to cancel a pre-paid vacation could cost you even more. But, just as it can shift the potential burden of medical emergency costs, the right travel insurance can also limit your risk of unexpected trip expenses.
Q: What should I know about trip cancellation and interruption insurance?
Various all-inclusive travel plans provide coverage for medical emergencies as well as for cancelled or interrupted trips. If you do not require an individual medical policy, it’s possible to buy a stand-alone cancellation and/or interruption plan.
Q: How much would it cost me to purchase a comprehensive all-inclusive plan?
Prices vary from plan to plan, and from person to person. The cost of medical emergency coverage will typically go up with the age of the traveller and with any existing (or previous) health conditions. The cost of trip interruption coverage alone usually depends on age and coverage limit, while trip cancellation coverage will vary with the cost of your planned trip.
Q: What reasons would make me eligible for a trip interruption or cancellation claim?
You may submit a claim for expenses if one of the following interferes with your travel plans:
- a weather disturbance
- a medical or mechanical problem
- legal or personal obligations
- actions, threats, warnings, or decisions of others (e.g., governments and airlines)
Q: What is the most common reason for trip interruption claims?
“Typically trip interruption is associated with weather-type conditions. Any time we have a winter with a lot of snow in Canada, we definitely see an impact on our trip interruption and trip delay claims,” explains Rob Iafrate, assistant VP at Manulife Financial. “In theory, you are less exposed [to weather delays in the summer]. The exception a few years ago was when ash clouds from a volcano in Iceland disrupted travel during the European [travel] season.”
Q: Is the cost of trip cancellation and interruption coverage higher at certain times of the year?
Iafrate says no: “When you are putting the product together and trying to balance the ease or convenience of the application process and the pricing, you take a holistic view of the year and to what extent that type of claim happens over a 12-month period.”
Q: Is the demand for this insurance higher at certain times of the year?
The number of travel insurance purchases rise in Canada when families plan summer vacations, particularly costly trips to Europe, and winter vacations. Older snowbirds who drive south for long periods tend not to pay extra for trip delay or cancellation coverage, says Iafrate.
Q: Do consumers worry more about trip cancellation than trip interruption?
Yes. Consumers realize they can lose more money if they have to cancel a prepaid vacation because of illness, a death in the family, job loss, or a life-threatening event at their vacation destination. There are daily and total limits for the value of interruption expenses that may be claimed, but consumers may purchase much higher coverage limits for a costly vacation. Iafrate has observed that trip interruption due to weather is often an after-thought.
Q: When do consumers typically ask for trip interruption insurance?
“The only time trip interruption is brought up in a pre-sale discussion is if somebody is connecting (flying between airports before reaching a final destination),” says Iafrate. Travellers may be exposed to a loss if weather causes them to miss their connecting flight and they have to pay for another ticket.
Some travellers only add trip interruption to their next purchase of medical insurance after they have had to pay for a return flight, when delayed by a weather, medical, or other emergency, notes Karen Cullen, the Ontario regional director for Travel Insurance Coordinators Ltd. (TIC).
Q: How are trip cancellation rates determined? Are the rates just a set percentage of the total trip cost, or are there other factors?
“Trip cancellation rates can be based on a percentage of trip costs—usually around 6 to 8 per cent,” says Cullen. “But this can vary significantly depending on the benefits you are purchasing. Some companies take the insured’s age and trip duration into consideration.”
Q: Why is medical information sometimes required when applying for travel medical insurance, but not trip cancellation and interruption insurance?
A medical emergency could cost an insurer millions of dollars, depending on the policy limits, but only hundreds or thousands of dollars for a disrupted trip. So insurers are simply more careful when screening applicants for medical coverage.
Q: What protection does cancellation and interruption insurance offer against hurricanes and other extreme weather?
A trip interruption policy will typically pay for extra accommodation and flight costs, up to a fixed dollar limit, if you miss a flight due to a hurricane or other extreme weather. Trip cancellation coverage would reimburse pre-paid costs you could not otherwise recover.
But if weather conditions merely delay arrival, you may be expected to proceed once it is safe. Cullen notes that TIC’s polices state that you would be covered to cancel if you are not able to depart on your trip because of adverse weather, volcanic eruptions, or a natural disaster that would result in you missing 30 per cent or more of your trip.
Q: Can I get cancellation insurance for a flight booked with rewards points?
“Reward point companies can sometimes offer protection (for a premium) so that, if you cannot travel, you may be able to get your unused points credited back to your account,” says Cullen. “Because there is no actual cash value assigned to rewards points, [other] insurers usually will not allow cash reimbursements back to clients if or when they have to cancel their trip.
While some travellers may accept the risk of paying extra costs when their travel plans are interrupted or may even be able to tolerate losing it all if a trip is cancelled at the last minute, trip cancellation and interruption insurance can lift any concerns for a set price. The cost of this type of travel insurance isn’t that high to begin with, and can be minimized by comparing plans and purchase options. It’s also good to know that there are annual plans available for frequent flyers that have a trip cancellation and interruption component.
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