Vacation insurance: Talk about a contradiction in terms.
The main purpose of a vacation is to get away from day-to-day cares of a sort that include the adequacy of your insurance coverage. Unfortunately, trips and insurance go together.
Medical insurance for travel outside Canada is essential, and pretty much everyone knows that. Trip cancellation and interruption insurance is another story because it makes sense only in some situations.
The idea behind trip cancellation insurance – it usually includes interruption coverage as well – is to reimburse non-refundable travel costs such as airline tickets or resort reservations. Coverage kicks in if you or a family member have a medical situation and have to return home, or if someone in your immediate family back home is hospitalized or dies. Other situations where coverage may apply include vacations gone awry because of a cancelled flight or a missed connection, a travel advisory by the Canadian government that a country is unsafe or an urgent need to return to your job.
"Trip cancellation insurance protects your investment, and it also offers peace of mind," said Darren Sniderman, senior consultant at Thomas Cook. "It's a large part of my business."
Think about who you're travelling with and who you're leaving behind at home if you're considering trip cancellation insurance. Mr. Sniderman said small children are prone to colds and ear infections that could prevent them from flying. Aged or ill parents are also a good argument for this type of insurance coverage. Another situation where it makes sense is if you're travelling in winter and your plans could be fouled up by flight cancellations.
Travel agents such as Mr. Sniderman can set you up with trip cancellation insurance, or you can shop around online (take a look at the list at the bottom of this article). Costs vary widely, as does the level of coverage.
For example, a quote from the Kanetix.ca website shows that two adults in their late 40s taking a 10-day trip with non-refundable total costs of $5,000 could pay as little as $148 and as much as $316. The low-end quote caps the trip cancellation coverage at $2,500, whereas the higher-cost policy insures up to the amount specified by the policyholder. After departure, the low-end policy caps coverage at $10,000, while the more expensive policy has unlimited coverage.
Note that it can be cost-efficient to buy travel medical and trip cancellation insurance combined into a single all-inclusive insurance policy. An all-inclusive policy for the hypothetical couple mentioned above, including travel medical and lost baggage, would range in cost from $220 to $344.
Before buying trip cancellation insurance, check the list of perks for your credit card. If you have a travel rewards card, you may find you're covered to some extent for trip expenses that were charged to the card. Example: ScotiaGold Passport Visa offers people under 65 up to $2,500 in trip cancellation/interruption coverage when at least 75 per cent of each traveller's trip expenses are paid for using the card.
If you pay in full using a TD First Class Travel Visa Infinite card, you get $1,000 per person trip cancellation insurance and $5,000 per person trip interruption insurance. Similar coverage is offered on Capital One's Aspire World MasterCard. Note: Credit cards usually limit coverage for families.
Mr. Sniderman said you can top up the coverage provided through a credit card by purchasing a separate policy for whatever amount you choose.
Timing It Right
Mind the timing of your purchase of trip cancellation insurance. Mr. Sniderman said it's possible to buy coverage right up until your trips starts, but there are insurers who require you to arrange a policy within seven days of paying for the trip or no later than 48 hours in advance of departure.
Mr. Sniderman warned that if you buy coverage at the last minute and then make a claim, your case will be very closely scrutinized by the insurers.
The price of trip cancellation insurance depends on the cost and duration of your trip and your age. If you have a serious pre-existing medical condition, there's probably no point in buying this coverage because your claim would likely be rejected.
As with travel medical coverage, you should immediately call your insurer for instructions if you need to make a claim. If you're using trip interruption insurance, Mr. Sniderman said you'll typically book your travel home and then submit a claim for full or partial reimbursement of applicable costs.
Trip cancellation insurance is classic insurance in that it's a complete waste of money if everything goes well on your trip, as it likely will. But if you've laid out a big whack of non-refundable money for a trip, if you have aged or ill parents or if you're a worrier, it's money well spent.
Protection for your vacation
Here are some websites where you can get multiple quotes for trip cancellation and interruption insurance: