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Note: The coronavirus pandemic has disrupted existing and future travel plans, and turned greater attention to trip insurance. Read our take on specific information concerning travel insurance and COVID-19, or see our comprehensive guide to managing your finances during COVID-19.
Travel insurance can help you get your money back if you have to cancel a trip — but only if you cancel for certain reasons. If you want more flexibility, you may need “Cancel For Any Reason” (CFAR) coverage.
“Cancel For Any Reason” coverage means exactly that. You can cancel for any reason and get a partial refund of what you paid, regardless of what caused your change of heart.
What about regular travel insurance?
Regular travel insurance restricts when you can get reimbursed for canceled travel. For example, you might get a full refund if you, a family member or a traveling companion gets sick before your trip and you have a doctor’s note to validate your claim. Other valid reasons under some trip insurance policies include things like:
Bankruptcy of the carrier.
Travel insurance typically won’t help if you want to cancel because you’re afraid of getting sick, however. Many people discovered that fact as the coronavirus was starting to spread earlier this year. Purchasing CFAR coverage is usually the only way to get a partial refund of your prepaid, nonrefundable trip.
Also, travel insurance policies usually exclude pandemics from their coverage. Once the World Health Organization officially declared COVID-19 a pandemic on March 11, policies with pandemic exclusions wouldn’t cover COVID-19-related illness or losses.
Every policy is different, and you’ll need to review the fine print to see what is and isn’t covered.
What is 'cancel for any reason' coverage?
There are some important elements of CFAR:
CFAR is supplemental coverage that offers partial reimbursement when you cancel a nonrefundable trip for any reason that isn't covered by your travel insurance policy.
You cannot purchase CFAR on its own. It is an optional upgrade added when you purchase primary travel insurance.
Not every trip insurer offers it.
It is the only type of coverage that will offer reimbursement if you cancel a trip for any reason.
If you accept a voucher or credit from a hotel or airline for a canceled trip, your claim may be ineligible for CFAR insurance reimbursement. Though, if you are only provided with a partial voucher/credit for the trip or have leftover unreimbursed expenses, you can claim the remaining amount.
How to purchase CFAR
If you buy travel insurance from a comparison site like Squaremouth or Travel Guard, you can filter by policies that offer a CFAR upgrade. When choosing a policy, make sure to select the cancel for any reason add-on (remember, it is optional). Not every insurance company offers CFAR, so if you’re buying directly from a provider, check to see if CFAR is available before you purchase. Cancel for any reason coverage may not be available in every state, and policies may have changed due to coronavirus — so make sure that the state you live in offers CFAR coverage in light of COVID-19.
How much will I pay for CFAR?
Cancel for any reason coverage will likely add about 50% to your total travel insurance bill. According to the U.S. Travel Insurance Association, a complete travel insurance policy will usually cost about 4% to 8% of the total cost of a trip. Based on these numbers, if you purchase CFAR coverage along with travel insurance, your total out of pocket cost will be from 6% to 12% of your trip.
A real-life sample of CFAR
To put these numbers to the test, we searched for travel insurance policies that offer a CFAR upgrade on Squaremouth. In the chart below, we’ve included four providers that offer cancel for any reason coverage. The figures are based on a nonrefundable $1,000 one-week trip to Mexico in April taken by a 30-year old U.S. citizen.
For each of the policies listed, travel insurance was from 4% to 8% of the total trip cost. CFAR coverage increased the cost of travel insurance by roughly 40%-50%. The cost of travel insurance inclusive of CFAR represented 5% to 12% of the total trip cost.
As you can see, CFAR is a pricey upgrade. Although these numbers may not look excessive, keep in mind that this is based on a one-week $1,000 trip. If you wanted to protect a two-week $5,000 trip (or a bigger one), the cost of CFAR increases considerably.
» Learn more: How to find the best travel insurance
Will CFAR give me a full refund of my trip?
Typically, you will receive a 75% reimbursement of prepaid nonrefundable trip plans. That is the silver lining of the pricey CFAR add-on.
