This benefit is getting more popular these days, mostly because of the world and life being what they are, sometimes demands extra protection. In earlier times, more companies offered it with their entry level plans, but they’ve since scaled back and now you tend to only see it available with the mid to upper tiered plans.
In a nutshell, the benefit tends to work in a similar way with all of the companies that offer it. It allows you to cancel your trip for any other reason not stated on the policy as long as you are cancelling no less than 48 hours prior to your departure date. Depending on the company and plan, reimbursement rates range from 50% to 90% of your trip cost.
Cancel For Any Reason means just what it says on the tin. You can cancel for any reason. Any reason, as in “hey, I just don’t feel like going.” We recommend clients to look at plans that offer that benefit usually when they wouldn’t be covered under any other way. You see, travel insurance for trip cancellation/interruption is very specific in what you are covered for, known within the industry as either Covered Reasons or Named Perils. If you are trying to cancel or interrupt your trip and it’s not due to a covered reason on your policy or if the coverage doesn’t apply because of an exclusion, you are out of luck. Cancel For Any Reason is that secret weapon that you can use as long as you play by its rules.
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Does anyone offer Cancel For Any Reason at 100%? Not really. In limited circumstances there are some plans that will pay 100% of you loss. Two companies off the top of my head have a percentage scale chart of cancellation penalties and Cancel For Any Reason reimbursements at each percentage level. Quick and dirty version is, if your travel supplier charges you a cancellation penalty of 25% or less of your trip cost, then the insurance would reimburse you for 100% of the remaining loss. Otherwise it’s lower percentage. The charts usually leave everyone scratching their heads.
Now the CFAR benefit is an extra time sensitive benefit that you have to first qualify for, and if you meet ALL of those qualifications, it’s then available to you at additional cost (some plans already include the cost, but you still have to qualify for the plan). In general, the qualification requirements are:
- You must purchase the insurance within 24 hours to 30 days (varies by company and plan of making your initial travel deposit;
- Insure for the full cost of your trip
I’m going to come right out and say this and more than likely repeat this to you so it sinks in – you either meet all of the requirements for the benefit and qualify or you don’t. At the date of purchase, none of these companies will require you to prove that you met all of the above criteria, but in the event of a claim, they will. You can bet that they are going to scrutinize your information to see if you did qualify. Some people get upset over that, but hey, think about it for a minute- you can get a policy that will refund up to 80% of your trip cost just because you changed your mind and don’t want to go.
Let’s take each of these requirements one step at a time. First requirement (but not the last)- buying the insurance within the allotted period of time that they designate, anywhere from 24 hours to 30 days (again varying according to company and plan) of making your initial travel deposit. Right here you need to understand this is a “ya snooze ya looze” type of deal. There is only a limited window of time where this benefit is available, so don’t wait on it. I get clients calling in frequently who want Cancel For Any Reason, but are upset when they discover that they are no longer eligible for it because they were outside of the time period to qualify. Don’t let that happen to you.
Initial trip deposit sounds simple, but it trips people up all over the place, mostly due to how what they define their trip is and what the policies define a trip as. Which one is it? Hint: the policies definition is what you want to use. Most plans (not all, but most) define a trip as from the date that you depart your primary residence until the date that you return back to your primary residence. That means everything you are doing in between is considered to be part of your trip.
A little bit of advice on initial trip payments- some companies start this countdown to buy the day you make your first payment, others start it the day after. Sometimes different service reps at the company will give you two different answers. Err on the side of caution. Use the day you made your initial payment as day one.
Let’s say you are booking a cruise, purchasing the air fare separately, leaving a several days early to visit family/friends, then booking a hotel for a few days ect… You might look at this and see several separate trips, but the insurance company is just going to see this as one large trip you are going on. Initial trip payment/deposit is the first time that you have made any sort of payment towards any portion of your trip- regardless of whether or not it’s refundable to you. This is going to tie in neatly with the next part…..
Insure for the full cost of your trip! Depending on the company and plan, this can be either the full pre-paid cost, or full pre-paid non refundable cost, so be sure to read the policy before clicking that “Buy” button. In the previous paragraphs I told you how a trip is generally defined and that’s what you have to remember for this part. When they say they want you to insure for the full pre-paid cost of your trip, they mean it. That means everything that you have pre-paid for that has to do with your trip prior to your departure. Skimp on this at your own peril. If in the event of a claim they find out that you didn’t insure for that pre-paid hotel because you “didn’t care about that”, don’t get upset when the claims department denies your claim stating that you never qualified for Cancel For Any Reason to begin with. Remember that when you buy a policy, you are signing on to a contract, and you are expected to fulfill your end of that contract.
As always, if you have any questions or comments concerning this benefit, don’t hesitate to contact us.