I’ve booked a non-refundable holiday package, but I may have to cancel due to unforeseen circumstances. Does travel insurance cover trip cancellation costs? – Kalyani
Kalyani, thank you for asking this relevant question. It’s something many travellers only think of when faced with a sudden change in plans, and by then, it’s often too late. The reality is no matter how meticulously we plan our holidays, life sometimes throws in the unexpected, be it a medical emergency, a family situation, or disruptions at the travel destination. When that happens, what’s at stake isn’t just the trip itself but also the hard-earned money spent on bookings that often isn’t refundable. This is where travel insurance steps in as a trusted partner.
Now, coming to your query, it is essential to know what travel insurance typically covers. Most standard travel insurance policies do provide coverage for trip cancellation, but with certain conditions. Typically, these policies reimburse you for prepaid, non-refundable expenses, such as flight tickets, hotel bookings, or tour packages, if the cancellation is due to a covered reason, which we in the industry refer to as “covered perils.” These could include personal injury or illness, family bereavement, or natural disasters such as floods or earthquakes.
CFAR option
However, there’s something more that’s worth knowing. If you’re looking for even greater flexibility, consider exploring an add-on called Cancel for Any Reason (CFAR). This is an optional cover available with some travel insurance plans, which lets you cancel your trip for any reason. Whether it’s a change of plan, work responsibilities, an unexpected meeting, shifted school exam dates, or simply a change of heart, CFAR gives you the freedom to cancel your trip without losing your money. That said, because of its broader coverage, CFAR usually comes at a higher premium compared to standard travel insurance. However, many travellers find that the convenience it offers is worth the additional cost.
CFAR coverage can include not only your travel and accommodation charges but also items such as pre-booked events, international SIM cards, guided tours, and excursions. Some policies even offer the option of voluntary co-payment, whereby the policyholder chooses to pay a portion of their claim, which can also potentially lower the insurance premium. This cover applies to both domestic and international trips if the reason for cancellation is sudden and unforeseen.
One important point to remember: regardless of the coverage, the event that leads to cancellation should not be known at the time of policy purchase. For instance, if you already knew about a medical condition or a visa issue before buying the insurance, the insurer may not accept your claim. Additionally, in the event of job loss, the reason must not be related to fraud or misconduct. These finer details matter, and it’s always best to read your policy document carefully to know your coverage.
At the time of making a claim, ensure you have the necessary paperwork, such as proof of bookings, payment receipts, and documents that explain the reason for cancellation. It helps to provide a smoother and faster settlement process.
Kalyani, I appreciate your awareness, and I recommend that you always have a travel insurance policy before starting your trip. By understanding the coverage options and considering your unique needs, you can maximise the benefits and avoid financial setbacks due to any unforeseen emergencies that may arise. It is not only a wise investment but also provides seamless financial protection, giving you the confidence to travel worry-free and letting you focus more on the experience and less on the uncertainty.
The writer is MD & CEO, Bajaj Allianz General Insurance
Published on August 9, 2025
