Trip cancellation insurance is one type of travel insurance. This type of insurance typically costs between five and seven percent of the cost of your vacation, according to the Insurance Information Institute, so it would cost you around $500 to $700 to insure a $10,000 vacation. Trip cancellation insurance typically covers you against financial loss in the event you have to cancel your trip due to severe illness, a death in your family or other significant events which are listed in your policy. Some trip cancellation insurance policies also cover you against loss in the event your tour management company or cruise line goes out of business and takes your money with them.
You should not confuse trip cancellation insurance with trip cancellation waivers. Trip cancellation insurance is an insurance policy that is sold by an insurance company. A waiver is a product sold by cruise lines and tour operators, and is not regulated by any state insurance commission. Waivers are typically far less expensive than trip cancellation insurance, but they also tend to have many more restrictions. When deciding between a trip cancellation insurance policy or a trip cancellation waiver you need to take your time and read the fine print. Don’t make any decision until you are completely comfortable with the coverage.
You must purchase your trip cancellation insurance policy prior to your departure date. Different insurance companies have different restrictions and requirements, but you should typically purchase your policy between seven and 30 days prior to departure. With more than 124 million travelers purchasing some form of travel insurance each year there is no shortage of insurance companies to choose from. In order to get the best price for the best coverage you should always compare multiple policies from a number of different companies. For the the greatest peace of mind you should also check the issuing company’s credit standing with an independent rating company such as A.M. Best, Standard and Poor’s or Moody’s.