While most Canadian snowbirds know that getting travel medical insurance coverage is an absolute must prior to leaving Canada for the winter, far fewer are aware of the benefits of trip cancellation & interruption insurance – whether it be for your winter trip or other vacations throughout the year.
This often overlooked insurance option can be a big money saver if you ever need to cancel your trip or come home early.
Snowbirds can use the following guide to better understand what trip cancellation & interruption insurance is, what it covers, how it works and whether or not it makes sense for your situation.
Trip Cancellation & Interruption Insurance vs. Travel Medical Insurance
A common misconception among Canadian snowbirds is that their travel medical insurance policy will reimburse them for their pre-paid travel expenses in the event that they need to cancel their trip prior to departure or return home early. Please be aware that this is NOT the case!
It’s important to understand the distinction between trip cancellation/interruption insurance and travel medical insurance, as they are separate policies that cover very different types of expenses:
- Travel Medical Insurance only covers you for eligible medical expenses you incur while travelling outside your province of residence, such as hospitalization, medical treatments and procedures, etc…
- Trip Cancellation / Interruption Insurance, on the other hand, only covers you for eligible travel expenses related to your trip, such as rental accommodations, cruises, airfare, hotels and tours.
Accordingly, snowbirds who wish to insure their travel expenses must buy Trip Cancellation & Interruption Insurance separately from their Travel Medical Insurance policies, or as part of an All-Inclusive package which covers both types of risks.
What is Trip Cancellation Insurance?
Trip Cancellation Insurance is designed to reimburse you for eligible expenses that you have incurred in connection with your trip which are not refundable or reimbursable by a travel supplier such as an airline, hotel or tour operator, if you need to cancel your trip prior to departure due to an eligible “covered cause” prior to your scheduled departure date.
The most common travel expenses snowbirds seek to insure are:
- rental accommodations (official documentation required)
- resort charges
- railway tickets
The amount you can recover under this type of policy is subject to a maximum that is equal to the value of your trip.
In order to make a claim under a trip cancellation insurance policy, your trip will need to be cancelled due to a “covered cause” as soon as it occurs. Generally speaking, “covered causes” for trip cancellation fall into two broad categories: Medical and Non-Medical.
Medical “covered causes” might include:
- An unexpected illness or injury of an eligible traveler that deems you unfit to travel and is based on your physician’s assessment.
- The hospitalization or death of a non-traveling family member prior to your departure date – be sure to check your policy to see who (for example, parents, grandparents, nieces, nephews) might be covered under this clause.
It is important to note that Trip Cancellation/Interruption medical coverages may be subject to a pre-existing condition. As with Travel Medical Insurance policies, the pre-existing condition period will be 90-days or 180-days. However, unlike Travel Medical Insurance policies, the pre-existing condition period commences from the date you booked your trip, not your date of departure. In the event of a Trip Cancellation/Interruption claim, the insurance company will require your medical history for the specific number of days from the date you booked your trip.
Non-medical “covered causes” might include:
- Flight, cruise or train cancellation
- An unforeseen natural disaster at your home or at your destination
- A Travel Advisory issued by the Government of Canada after you booked your trip advising you not to travel to a country or a specific jurisdiction.
- A legal obligation, such as being called for jury duty or to appear as a witness in court;
- The non-issuance of a travel visa from the jurisdiction that you are travelling to;
- Job loss
Terms for trip cancellation insurance policies can vary greatly among insurers, so be sure to review your policy to know the conditions, situations or causes that will allow you to make a claim for trip cancellation.
With some policies, the purchase window for Trip Cancellation is short, typically 48-hours from the date you booked your trip. Other policies allow you to purchase several days or even weeks after booking your trip, however, any events that existed prior to purchasing this coverage will not be covered.
What is Trip Interruption Insurance?
Trip Interruption Insurance is typically offered in tandem with Trip Cancellation Insurance.
Whereas Trip Cancellation Insurance covers you before you depart on your trip, Trip Interruption Insurance is meant to cover you during your trip if you need to come home early prior to your scheduled return date.
Trip Interruption Insurance will generally reimburse you for the following expenses:
- A one-way economy airfare ticket to return to your original departure point, such as your province of residence.
- The unused portion of any other eligible expenses which are non-refundable such as rental accommodations, cruises, flights, hotels, tours or resort charges.
- Some policies will also include a subsistence allowance to cover meals, telephone charges and hotel charges. These are typically limited to a maximum of $250 or $500.
The amount payable is subject to a maximum, often between $10,000 and $25,000.
The “covered causes” for Trip Interruption are usually the same as Trip Cancellation, although some will not apply to both coverages. For example, you will not be able to interrupt your trip if a travel visa was not issued since you’re already there. Pre-existing conditions applies to Trip Interruption as well.
