Credit Card Travel Insurance Unwrapped: Trip Cancellation
This is the next publication in our credit card travel insurance series for travel advisors. These publications provide a detailed perspective on every travel insurance component that is included on credit cards and informs travel advisors about the most important aspects of the coverage.
Trip cancellation insurance (together with trip interruption) is one of the less understood elements, especially by travellers. So, let’s dive in!
What is trip cancellation insurance?
Trip cancellation insurance is one of the most important elements of travel insurance that can come with a credit card. It protects travellers in case of an unexpected event happening BEFORE the trip starts and, as a result, requires cancelling the trip, potentially forfeiting already paid costs.
If the costs are reimbursable, it is all good. But if they are not, trip cancellation insurance offers the last resort (not considering the long, legal way) to recover the costs. It is important to understand that not every possible event is covered by this insurance, but it typically covers interruptions of a serious nature (such as death or sickness of an immediate family member, pregnancy complications, travel advisory, etc.).
What aspects of trip cancellation insurance are the most important?
Travel professionals must pay attention to the following three aspects of any trip cancellation that comes with a credit card:
1. Coverage per insured person. Typical values are between $1,000 and $5,000 per insured person. When deciding if this coverage is enough, it is important to ensure that this amount covers aspects like reimbursement for an unused part of the vacation like hotel costs, cancellation costs/penalties, unplanned return tickets, etc.
2. Aggregate amount per trip. Typical values are between $1,500 and $5,000 and are rarely higher. Overall, the aggregate amounts per trip for cancellation insurance is lower than for trip interruption insurance, since many arrangements are easier to cancel as long as the trip has not started. This coverage is important for larger families, especially when travelling with children. The larger the family, the greater the financial loss from trip interruptions.
3. Persons covered. In many cases, this includes a spouse and dependent children and, sometimes, a travel companion. It is important to understand who exactly is covered by this insurance, and if needed, complement it through additional insurance.
4. Events covered: Interestingly, the list of events covered by various credit cards may vary greatly. Here is a comparison of trip cancellation conditions across two sample credit cards: RBC Visa Infinite Avion and National Bank Platinum Mastercard with major differences highlighted in green.
| RBC Visa Infinite Avion | National Bank Platinum Mastercard |
|---|---|
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What are common exclusions related to trip cancellation insurance?
Similarly to trip interruption insurance, trip cancellation insurance comes with a number of exclusions where pre-existing medical conditions (such as a heart or lung condition) come into play. Also, situations where a traveller might have been aware of potential issues are excluded (e.g., trip against doctor advice).
Which credit cards offer trip cancellation insurance?
Most banks have at least a few credit cards that include this coverage. Very often it goes hand-in-hand with trip interruption insurance though, there are several cards that offer one (usually trip interruption insurance) but not another. Typically, it can be found in the higher categories of cards that require an annual fee. That being said, trip cancellation limits vary widely. Most no-fee credit cards do not offer it.
Here is a list of bank credit cards offering this coverage. More information about travel insurance coverage on nearly every major credit card can be found through our tool at TravelandCards.com
Please note that this information reflects the individual, not business, credit cards on offer as of June 28, 2021.
What if a credit card does not offer trip cancellation insurance?
It is very important for travellers to have this type of coverage. We saw why during the pandemic when unexpected events drove high cancellations and trip interruptions.
Travel advisors can use our TravelAndCards tool to find out if their clients have trip cancellation on their credit card, and if needed, offer additional coverage. This benefits both sides – travellers are well protected and have peace of mind, and travel advisors can differentiate their service by providing valuable advice while increasing their own travel insurance sales.
Contact us if you are interested in equipping your travel agency and your travel professionals with this unique tool.
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