Let’s consider the example above. CFAR coverage under those policies reimburses 75% of the total trip cost. If you purchase travel insurance for this trip (without CFAR) and need to cancel for a non-covered reason, you would lose the $1,000 you paid.
However, if you purchase the CFAR option and cancel your trip, you would be reimbursed $750 and lose only $250. You’re essentially paying an extra $16-$40 to safeguard $750 of your trip no matter the reason for your cancellation.
If you’re having second thoughts about a trip you’re planning and suspect you may need to cancel it, CFAR could provide peace of mind. Just remember that accepting a voucher or credit from an airline or hotel for a canceled trip could invalidate your CFAR claim, so make sure to check the fine print of the policy or ask your travel insurer for more information.
When should I purchase CFAR?
Most trip insurance providers limit the time during which you can buy CFAR coverage. We reviewed 16 travel insurance policies that offer CFAR as an optional upgrade and found that this add-on must be purchased within 10 to 21 days of making your initial trip payment (depending on the company). In the case of cruise specific policies, you must purchase it prior to the final payment date of your cruise. You cannot buy a cancel for any reason supplement if your trip has already begun.
Can I really cancel for ANY reason? What does a CFAR policy cover?
Yes, any reason. When you buy CFAR coverage, you can cancel your trip for any reason you want without worrying that you’ll lose your entire prepaid, nonrefundable vacation deposit. The reason doesn't matter as long as you cancel within the allowable time frame (usually two days in advance) and you’ve insured the entire nonrefundable cost of your trip.
» Learn more: What to do if you get sick while traveling overseas
What are the limitations of CFAR?
As discussed previously, there are a few limitations to CFAR:
It doesn't offer full reimbursement. Different policies have varying reimbursement percentages ranging from 50% to 75%.
A trip cannot be canceled at the very last minute. You will need to cancel two days in advance to get reimbursed.
You are required to insure 100% of your nonrefundable trip costs; you cannot pick and choose which parts you want to insure.
You have a limited number of days (10 to 21 days depending on the policy) after purchasing a nonrefundable trip to add the CFAR option.
Accepting vouchers or credits from airlines can affect the claim amount. If you accept a voucher, you can no longer claim that charge on your travel insurance. However, if you only receive a partial credit for the trip or have remaining unreimbursed expenses, you can claim the outstanding amount.
Cancel for any reason coverage FAQ
I found a great deal for a vacation in the future, but I’m worried about coronavirus. Should I get travel insurance and/or CFAR?
Trip cancellation provisions under travel insurance policies have a lot of exclusions. Wanting to cancel because you’re scared to catch coronavirus isn't an allowable reason under travel insurance policies. The only way to protect a nonrefundable trip is to purchase CFAR coverage. If you do decide to cancel, make sure you do so in the allowable time frame (two days for many providers).
My credit card offers trip cancellation coverage. Do I still need to get CFAR if I want to cancel a trip and get a refund?
Similar to the trip cancellation coverage provided by travel insurance policies, credit card trip cancellation coverage has a long list of exclusions. Acceptable reasons for trip cancellation coverage can include bankruptcy, terrorist attacks and extreme weather that prevents a trip from starting. Changes in plans are generally not covered. The only way to protect your nonrefundable trip is to purchase travel insurance and get a CFAR optional upgrade. CFAR cannot be purchased on its own.
I bought travel insurance but didn’t purchase CFAR. Is it too late?
If it has been more than 10 to 21 days (based on the policy) since you made your initial trip payment, it is probably too late to purchase CFAR coverage. If you’re planning a cruise, CFAR must be purchased before your final payment.
The bottom line
Coronavirus has had a significant impact on past and future travels. Many people have had to cancel trips, and some are hesitant to plan upcoming vacations. Although standard travel insurance can protect you when unforeseen circumstances affect you before or during your trip, the coverage comes with a lot of limitations and exclusions.
The best way to protect a nonrefundable trip is to purchase a cancel for any reason optional upgrade, as it will allow you to cancel for any reason and still receive a sizable reimbursement.
How to Maximize Your Rewards
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Airline miles and a large bonus: Chase Sapphire Preferred® Card
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