Trip cancellation pays the insured's prepaid, non-refundable costs when a covered event forces the cancellation of the trip before departure.
- Covered events typically include: sudden serious illness or injury (insured, travelling companion, family member, business partner); death (any of the above categories); jury duty; subpoena for legal proceedings; involuntary loss of employment; destruction of the insured's principal residence; cancellation of business meetings (where applicable); travel advisories declared after booking (insurer-specific).
- What is paid: the non-refundable portion of the prepaid trip cost: airline tickets, tour deposits, hotel deposits, cruise fares. Refundable amounts are not paid.
- Time of effect: coverage attaches at purchase (or at trip deposit, if purchased then) and continues until departure. Most carriers offer the best pre-existing condition treatment if cancellation is purchased within a short window (often 72 hours) of the trip deposit.
The insured can usually purchase cancellation coverage only before departure; after departure, the trip is no longer cancellable and the relevant coverage becomes interruption.
Common mistake: thinking cancellation covers a client who simply changed their mind ("disinclination to travel"). It does not. The covered reasons are specifically listed and require evidence (medical certificate, death certificate, employment letter).
🧠 Memory hook, "Cancellation = Before; Interruption = After". Two products for two phases of the trip.
Recall: Name three covered reasons under trip cancellation coverage. Why is "I changed my mind" not a covered reason?