Is Cancel For Any Reason Travel Insurance Worth It?

Travel insurance policies protect travelers in case they are unable to complete their trip as booked. These policies protect against flight delays or cancellations, lost or damaged luggage, illness and many other issues. A certain type of travel policy also lets you cancel your trip for any reason, even if you simply change your mind.

Cancel For Any Reason policies are known as Cancel For Any Reason travel insurance, and we'll explain what they are, how much they cost and if they're worth it.

CFAR travel insurance is an optional upgrade to your travel insurance policy. This feature allows travelers to cancel their prepaid, nonrefundable reservations for any reason — not just reasons covered by a typical travel insurance policy.

This added flexibility comes at a cost. First, you'll pay extra for the upgrade to add Cancel For Any Reason to your travel insurance policy. Second, when submitting a claim, most policies reimburse only a portion of your travel costs — 50% to 75%, depending on the policy.

Because of this, it's important to weigh the cost of the policy upgrade against how much you'll receive if you submit a claim.

» Learn more: What to know before buying travel insurance

As with any travel insurance policy, only the reservations that are prepaid and nonrefundable are covered. If you have a refundable reservation that you can cancel without penalty, simply cancel the reservation without involving your travel insurance company.

Policy coverage varies by insurer and type of policy purchased. Before purchasing a travel insurance policy, review what is covered to ensure that it aligns with the reservations and tickets you are buying. A few examples of prepaid, nonrefundable travel reservations include:

• Nonrefundable airline tickets.

• Prepaid, nonrefundable hotel reservations.

• Prepaid rental cars.

• Cruise excursions.

• Event tickets.

• Campground reservations.

Unfortunately, most travel insurance policies do not cover award reservations. Many hotels and airlines allow you to cancel rooms and flights booked with points and miles without penalty.

With Cancel For Any Reason travel insurance, you can literally cancel your reservations for any reason. Examples of reasons travelers may use to cancel their trip include:

• Concerns about COVID cases or quarantine requirements.

• Passport didn't arrive in time.

• Safety concerns about the destination.

• Family or work obligations.

• Travel companion cannot travel and you don't want to travel alone.

• Pre-existing condition impacts your ability to travel.

• Starting a new job and cannot get time off.

CFAR policies can offer travelers extra protection in case they need to cancel a reservation. However, travelers must follow specific guidelines for claims to be approved. Those guidelines vary by policy and insurer, but these are some common ones:

• Purchase date. Travelers should purchase their policy within 10 to 21 days of booking their initial trip payment.

• Deadline to cancel travel plans. Cancel your travel reservations at least 48 to 72 hours before departure.

• Coverage amount. If you want to qualify for CFAR benefits, most policies require that you purchase coverage for 100% of your prepaid and nonrefundable expenses.

• Partial reimbursement. When you submit a claim, the insurer generally reimburses only 50% to 75% of eligible travel expenses.

One of the major variables of travel insurance policy premiums is the total cost of your trip. Include the total cost of all prepaid and nonrefundable reservations, tickets and other travel expenses to receive a quote that covers your entire trip.

The cost of travel insurance policies with CFAR benefits vary based on provider, the cost and length of the trip, the number of people traveling and other factors. To illustrate how much you'll pay for CFAR travel insurance, we priced out a policy for a family of four taking a seven-day trip from the U.S. to Spain that costs $5,000.

* Policy quotes from InsureMyTrip.com as of November 25, 2022.

Cancel For Any Reason travel insurance protects your trip itinerary, but do you need it if you have travel protections from other sources? Let's review common coverage options to see if they offer the same protections.

Credit card travel insurance

Some credit cards offer valuable travel protections that cover you in case your flight is delayed or canceled, if you get sick during your trip, or your bags are lost or damaged. However, they do not provide Cancel For Any Reason benefits, so you won't receive reimbursement unless you cancel for a covered reason.

» Learn more: The best travel credit cards right now

Refundable reservations

During COVID-19, many airlines, hotels and other travel companies made positive changes to their refund policies. If you have the option to cancel your reservations and receive a refund, you don't need to buy a CFAR policy. However, you should still familiarize yourself with the cancellation policies of the airline, hotel or other providers so you know what's required in order to cancel your reservation.

» Learn more: Credit cards with travel insurance

Airline or cruise cancellation policy

When booking an airline or cruise reservation, you may be presented with an option to protect your reservation by buying insurance. These policies are specific only to the flight or cruise reservation and will not cover your entire trip.

Travel insurance policies offered by airlines and cruises vary widely, but many do include Cancel For Any Reason benefits. As with other CFAR policies, you'll only receive a fraction of the cost of your trip if you cancel. For example, Carnival Cruises reimburses up to 75% of your prepaid, nonrefundable cruise.

Airline travel insurance policies generally do not include Cancel For Any Reason benefits. To submit a claim, you must cancel for an eligible reason.

Cancel For Any Reason travel insurance covers prepaid and nonrefundable travel expenses. While you may have travel protections from your credit card or other policies, they generally do not cover your entire trip or Cancel For Any Reason claims. When considering a CFAR upgrade to your travel insurance policy, compare the cost and benefits to determine if Cancel For Any Reason travel insurance is worth it. 

CFAR policies offer additional flexibility if you need to cancel a reservation, but be sure to follow your policy's claim guidelines to receive money back on your covered reservations.