Trip Cancellation and Interruption Insurance
Trip cancellation and interruption insurance provides financial protection when a trip must be canceled, delayed, or cut short due to unforeseen events beyond the traveler’s control. This coverage helps reimburse non-refundable travel expenses such as flights, hotels, and tour bookings that would otherwise be lost if a covered reason prevents or disrupts your travel plans.
How It Works
Trip cancellation and interruption insurance reimburses non-refundable costs and out-of-pocket expenses if a trip is cancelled, delayed, or cut short for a covered reason. Although they are often sold together as a bundle, trip cancellation and trip interruption are two distinct coverages, and travel medical insurance can be added to that bundle. The cancellation portion covers pre-paid, non-refundable travel expenses, such as airfare, cruise, train, or hotel, that you have insured, should you cancel your trip before departure for an unforeseen covered reason. The interruption portion covers you while you are already on your trip, reimbursing the lost portion of the trip plus additional expenses such as a last-minute flight home when a covered reason requires you to return. To be covered, the event that requires you to cancel or interrupt the trip must be unknown on the effective date of coverage, beyond your control, and prevent you from travelling or continuing your trip. This is different from travel medical insurance, which covers illness or injury abroad, and ideally a traveller should be covered for both. The best time to buy trip cancellation insurance is when you purchase your trip or make a deposit, and the coverage amount you set is the maximum reimbursement you can receive, even if your trip ends up costing more than that amount, so all non-refundable expenses should be calculated correctly.
Example:
A couple in Ontario books a non-refundable Caribbean package and buys trip cancellation and interruption insurance through their Blue Cross travel plan. A week before departure, one of them breaks a leg and a doctor deems them unfit to travel, so the trip cancellation portion reimburses their insured non-refundable costs. Had the injury instead happened mid-trip and forced an early return, the interruption portion would have covered the unused, pre-paid portion of the trip plus the cost of an additional flight home. Note that at tax time, only any travel medical portion of the premium could be claimed under the CRA Medical Expense Tax Credit; the cancellation and interruption premium itself is not eligible.
What to Watch For:
When a flight is cancelled or delayed, policyholders are encouraged to first seek a refund or rebooking from the airline, which is required under federal Air Passenger Protection Regulations, before submitting a trip cancellation or interruption claim with their insurer. Keep in mind that, unlike the medical portion of travel insurance, trip cancellation, trip interruption, and baggage loss insurance premiums do not qualify for the Canada Revenue Agency’s Medical Expense Tax Credit. Because the coverage amount you set is the maximum reimbursement available even if the trip costs more, calculate all of your non-refundable expenses correctly before you buy.
