Cancel For Any Reason Travel Insurance: What You Need to Know
If you are rescheduling a vacation or booking a future trip, consider purchasing an insurance policy with the CFAR benefit.
Consider cancel for any reason travel insurance for peace of mind when planning your next vacation. (Getty Images)
As travelers frantically try to cancel upcoming vacations and reschedule trips for later this year, they may find that even though they had purchased travel insurance, the policy doesn't cover the cost of their vacation. That is probably because an event like the coronavirus pandemic was not a reason for cancellation specified in their plan.
"Most policies cover a limited amount of peril, so there can be exclusions, such as CDC warnings and travel advisories," according to Erin Gavin, insurance product specialist at InsureMyTrip.com, an insurance aggregator. That’s why you should read the fine print. While many plans cover cancellation at 100% of the trip costs due to a natural disaster or a terrorist attack at the destination, these plans generally do not include a pandemic.
The only way that you can guarantee coverage for an event not specified in a traditional comprehensive travel plan, such as the coronavirus, is to purchase an upgrade for the cancel for any reason (also known as CFAR) benefit.
What Is Cancel for Any Reason Travel Insurance?
The cancel for any reason benefit is an optional upgrade (available for an additional fee) with select travel insurance plans. It is time-sensitive and must be purchased once the trip is booked and an initial deposit on the trip is made. Several other eligibility requirements must be met, including canceling the trip within a specified time. If all criteria are met, CFAR allows travelers the flexibility to cancel their trip for any reason and recover part of the cost.
"The CFAR option enables the insured to cancel their trip for any reason up to 48 to 72 hours prior to their scheduled departure date and receive a partial reimbursement of their insured trip costs, depending on the plan and provider. If you cancel within that 48 to 72 hours, only the standard trip cancellation reasons will apply," says Stan Sandberg, co-founder of TravelInsurance.com, another insurance aggregator.
Another requirement to qualify for the CFAR benefit is that you need to insure 100% of your nonrefundable, prepaid trip costs, Sandberg adds. That amount must include any trip costs subject to a cancellation penalty, fee or other restriction, according to Sandberg.
"If someone buys a CFAR policy and then purchases additional travel arrangements, they are also required to insure those subsequent travel arrangements in order to meet the 100% requirement. They must purchase the additional insurance within the same timeframe as the original purchase, 24 hours to 21 days, depending on the plan," he says.
Additionally, when evaluating plans with CFAR, you should know there are major differences in reimbursement rates, especially when there are more deposits and prepaid costs involved with longer and more expensive trips. There are also per-person coverage limits. Travelers need to keep in mind that regulations and rates vary by the insured’s state of residence as well.
When Do You Have to Buy Cancel for Any Reason Travel Insurance?
Travelers must purchase cancel for any reason insurance typically within 21 days of booking the trip or paying a deposit toward the vacation.
“All CFAR plans require that you purchase the plan and the optional upgrade within a strict timeframe from when the insured made their initial trip deposit or payment. The window ranges from 24 hours to 21 days. Once a customer is outside of the 21 days of their initial trip payment date, then CFAR is no longer available for their trip," Sandberg says.
After that time, the only policy available for purchase would be a standard travel insurance plan.
Some companies also have tighter windows of just 10, 14 or 15 days from when you booked or put a deposit down on a trip to be able to purchase the CFAR upgrade, so you need to compare policies carefully. Also, if you are planning a last-minute trip, be sure to purchase the insurance with the CFAR benefit more than 24 hours prior to your time of departure. You cannot buy this upgrade the day of travel and have valid coverage.
What Does Cancel for Any Reason Travel Insurance Cover?
As long as you meet all the eligibility requirements and restrictions on timeframes as outlined above, and can purchase the CFAR upgrade, it will cover canceling your trip for any reason. If you are uncomfortable traveling, whether it’s because you’ve had a change of heart or due to coronavirus concerns or anything in between, you don’t need to explain. Just be sure that you have documentation for the exact amount of your prepaid and nonrefundable expenses that were insured to submit for your claim.
What Doesn't Cancel for Any Reason Travel Insurance Cover?
