What is Trip Cancellation Insurance and How Does it Work?

Travel is full of the unexpected. Most of it is exciting — exploring a foreign city, finding a new food you love, making new friends. But unfortunately, travel can also bring some not-so-pleasant surprises. Maybe a long line at security makes you miss your connecting flight. Or a government travel advisory forces you to cancel your plans completely.

Last summer, the average cost for a two-week international vacation for a Canadian family of four was around $10,000. Now, imagine there’s a hurricane right before the trip and you must cancel. Or a family emergency back home requires you to cut your trip short. Depending on your flight booking, your family could be out a lot of money.

Trip cancellation and interruption insurance gives you financial protection for these kinds of situations. This way, you can have peace of mind as you prepare for and enjoy your trip, rather than worrying about the what-ifs.

What is trip cancellation and interruption insurance?

Trip cancellation and interruption insurance is your financial protection if a trip doesn’t go ahead as planned. If your flight is delayed due to bad weather or you need to cut your trip short to return home for a medical emergency, trip cancellation and interruption coverage can help protect you against recouping any non-refundable costs.

It can also help with any out-of-pocket expenses you incur because of the change in plans. For example, if you’re stranded for a few days in your destination until the weather clears, you could be reimbursed for hotel stays, meals, and taxis.

It’s important to note that, trip cancellation and interruption insurance is different from travel medical insurance. Travel medical insurance is specifically designed to cover the costs of sickness or injury while you’re travelling, not the cost of flight delays. For that reason, it’s a smart idea to get both forms of travel insurance before you depart. You can often bundle these two insurance products together for the best coverage and value.

It’s also a good idea to buy trip cancellation insurance sooner rather than later — ideally, as soon as you know the full cost of your trip and book it, so you’re fully covered. The reason? Trip cancellation coverage only takes effect on the date you buy it. This way, if something comes up and you need to cancel your trip before you depart, you’ll already have coverage in place. You can’t retroactively apply trip cancellation coverage.

Trip cancellation and interruption insurance generally ends once your trip is cancelled (if the cancellation was before you left home) or once you return to your home.

What does trip cancellation and interruption insurance cover?

Policies can vary, but here are some common scenarios that can be covered by trip cancellation and interruption insurance with RBC Insurance:

• Emergency illness or injury: You require emergency medical care or are quarantined and cannot travel as planned. For business owners, this can include the medical emergency of a key employee or business partner. 

• Death of a family member or friend: The death of a family member or someone close to you causing you to cancel or interrupt your trip. For business owners, this may include the death of a key employee or business partner. 

• Natural disaster: Your trip is interrupted or cancelled because of a natural disaster, such as an earthquake or volcanic eruption.

• Pregnancy: Complications due to pregnancy arising in the first 31 weeks.

• Government travel warnings. If the Canadian government issues an “Avoid non-essential Travel” or “Avoid all Travel” advisory.

• Visa issues: Your travel visa is rejected for a reason beyond your control.

• Transport delays: You miss your flight, ferry, train, or miss a connection due to a  weather condition or an emergency police-directed road closure.

• Work-related emergencies or changes: You’re transferred or lose your job. Cancelled business meetings may also be covered.  

• Service duty: You’re summoned to serve in the military or to act as essential medical, police, or fire personnel.

• Court duty: You’re called for jury duty or to appear as a witness or party in a court proceeding.

As you can see, much of the coverage isn’t just for issues that might crop up during your trip — you’ll also have coverage in place for things that happen before you leave, but after you’ve purchased your policy.

What does trip cancellation and interruption insurance not cover?

Trip cancellation/interruption insurance covers a lot of things, but it doesn’t cover everything.

Here are some reasons for cancelling or interrupting your trip that likely won’t be covered:

• Pre-existing medical conditions that weren’t stable for a set period before your effective date you purchased the insurance.

• Pregnancy or routine natal care

• Medical travel for you to obtain a diagnosis or treatment.

• Self-inflicted injury or a suicide attempt.

• Alcohol or drug abuse that results in a medical condition.

• Injuries from high-risk activities, such as rock climbing or mountain climbing.

• Visa denial due to a late application by you or reason within your control.

• Entry denial at customs or a security checkpoint.

• Illegal activity committed by you.

