Flight cancellation insurance: what it is and how to get it

You’re booking a trip, and the checkout page is offering trip protection. Before you add it, it helps to know what you'd be paying for. Flight cancellation insurance pays you back when you have to cancel for a covered reason, such as illness or a family emergency. If the airline cancels your flight and you turn down the alternative it offers, DOT rules already entitle you to a cash refund of your fare, with no insurance needed. A policy can be worth paying for because, in addition, it covers the hotel, tours, and other prepaid costs the airline won't refund.

Key takeaways

1. If your airline cancels or significantly changes a flight to, from, or within the US and you turn down the alternative, the DOT requires an automatic cash refund of your fare.
2. That refund covers your airfare and any paid extras, such as seat selection. It doesn't cover hotels, tours, or other prepaid costs you lose.
3. Flight cancellation insurance usually comes as part of a travel insurance policy. 
4. Flight cancellation insurance only pays out if you cancel for a reason listed in the policy, such as illness, injury, or a death in the family.
5. Cancel For Any Reason (CFAR) coverage is an optional add-on. It typically pays back 50% to 75% of your trip cost and adds close to 50% to the price of the policy.
6. Many credit cards include trip cancellation coverage if you paid for the trip with that card, so check your benefits before buying a separate policy.

Does travel insurance cover canceled flights?

Not for the cost of your ticket. Under the DOT automatic refund rule, if you turn down the rebooking or travel credit the airline offers, the refund is automatic. So, there's no claim to file. Card payments must be refunded within 7 business days. A significant schedule change, such as a domestic flight moved by 3 hours or more, entitles you to the same refund.

Our guide explains how to get a refund for a canceled flight in more detail.

Your refund for an airline-canceled flight only covers your airfare. If the cancellation wipes out a trip with a prepaid hotel, tour, or cruise, a trip cancellation policy can help you get those refunded too, as long as the cause is listed in your policy. If you're stranded overnight by a cancellation within the airline's control, most major US airlines commit to covering your hotel and meal costs.

If your flight left the EU or UK, or landed there on an EU or UK airline, you could be owed EU261 or UK261 cash compensation, a separate right on top of any refund.

What flight cancellation insurance covers, and what it doesn't

Policies vary, so covered reasons for trip cancellation is what you need to focus on. Most standard plans pay back your prepaid, non-refundable costs, such as flights, hotels, car rentals, and tours, if you have to cancel because of:

• Illness or injury to you, a travel companion, or a close family member
• A death in the family
• A family emergency that needs you at home
• A natural disaster or severe weather at home or at your destination

Common reasons your claim could be turned down:

• A pre-existing medical condition you didn't disclose when you bought the policy
• A storm or other event that was already forecast when you bought the policy
• Work commitments that stop you from traveling
• Changing your mind about going

Standard trip cancellation vs Cancel For Any Reason Insurance

Standard trip cancellation pays back up to 100% of your prepaid, non-refundable costs. It only does this for the reasons listed in your policy, and if you cancel for any other reason, you get nothing.

Cancel For Any Reason (CFAR) is an optional add-on to a standard policy. It pays out for any reason, including changing your mind, but you only get part of your costs back, and the conditions are strict. Most CFAR plans also require you to insure the full cost of your trip.

How much does flight cancellation insurance cost?

Travel insurance usually costs 5% to 10% of your trip price, according to the National Association of Insurance Commissioners. On a $1,500 trip, that puts your trip cancellation insurance cost at about $75 to $150. Your age, destination, trip length, and level of cover all affect where you land in that range.

Flight canceled by the airline?You could be owed a refund or compensation. Check Your Flight

Check what you already have

Before you buy a policy, see what cover you already have:

• Credit card trip cancellation coverage is included with many cards. It usually only applies if you paid for the trip with that card, so check your card's benefits guide.
• If you booked at least 7 days before departure, DOT rules give you 24 hours to cancel without penalty on most US airlines.
• On major US airlines, canceling a standard economy fare yourself usually gets you a travel credit for its full value, with no change fee. Basic economy fares often get you nothing back, or a credit minus a fee.

How to get flight cancellation insurance

• Add up your prepaid, non-refundable costs, such as flights, hotels, and tours. This is the amount you stand to lose.
• Check your credit card and any existing travel policy so you don't pay twice for coverage.
• Decide between standard cover and CFAR coverage. If the reasons you might cancel aren't on a standard policy's list, CFAR may be worth the extra cost.
• Compare policies on covered reasons, exclusions, and claim deadlines, not just price.
• Buy soon after you book. CFAR has to be added within a set window after your first payment, and some policies only cover pre-existing conditions if you buy early.

When is flight cancellation insurance worth it?

Non-refundable trip protection is worth buying if canceling would cost you a lot of money. For example, if you are planning an expensive trip with non-refundable hotels, tours, or a cruise, or a trip where you or a close family member has health concerns. You can probably skip it if your bookings are refundable, or if your credit card already covers trip cancellation.

If the airline cancels, the DOT already makes it refund your fare, so there's no need to pay an insurer for that. Insurance is for the hotel, tours, and other bookings you'd lose if you had to cancel the trip yourself. Before you buy, check which reasons your policy actually covers.

 - Anton Radchenko, AirAdvisor.

FAQs

If your flight has already been canceled

You may not need insurance to get your money back. If you've received a flight cancellation notice, our guide on what to do when your flight is canceled covers refunds, rebooking, and care at the airport. 

You can also check your flight to see what you're owed.