How to decide if trip cancellation insurance is worth the cost

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Noah Meyer-Delouya, 25, only bought trip cancellation insurance once — and it paid off.

The Toronto-based accountant did it because he, his mom and his brother bought cheap tickets to Los Angeles this past January. They figured $67.89 for trip cancellation insurance for all three of them wasn’t too much extra money to protect their trip.

They also liked that this trip cancellation insurance policy explicitly included the ability to receive a full refund for their airfare if somebody contracted COVID-19.

“With COVID, it’s become so much more normal to be more cautious and be aware of the chance of getting sick and it impacting your trip,” Meyer-Delouya said.

Five days before the trip, his mom tested positive for COVID. Two days later, his brother tested positive too. Meyer-Delouya got lucky and didn’t contract COVID. But the family decided to cancel all their tickets and cash in their trip cancellation policy.

Trip cancellation insurance is different from medical travel insurance. It means that if something unexpected happens and you need to cancel your trip, you can get your money back for non-refundable items, like plane tickets, any time “before you set foot on the plane,” said Will McAleer, Executive Director of the Travel Health Insurance Association of Canada.

Meyer-Delouya’s circumstance perfectly illustrates how trip cancellation insurance works: the trip was cancelled because of illness before the plane took off.

According to McAleer, not only does trip cancellation insurance cover flight fare if a ticket holder becomes ill and can’t fly, but also if a family member gets sick, an accident before the trip or some other unforeseen circumstance. Other non-refundable trip purchases, like accommodations, may also be included under the policy.

McAleer added that trip cancellation insurance usually includes trip interruption insurance for travellers for who have to return early for reasons outside their control.

For instance, if a hurricane hits your resort, trip interruption insurance covers the non-refundable costs of the trip that you haven’t used, like the return plane rides and remaining days for hotel rooms, but also any incurred expenses because of the interruption, like booking a new flight to get home.

Despite his success with trip cancellation insurance in January, Meyer-Delouya doesn’t plan on buying trip cancellation insurance for his summer travels to Morocco, Spain and Japan.

“Why would you spend up to 20 or 30 per cent more for your ticket … for something that might never happen?” Meyer-Delouya said.

Even with a busy summer travel season ahead, a third of Canadians 18-to-34 years old agree with Meyer-Delouya, and think that travel insurance is too expensive, according to a 2023 TD Insurance survey. However, the same survey discovered that 31 per cent of these young Canadians couldn’t cover out-of-pocket expenses for more than $300 on a trip.

Trip cancellation tends to amount to about four to 10 per cent of the cost of the non-refundable expense of a trip, according to Ratehub. The site estimates that the average trip cancellation insurance costs $170, which is close to half of that inaccessible $300.

McAleer recommends that travellers think about three things when they’re assessing whether or not they need trip cancellation insurance: health concerns, policy options and travel plans.

Though trip cancellation insurance isn’t medical travel insurance, it’s often used in medical scenarios, McAleer said. Just like Meyer-Delouya’s mom and brother, an illness could prevent you from getting on your plane at any point before the flight takes off. If you buy trip cancellation insurance, McAleer recommended checking your policy closely to ensure that any pre-existing medical conditions are covered.

The next thing to consider is the actual trip cancellation policy. McAleer said that many people have trip cancellation insurance through their credit cards and employers, so you may not need to purchase an additional policy.

In fact, Meyer-Delouya discovered that the same company that insured him for his January trip covers him via his credit card – another reason why he doesn’t feel the need to buy trip insurance for his summer travels.

The final factor is the nature of your trip. McAleer said that he’s been seeing an increase in adventure tourism trips, which come with quite a bit of risk. A scuba diving or bungee jumping trip has a much higher risk factor than a weekend away to visit family, so investing in trip insurance may be prudent because so many things could go wrong.

Whatever you decide to do, McAleer emphasized the importance of thinking about trip cancellation insurance as a part of booking your travels, not a last-minute thing so that you feel prepared for your trip.

“Understand your policy and understand the type of trip you’re taking,” McAleer said.

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