Is Trip Cancellation and Trip Interruption Insurance Sold Together or Separately?
Trip Cancellation and Trip Interruption Insurance is normally offered together in a single policy, so you’ll be covered for both situations. There are some providers who offer stand-alone Trip Interruption Insurance, plans but generally speaking, these two benefits are normally bundled together.
You can also opt for an All-Inclusive Travel Insurance policy, which includes Travel Medical Insurance, Trip Cancellation/Trip Interruption Insurance and Baggage Insurance in a bundled package.
You may also have limited Trip Cancellation and Trip Interruption insurance included as a benefit with your credit card (see below for details).
Where Can You Buy Trip Cancellation and Interruption Insurance?
Trip Cancellation and Interruption Insurance is offered by most travel insurance providers, but it’s often most convenient to deal with the same company that provides your travel medical insurance.
In addition, Trip Cancellation and Interruption Insurance may be included as a benefit with some credit cards. However, there are important restrictions and limitations you need to be aware of with such credit card policies, so be sure to check your card’s terms.
Some of these restrictions and limitations include the following:
- In order to be eligible for this benefit, the cardholder must charge the entire cost of their trip to that credit card (although some cards permit the charging of less than 100%).
- The maximum you can claim per trip is usually quite low, usually between $1,000 and $2,500 per trip can be subject to an overall trip maximum. However, you may be allowed to purchase “top-up” Trip Cancellation/Interruption Insurance for the balance of the value of your trip. Review your policy and speak to the insurance company underwriting your credit card benefits.
- While many credit card Trip Cancellation/Trip Interruption Insurance plans cover all ages, some have age limits and will only cover cardholders up to a certain age.
- Many credit cards have stability requirements on pre-existing conditions for coverage to apply.
- Some credit cards may offer either Trip Cancellation or Trip Interruption insurance, while others may offer both.
In some cases, the maximum amount you can claim under your credit card policy will be significantly less than the value of your trip. If this is the case, you should definitely consider purchasing additional Trip Cancellation and Interruption Insurance over and above the amount offered by your credit card.
When Should Snowbirds Consider Buying Trip Cancellation & Interruption Insurance?
Should you consider Trip Cancellation and Interruption Insurance for every trip? That depends.
Every situation is unique and you’ll need to weigh the cost of coverage against the potential cost of being out-of-pocket for the full amount of your trip.
Having said that, here are a few factors you’ll want to consider when making your decision:
- The dollar value of your trip: This is probably your most important consideration. The more expensive the non-refundable portion of your trip is, the more it makes sense to get Trip Cancellation and Interruption Insurance. Remember, insurance will only cover your non- refundable expenses.
- The duration of your trip: The longer you plan on being away, the more likely your trip may be interrupted and you may need to return home early for some reason.
- How far in advance you book your trip: The longer you book your trip in advance of your departure date, the greater the need for trip cancellation as a lot can happen in the intervening time.
If you intend to purchase Trip Cancellation and Interruption Insurance, it’s important to know that it must be purchased before you leave on your trip. And for trip cancellation to be covered, it’s essential that you purchase as soon as possible after you book your travel, as your policy needs to be in effect prior to an event occurring that would require you to cancel your trip.
How Much Does Trip Cancellation Insurance Cost?
The cost of Trip Cancellation and Interruption Insurance is based on a percentage of the value of the travel expenses that would be covered under your policy, so make sure you know these costs and have them available when purchasing your policy.
Generally speaking, the premium for Trip Cancellation/Trip Interruption Insurance is based on 2 main criteria:
- the value of the trip,
- the age of the traveller, and
With some insurance providers, the duration of the trip is also used to determine the premium.
Typically, the premium will be between 5% - 10% of the value of your travel expenses. So, for example, if your non-refundable travel expenses total $5,000, your premium would be between $250 and $500.
A traveler between the ages of 65 - 69 might pay between $7 - $9 per $100 of trip value, so a trip costing $2,500 can expect to pay between $175 - $225 for the coverage, plus applicable taxes in your province of residence.
Top Tips Before Buying Trip Cancellation and Interruption Insurance:
- Know the non-refundable value of your trip: This will help you determine if it’s worth buying Trip Cancellation & Interruption Insurance
- Understand your policy: Make sure you read the terms and conditions of your policy before you buy so you know what’s covered and what isn’t
- Buy before you leave: You must purchase your policy before you depart for it to be effective, and for the cancellation portion to be effective, it must be purchased prior to an event occurring that would require you to cancel your trip.
- Consider bundling with your travel medical insurance: You may be able to save on your Trip Cancellation and Trip Interruption insurance if you bundle it in an All-Inclusive Plan with your travel medical insurance.
In closing, always heed the advice from the Travel Health Insurance Association of Canada: “Know Your Health. Know Your Trip, Know Your Policy.”