Travel Insurance: How Does Trip Cancellation Coverage Work?

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Having your long-awaited holiday cancelled is one of the more unfortunate circumstances that can happen while getting ready for a trip. Whether it is due to a medical emergency or situations like natural disasters or airport closures, trip cancellations can lead to losses of hundreds of dollars. To protect themselves from the financial loss of an entire trip cancellation, travellers typically buy a travel insurance policy. However, not all types of cancellations will be covered, which can leave travellers stuck without any financial recourse. To help you avoid these pitfalls, we've written an in-depth guide about what a trip cancellation benefit from your travel insurer really entails.

What Does the Trip Cancellation Benefit Cover?

A travel cancellation benefit will let you claim for cancelling your trip in its entirety. You can claim up to the limit stated in your policy. For instance, if you have to cancel a S$6,000 trip and your policy only have a trip cancellation benefit of S$5,000, then at most you will get reimbursed S$5,000. On the other hand, if your trip cost S$1,000 and you have a trip cancellation benefit of S$5,000, then you will at most get reimbursed S$1,000.

While every insurance plan is different, there are a few widely accepted reasons in which your cancelled trip would be covered. The major reason that is accepted by all insurers is death or serious illness/injury. This applies not just to you, but your spouse, child, travelling companion, close relative or close business relative as well. Some insurers even extend it to anyone you were planning to stay with during your trip.

This graph shows the average benefit limits for trip cancellation based on different travel insurance levels

Another reason for trip cancellation that your insurer will accept is if there is a serious public event in your country of destination. For instance, suppose you bought a ticket to a destination and 20 days before you are supposed to leave, riots and protests disrupt public peace. If the riots don't end and you have to cancel your trip because of a travel advisory, your claim should be approved.

Other Widely Accepted Reasons for Trip Cancellation

  • You or travel companion called to be a witness in court during travel dates
  • Your or your travel companion's home gets seriously damaged by a fire, storm, flood or natural disaster
  • Your onward flight is cancelled by the airline due to poor weather conditions
  • Your onward flight is cancelled by airline due to airway, airport or runway closures

Regardless of your reason for cancelling your trip, the reason must occur within 30 days of your departure.

Trip Cancellation Due to Pre-Existing Medical Conditions

While most travel insurers don't provide trip cancellation coverage for pre-existing conditions, there are a few that have started to do so. A pre-existing condition is a medical condition (allergy, physical condition or illness) that exhibits symptoms or signs that you are aware of. It is also a condition that you were advised to receive or received treatment, medical advice, diagnosis or drugs in the 12 months before the start of your trip.

The travel insurers that offer trip cancellation coverage for pre-existing conditions are NTUC Income, MSIG, and Etiqa's Tiq travel insurance. Aviva also covers trip cancellation for pre-existing conditions under their "trip cancellation for any reason" benefit. Pre-existing condition plans cost 2.5-3x more than plans that don't cover pre-existing conditions. However, they can be worth the cost if you have serious medical conditions such as cancer, epilepsy or heart disease, whose complications can result in cancelled trips.

Trip Cancellations for Any Reason

Currently, Aviva is the only insurer that lets you cancel your trip for any reason. This may seem too good to be true—and it is. As with all insurance benefits, even this travel benefit will have exclusions. In the case of Aviva, this means that trip cancellations that arise from your negligence, travel to restricted countries, or known circumstances or events will not be covered. However, it can be a very beneficial benefit for those with unpredictable schedules, because you'll be able to recover your financial losses even if your reason for cancelling your trip isn't something that's typically covered.

What Doesn't the Trip Cancellation Benefit Cover?

There are a myriad of reasons you might not be covered under your policy's trip cancellation benefit. The main one is that you can't cancel your trip because you don't want to go anymore. Furthermore, while serious illnesses are covered under trip cancellation, not serious illnesses or injuries are not. This means you won't get a payout if you cancel your trip because you or your family member has the common cold. Insurers also won't let you claim for trip cancellations that arise from work obligations.

You also won't be able to submit a claim for a cancelled trip if you failed to notify your airline, transportation provider, tour operator or licensed travel agent that you had to cancel your trip. Lastly, you won't be able to claim for travel cancellation if the claim arises from something that is considered as a general exclusion (e.g. negligence, illegal activity, travelling against travel advisories).

Common General Exclusions

Medical ExclusionsTrip Inconvenience Exclusions
Pre-existing conditionsParticipation in professional or compensated sports
Mental disordersItems taken by customs officials
Loss or injury due to alcohol/drugsTravelling against advice of regulatory authorities
Pregnancy-related events unless mother is at riskTravelling to a country at war
Travelling when medically unfitClaims paid for by other insurers

What Expenses Will Get Reimbursed?

If you have to file a trip cancellation claim, your travel insurer will pay you for any irrecoverable expenses (meaning expenses you cannot get a refund for on your own) paid to your travel agent, air, sea or land transportation expenses and/or accommodation expenses. If you receive some type of refund, then the payout will be reduced by that amount. Some insurers may also cover non-refundable entertainment tickets. However, because this is not a ubiquitous cover across the industry, you should always read the policy wording first. Lastly, insurers will not reimburse you for air miles or other points that you used to pay for your trip.

How Do I Submit a Trip Cancellation Claim?

If you are cancelling your trip because of a death or serious illness/injury then you should submit medical records with your claim. All other claims should be submitted with relevant forms of proof. For instance, you may have to get a note from the airline if your trip was cancelled due to an airport shutdown. You have to submit your claim and the appropriate documents within 30 days of the event happening.

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