As a result of Covid, travelers have become more interested in travel insurance than ever. Most policies will not cover changes or cancellations due to fear of an epidemic, border closures, or lockdowns. (Some will reimburse you if you have to cancel because you have been diagnosed with Covid or are quarantined.) The only way to be protected in the event that you choose to cancel a trip due to concerns about coronavirus is to purchase additional “Cancel For Any Reason” (CFAR) coverage. As the name implies, CFAR allows you to cancel your trip without requiring that you justify your reasoning. It may give you the peace of mind you need to book a trip—but there are caveats. Here are the main points travelers need to know about buying and using CFAR insurance.
Cancel For Any Reason coverage is expensive.
Pre-pandemic, CFAR coverage typically added 40% to your insurance premium—but as both interest in and claims against CFAR policies have increased, in many cases their price has too. We looked at six insurance quotes in August 2021 and found that a CFAR clause increased the premiums on five of those products by 50% to 88%. To put this in dollar figures: Standard travel insurance for trip cancellation/interruption and medical expenses on a $20,000 trip may cost $1,000; adding CFAR could bump that up to $1,500 or more.
Don’t expect to get all your money back.
Specifics vary by policy and based on your state of residence, but most plans reimburse 50% to 75% of your nonrefundable, prepaid trip costs. Some have a maximum amount that you can insure (e.g., $10,000 per person).
You can’t add CFAR at the last minute.
To be eligible for CFAR coverage, you must purchase it soon after you make your first trip payment, usually within 14 to 21 days (and in some cases, within just 24 hours of your deposit).
You can’t cancel at the last minute, either.
You’re out of luck if you find out a day before your trip that you must cancel. In order to be reimbursed via a CFAR clause, you must call off your trip at least 48 hours prior to departure.
Coronavirus is impacting the availability of CFAR coverage.
Before Covid, CFAR policies were unavailable to residents of New York State due to state insurance regulations; back in March 2020, in light of Covid, New York’s governor announced that travel insurance companies could sell CFAR policies in the state. While several providers saw Covid as a reason to discontinue offering CFAR coverage entirely, others—including Travelex Insurance Services—have recently added optional CFAR upgrades.
Is it right for you?
We are hearing from some readers who want to book trips but don’t want to risk losing 100% of their prepayment, should they decide to cancel because of changes in Covid case rates or protocols at their destination. Those readers have been happy to learn about CFAR. So from what we are seeing, CFAR is an option that can provide some peace of mind, at a price. Whether it’s enough peace to be worth the cost is a personal choice.
Which insurance company should I choose?
There are many providers, and in our article How to Buy Travel Insurance: What It Covers, When You Need It, you can learn more about what to look for, what to avoid, and how to choose the right one for your specific needs.
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I just checked and Travelex makes no mention about CFAR being an option nor anything about covid being covered. I just did a quote for a trip starting after Sep 1. Can you tell us specifically where you saw that?
You can read about Travelex’s CFAR upgrade here: https://www.travelexinsurance.com/travel-insurance/upgrades/cancel-for-any-reason
and about their Covid coverage here: https://www.travelexinsurance.com/covid19
A lesson I just learned about “the cancel for any reason” insurance:
I purchased this more expensive policy containing this clause in Dec 2018 for a trip to Europe in April & May 2020. The trip centered on a week long river cruise and we were spending about a week before and after the cruise doing other things. The river cruise operator cancelled due to the pandemic. The insurance company had always told me to insure ALL of my non-refundable expenses (I have used this company for years, they have good ratings, and I have never had a claim). So as expected I had covered my non-refundable expenses (hotels, some airfare, etc -not associated with the cruise company and not a huge amount, less than $500).
However, when I talked with the insurance company after the river cruise operator cancelled, I found out that my “cancel for any reason” coverage was worthless. Since the river cruise company cancelled the trip, the insurance company said I can not file a claim against my other non-refundable expensed regardless of the fact they were not related to the cruise. In other words, since I did not cancel the overall trip on my own, and the river cruise company cancelled their cruise, I am not eligible to claim any of the other expenses.
The insurance company did issue a voucher for the amount of the insurance premium ($806) that I can use within 3 years of the original start date of my policy in Dec 2018 (thus good until Dec 2021) towards another NEW policy (can’t be applied to either of the other 2 policies I currently have for other trips not yet paid in full).
The lesson to me is that paying for a “cancel for any reason” policy is a waste of money.
Benjamin, thanks for sharing your experience. I’ve not heard of insurance providers using such a loophole to deny a claim, so this is useful for all travelers to know about.