The only time CFAR would not cover a claim is if the eligibility requirements are not met. These would include items mentioned above, such as purchasing the benefit within less than 24 hours of the departure time, not canceling the trip at least 48 to 72 hours before the departure date (as specified in the plan), or not correctly insuring the exact dates and amount of the trip.
"The insured amount must cover you from the moment you leave home to the moment you return home. You cannot cover part of a trip,” Gavin adds.
Also, the amount you insure must be specific. For example, if the total prepaid and nonrefundable cost of the trip is $2,893.28, then use that figure to calculate the price of the policy, don’t round up.
How Much Is Cancel for Any Reason Travel Insurance?
If you want to add the CFAR benefit to your travel policy, how much more will it cost than a regular comprehensive travel insurance plan? According to Sandberg, standard trip cancellation coverage without CFAR typically costs between 4% and 10% of the insured trip. With CFAR, travelers can expect to pay another 50% to 60% of the standard policy cost.
Here is an example of how much travel insurance with the cancel for any reason benefit costs. (Prices were accurate at the time of publication.) The following rates are for a 40-year-old Florida resident traveling within the U.S. for one week in June, with a total trip expense of $3,000. The costs were calculated on TravelInsurance.com.
There were 24 plans available for a standard travel insurance policy. Rates ranged from a Silver Plan with one company (AXA) for as low as $77 and went as high as $231 for a Platinum Plan with another company (AIG - Travel Guard). Of course, the policy benefits varied depending on the price and the company.
Of the 24 options, only seven companies offered the cancel for any reason upgrade. AXA was one of them, but to apply for the CFAR option, the policy had to be upgraded to a Platinum Plan at $125. The additional upgrade charge for CFAR was $63 for a total of $188. One of the most expensive plans, from AIG – Travel Guard, totaled $320.60 for the standard travel insurance policy plus the CFAR benefit.
How Much Can I Get Back with CFAR Coverage?
The typical reimbursement benefit is between 50% and 75% of the total insured costs. The rate of reimbursement will depend on several factors, including the length and value of the trip. It’s best to compare all the plans available to determine the best benefits for the price and what will be the best travel insurance plan with cancel for any reason coverage for you.
You also need to follow the specific requirements to ensure that you are eligible for the reimbursement. Gavin reiterates that if you ever had to file a claim and say, the documentation surrounding the amount of the trip you insured wasn't precise, it could result in a denial of the claim.
"While there are advocates that can help and mitigate the situation to where they may make an exception, you don't want to be in that position,” she says.
Cancel For Any Reason Travel Insurance Providers
Not every travel insurance company offers the cancel for any reason benefit, and the types of plans each insurance company provides vary by state.
Here are a few popular companies that currently offer the CFAR benefit:
- AIG – Travel Guard
- AXA – Assistance USA
- CF – Travel Insured International
- John Hancock Travel Insurance
- Seven Corners
"Selling travel insurance has never been more important but has also never been so difficult. With an inundation of claims and differing state regulations, many companies are changing terms of new policies,” says Jack Ezon, founder and managing partner of Embark Beyond, a premier luxury travel company based in New York. He explains further: “For example, Travelex just removed the ability to buy cancel for any reason on any policy.”
As an example of how things in the insurance world can evolve, for the past 10 years New York state residents could not purchase CFAR coverage due to state regulations. This policy changed when Gov. Andrew Cuomo announced in early March that insurance companies in the state would be able to offer the cancel for any reason option. Six international and national companies have agreed to provide the benefit. However, it is not available yet through many of the online insurers. According to a spokesperson for InsureMyTrip.com, they have not received the CFAR product for New York as of yet. She said it will take several weeks to get these policies to market.
The Bottom Line
With so much uncertainty about how long this pandemic will last and how severe it will be, travel insurance with the added cancel for any reason benefit may be worth the investment to many travelers. While it is more expensive and it doesn't cover 100% of the cost of the trip, it will give travelers peace of mind knowing they can cancel if it's necessary.
As Ezon mentioned, if you're going to book a trip and want to insure it, know that the rules and state regulations are changing fast. It's very tempting to plan future travel with airfare, cruise and travel deals too good to pass up, but keep in mind it may be more difficult going forward to insure trips with the CFAR benefit.
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