Credit Card Trip Cancellation and Trip Interruption Insurance

Many rewards credit cards come with insurance that protects you, the cardholder, in the event of an emergency. Some include travel medical insurance, which would help if you needed to see a doctor or go to the hospital in another province or country. There’s also collision and damage insurance, which protects you and any rental cars you borrow. Finally, there’s also trip cancellation and trip interruption insurance. If you’re planning a vacation, you should look into whether or not your credit card has this type of coverage. Here’s how it works.

 

What is trip cancellation and trip interruption insurance?

Trip cancellation and trip interruption insurance are related but are still two different policies that come with select credit cards. With both, your credit card company would reimburse you for non-refundable expenses, in the event that your trip is interrupted while in progress or is cancelled outright.

Trip cancellation insurance applies when a trip has to be cancelled before it’s even started. This policy kicks in the minute the trip is booked and runs until the scheduled departure date. After the scheduled departure date, benefits under a trip cancellation policy are not available.

Trip interruption insurance (sometimes referred to as trip delay insurance) applies when a trip has to be cut short or altered to occur after the scheduled departure date. This policy kicks in after the scheduled departure date and runs until the end of the trip. With trip interruption insurance, you’re covered if you incur costs like plane tickets if you miss a connecting flight, or for unused bookings like hotels if part of your trip was interrupted and you have to go home early, for example.

• View all our picks for the Top Credit Cards for Travel Insurance.

What is covered under trip cancellation and trip interruption insurance?

Like most insurance policies, coverage is only available under trip cancellation and trip interruption insurance under specified circumstances. In other words, just cancelling your trip because you’re busy at work doesn’t qualify you for any reimbursement of your expenses. In a similar vein, returning home early because you just aren’t having a good time on your vacation is also not a valid reason to make a claim.

Here is what’s normally covered under trip cancellation and trip interruption insurance:

Trip cancellation insurance:

• An unexpected illness or injury to the insured person, which prevents them from starting the trip
• The death of the insured person
• The death or unexpected illness of an insured person’s immediate family member
• The death or hospitalization of an insured person’s host
• A car accident or road closure forcing the insured person to miss their departing flight
• A formal notice by the Department of Foreign Affairs advising Canadians not to travel to a country that is part of the insured person’s trip
• Being called up to active duty if the insured person is a military reservist

Trip interruption insurance:

• An unexpected illness or injury to the insured person, which means the trip cannot be continued
• An injury or illness to the insured person that delays them reaching a destination during the trip
• The death of the insured person while on the trip
• The death or unexpected illness of an insured person’s immediate family member, which forces them to return home
• Any weather, traffic accident or road closure that caused the insured person to miss a connecting flight
• A formal notice by the Department of Foreign Affairs advising Canadians not to travel to a country that is part of the insured person’s trip

What is NOT covered under trip cancellation and trip interruption insurance?

Insurance policies specifically exclude certain things from receiving trip cancellation and trip interruption coverage. Here are the situations generally excluded:

Trip cancellation insurance:

• Pre-existing medical conditions (where either symptoms appeared or treatment occurred leading up to the trip)
• Self-inflicted injury
• The reimbursement of travel points that will be lost or wasted

Trip interruption insurance:

• Alcohol or drug abuse by the insured person
• Criminal activity by the insured person during the trip
• Any intentionally inflicted injuries by the insured
• Psychological or mental issues of the insured person
• Pregnancy-related reasons if they occur within 9 weeks of the expected delivery date
• Injuries sustained doing something dangerous, such as bungee-jumping or skydiving
• Terrorism or civil war

Does trip insurance cover costs if the airline cancels or delays your flight?

If an airline delays or cancels your flight, the airline is responsible for booking you on the next available flight, or reimbursing you if this is not possible. You may also be reimbursed by the airline for significant delays if they inform you less than 14 days before your departure, according to the Canadian Transportation Agency. However, with your credit card’s trip interruption insurance, you may be reimbursed for airline ticket costs if your flight is delayed and you miss your connecting flight and have to book another one, for example. Trip delay coverage is a separate insurance policy that applies to other costs associated with the interruption, like a hotel stay while you’re waiting for a connecting flight.

What is reimbursed in a trip cancellation or trip interruption insurance claim?

Depending on whether you have to cancel your trip before it begins, or interrupt it after it’s started, different coverage is available. For trip cancellation insurance, you are generally entitled to the non-refundable portion of the trip at the time you have to cancel it. With trip interruption insurance, you are generally entitled to the unused portion of your trip if you cannot continue, as well as extra costs associated with flying home early.

In both cases, the credit card agreement will specify how much the insured person is covered as an individual, and how much their spouse and dependent children are covered. Benefits vary depending on the card and can range from $500 to $2,500 per eligible person on the trip. Benefits are also subject to a maximum amount for the entire family. As a general rule, the greater the annual fee for a card, the more generous the insurance coverage will be.

Making a trip cancellation and trip interruption insurance claim

If you must cancel or interrupt your trip, it is very important to contact the insurance provider immediately. In some cases, they will need to approve certain expenses, such as transportation arrangements, in order for them to be reimbursed.

In addition, waiting to cancel or delay a trip can cost you significant amounts of money. 

Let’s say a relative becomes ill two weeks before a scheduled trip, and you know at that point you cannot travel. If you cancel all your plans immediately, it’s possible that only 10% of your expenses will be non-refundable and the rest can be reimbursed. However, if you wait to cancel the flight and accommodations a few days before your scheduled departure, cancelling will result in either a smaller refund or no refund at all. The lesson: cancel your plans and make a claim as soon as possible.

When making a claim, you will need all relevant documents in order to prove that you are eligible for a benefit. This may include copies of plane tickets, invoices for hotel bookings, and medical records indicating that you needed to cancel your trip. Make sure you keep copies of all documentation that are pertinent to your trip.

 

Final note: Pay attention to which credit card you book all trip expenses with

Imagine you book a vacation. You put 50% of the trip’s expenses on one credit card, and the other 50% on a second card you have. Both have trip cancellation and trip interruption insurance, so you’re covered in case something happens, right? Not necessarily. Some credit card agreements only cover you if you put the entire trip on the card (using either points or credit). Paying for part of the trip in some other way (cash, debit, cheque or another credit card) may void your insurance coverage. Make sure you read the fine print of your agreement before deciding how to pay for your trip.

If you’re already thinking of getting a travel rewards credit card, choosing one with both trip cancellation and trip interruption insurance is a wise idea. Buying it separately can cost hundreds of dollars out of pocket throughout your year of travel, whereas it’s already included on some cards. There’s a chance you may not need it, but if something happened, you’d be glad it was there.