Due to global events involving the coronavirus pandemic, travelers are more aware of travel insurance than ever before. Here we talk you through what kind of insurance you need for travel beyond coronavirus.
Most comprehensive trip insurance policies include a coverage that protects 100% of your insured non-refundable trip expenses should you need to cancel for a “covered event” as listed under the trip cancellation benefit. So what constitutes a covered event?
- You or your family member fall ill, become injured or pass away
- Your destination is hit by a natural weather disaster
- A terrorist act occurs at your destination within a certain time frame from your trip
Therefore, as you’ve come to realize if you were unable to go on your recently scheduled trip due to a travel ban, you will likely not be covered unless you have a specific type of coverage called “Cancel for Any Reason,” and maybe not even then since insurance companies are rewriting their policies.
What is CFAR “Cancel for Any Reason”?
“Cancel for Any Reason” (CFAR) is a very specific type of travel insurance benefit that is not offered or included with every comprehensive travel insurance policy. The coverage is often an optional upgrade and a time-sensitive benefit. CFAR protects 50-75% of your insured trip cost and allows you to cancel your trip for any reason whatsoever. However, there are a few requirements you have to meet to be eligible to purchase CFAR travel insurance:
- You have to purchase CFAR insurance within 10-21 days of your initial trip deposit date, depending on the plan–-make sure you check and take care of it in that time-frame to be eligible for coverage!
- In order to be eligible for compensation, you have to account for and insure ALL prepaid, non-reimbursable trip costs.
- If you decide to cancel your travels, you have to do so at least 48 hours prior to your trip departure.
- If you cancel, you’ll be refunded a portion of the pre-paid, non-refundable trip payments, rather than 100% of it. Generally, this portion is around 75% of what you had insured.
What does it cover?
Great question. CFAR travel insurance costs about 40% more, but it offers much more fluid cancellation terms than your standard insurance package or even trip cancellation insurance. With this add on, you can literally cancel for any reason. You no longer want to travel to your destination (or can’t due to new travel advisories or bans), feel uneasy about going, or get unexpectedly busy at work–-for any of these reasons you can cancel your travels and receive partial repayments.
Can I use “Cancel for Any Reason” on rescheduled trips?
Unfortunately, CFAR coverage would not be available for rescheduled trips if the original deposit or payment date (not the date the trip was rescheduled) is outside the 14-21 day window.
Do I really need it?
Up to you, but with recent global events, it’s not a bad idea. A few weeks ago many thought their June and summer trips would be safe, but with shelter in place orders extending and talks of a resurgence of the virus potentially happening later in the fall, it might be a good idea to purchase CFAR. I repeat — check on the coverage details of the cruise company or other tour operator’s “travel with confidence” policy.
How do I buy “Cancel for Any Reason” travel insurance?
The time to buy a CFAR policy would be as soon as you make your first payment or deposit for upcoming travel. To be eligible to purchase this policy you must meet the following requirements:
- Purchase the policy within 14-21 days of the initial trip deposit date
- Insure 100% (not just a portion) of your prepaid non-refundable trip expenses
- Cancel your trip at least 48 hours prior to your scheduled departure date
Pricing, like all policies, is mostly based on the age of the traveler and the cost of their trip. That is why it is best to compare plans to find the most affordable options since CFAR policies cost anywhere between 12-20%, as opposed to 5-7% (the average of regular insurance policies), of your trip cost.
The new travel season after the COVID-19 pandemic will be an interesting one. Make sure you are covered and get details on tour operator’s offer of “travel with confidence”. CFAR is great for you, my reputation as an advisor, and everyone’s sanity!