Is Cancel For Any Reason Travel Insurance Worth It?

If planning the trip of a lifetime, the old adage to "hope for the best, plan for the worst" should be your consistent mantra, especially if your trip is particularly expensive, has inflexible dates, or involves a complicated itinerary. No matter how prudently you plan, one unforeseen hazard or circumstance can completely derail your vacation.

A successful trip is typically contingent on almost every detail perfectly panning out. When best-laid plans derail your trip or a serious emergency arises, a quality travel insurance plan can typically cover travel-related and emergency medical expenses. Depending on your plan, travel insurance may reimburse your hotel stay due to a missed connection, cover the cost of lost baggage, or evacuate you in a medical emergency.

Travel insurance will typically also cover prepaid, non-refundable expenses if you cancel your entire trip. However, the coverage is usually limited to the hospitalization, injury, or death of you, a travel companion, or a family member; an unforeseen legal obligation; and instances of severe weather (with stipulations). Needless to say, coverage for trip cancellations is usually limited and very specific.

Since you may find it necessary (or wise) to cancel a trip for other reasons, many travel insurance companies now also offer "Cancel for Any Reason" (CFAR) coverage. While not cheap, this add-on benefit can provide you with additional flexibility and financial peace of mind. 

When considering if a CFAR option is worth it, you'll need to weigh its advantages against the cost. You cannot purchase a CFAR benefit as a stand-alone policy. Just like other travel insurance add-ons, such as coverage for extreme activities, a Cancel for Any Reason benefit will be added to an existing policy.

If you choose a CFAR option, your policy's premium may increase by 40-50%. When budgeting for an expensive trip, this added cost can be daunted. On the flip side, a particularly expensive trip is also the one you need to protect the most. We should mention that you'll need to typically purchase a CFAR option within a few weeks of making your first trip payments. Also, you'll need to separately insure all prepaid, non-refundable trip expenses through your base policy.

It's also worth noting that a CFAR benefit will not reimburse you for the entire canceled trip. Depending on your policy, you may be reimbursed between 50-75% of the trip's total cost. While this may seem unfair, remember that without the CFAR option's last-minute flexibility, you wouldn't receive anything if you canceled your trip outside of the acceptable reasons.

A Canceling for Any Reason option is pretty self-explanatory. You can literally cancel for any reason without many stipulations. However, although CFAR is a benefit that allows last-minute decision-making, you'll typically need to cancel the trip between 48-72 hours before your departure date, depending on your insurance carrier.

If you're planning a high-risk trip or a trip with a lot of uncertainties, you may find that a CFAR option is worth it. For instance, if the destination you're visiting experiences political upheaval or implements pandemic-related protocols, you'll be covered for canceling under a CFAR add-on. Personal or professional reasons may also lead you to cancel your trip last minute. Typically, regular coverage will not cover these reasons for cancellation.

Determining whether CFAR is worth the cost will depend largely on the trip and the people traveling. Often, CFAR is utilized when someone emotionally no longer wants to travel, as physical reasons for canceling are typically covered under regular travel insurance. So, if you or your party feels apprehensive about traveling while planning the trip, then CFAR may be a wise choice to at least mitigate financial anxiety as the departure date nears.