Again, keep in mind that policies can vary, so read the policy carefully and double-check what is and isn’t covered before you leave.

How much does trip cancellation insurance cost?

The cost of any form of travel insurance depends on a few different factors, including trip duration, non-refundable trip costs, number of travellers, and ages of travellers. For example, a luxury Antarctica cruise for two seniors will have a much higher premium than a budget solo spring break trip to the Dominican Republic.

Regardless of your destination, pay close attention to your non-refundable costs. These could be things like airfare, accommodations, tour packages, and pre-booked activities. The operator may only give you some of your money back if you cancel, or none at all — especially if you’ve booked a budget airfare or discounted accommodations. Deposits on cruises and group tour packages are often non-refundable.

Once you know the full non-refundable cost of your trip, you can quickly get a quote online.

For convenience and cost savings, it may be best to bundle your trip cancellation into a package that also includes travel medical and baggage insurance. This way, you can have comprehensive coverage if something goes wrong.

If you travel several times throughout the year, you can also consider an annual multi-trip policy, that will keep you protected for trips of up to 30 or even 60 days each.

Why should you buy trip cancellation insurance?

Trip cancellation and interruption insurance is a smart move for any trip that has non-refundable costs, whether that’s airfare, hotel bookings, or a deposit on a group tour. But there are some situations where you’ll especially want to consider it:

• You’re travelling internationally: Having to come home early can be a lot more challenging (and expensive) if you’re abroad.

• You booked far in advance: The further out your trip is, the higher the chance something might crop up that requires you to cancel or reschedule.

• Your trip is non-refundable: Limited cancellation windows could mean getting none of your money back without insurance coverage.

• You have connecting flights: Depending on the reason, a missed connection may not be covered by the airline and you could be left on the hook paying for a new flight.

• You have little or no coverage through your credit card or employer: Some credit cards offer travel insurance, but not all, and they may have less coverage than a standalone policy. Same with an employer-provided travel insurance plan.

• Your trip is expensive: Having to cancel or cut short a pricey dream vacation could take a big chunk out of your budget.

• You’re travelling with family or friends: More people means more risk of someone having to cancel.

Do I need trip cancellation insurance if I have credit card coverage?

Some credit cards, especially travel credit cards, include travel insurance. But they may not have as many covered reasons and limit of coverage can be lower than the cost of your trip.

As well, you must use that credit card to pay for the trip — some cards only require partial payment with the card, while others might require that you’ve booked everything with the one card to be eligible for coverage.

If your credit card offers trip cancellation and interruption insurance, check exactly what’s covered and how much of the trip needs to be paid for with the card. If the card’s trip cancellation and interruption insurance doesn’t meet your needs, make sure you get a more robust travel insurance policy that will have you fully protected.

Protect against the unexpected with trip cancellation insurance

Having to cancel a trip can be heartbreaking, and expensive if you’re unable to recoup any of the costs. When planning your next adventure, consider how much money you could be out if you had to cancel your travels due to a sudden illness, a family emergency at home, or a new Canadian travel advisory advising to avoid non-essential or all travel is issued for your destination.

Trip cancellation/interruption insurance offers financial peace of mind for any non-refundable trip costs — so you can focus on enjoying your vacation.

RBC Travel Insurance

If you need help during your trip for a medical or other travel emergency, help is available 24/7.

Get A Quote

Learn More

FAQs about trip cancellation insurance

Is trip cancellation insurance worth it for domestic travel?

Trip cancellation insurance is worth it for any trip that includes non-refundable costs, regardless of the destination. International travel can often be more expensive or may be more challenging to cancel, which is why trip cancellation insurance is particularly useful for trips abroad.

When should you buy trip cancellation insurance?

You should buy trip cancellation as soon as you know the total costs of your trip, so that you can get an accurate quote with enough coverage. Your policy takes effect on the day you purchase it, so having it well in advance of your departure date means you’ll already have coverage in place if something unexpected comes up and derails your plans. 

Can I buy trip cancellation insurance after booking my trip?

Yes, you can buy trip cancellation insurance after booking your trip. You need to know the full cost of the trip so you can get an accurate quote, so it makes sense to buy coverage after booking rather than before. But once you know the costs, don’t wait. If something comes up and you need to cancel but haven’t bought your trip cancellation insurance yet, you can’t retroactively apply your coverage.