Travel insurance is becoming increasingly necessary for travelers. This is especially true given the increased uncertainty in travel arrangements. One of the most important aspects of travel insurance is trip cancellation coverage, which helps limit financial losses when a vacation cannot go as planned. This coverage often reimburses travelers for non-refundable and prepaid charges including airline tickets, hotel reservations, and other travel-related fees. Some insurance policies may also cover the irrecoverable costs of planned events or concerts, such as certain sports activities or music concerts.

It is important to understand that coverage is only offered for specified circumstances, which often include:

Medical emergencies are defined as any illness or accident that causes the insured, their travel companions, or close family members to cancel their vacation. For example, if a traveler becomes unwell just days before departure, trip cancellation insurance can pay the expenses of unused tickets and hotel.

Natural disasters: Earthquakes, floods, and extreme weather conditions that disrupt travel plans are all covered. For example, if a flood strikes a destination just before a planned trip, travelers can collect their non-refundable charges.

Personal emergencies: The death of a family member or other serious personal crises may also qualify for trip cancellation coverage. Many policies require that these events be documented and reported to the insurance company.

Terrorism and civil unrest: If a traveler's destination suffers a terrorist attack or civil unrest, they may be allowed to cancel their trip and claim compensation for their expenses.

How do clients submit a claim for trip cancellations or delays?

Customers must submit the required documentation to the insurer. The list may vary depending on the requirements of each insurance. For example, if a customer is hospitalized for at least 48 hours, ACKO will provide trip cancellation coverage, for which the policyholder must submit proof such as the discharge summary, confirmed hotel and flight booking details, cancellation proof, and the amount deducted by the flight operator/hotel, according to Brijesh Unnithan, senior vice-president, Embedded Insurance at ACKO.

Exclusions and Considerations

While trip cancellation insurance offers comprehensive coverage, there are several noticeable exclusions. Cancellations due to pre-existing medical illnesses, pregnancy-related issues, or scenarios known before acquiring insurance are all common exclusions. Furthermore, if a trip is canceled due to a change of mind or personal preference without a good explanation, compensation may not be available.

Travellers should also be aware of the time limits for making claims. Most insurers need claims to be submitted within a particular time frame after the cancellation, and some policies require cancellations to be made a certain number of hours before the departure time in order to be reimbursed.