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“Cancel For Any Reason” Travel Insurance: What It Is and How It Works

by Brook Wilkinson | May 5, 2020

As a result of the coronavirus outbreak, travelers have become more interested in travel insurance than ever. But with this pandemic, most regular travel insurance won’t help you, because most policies don’t cover changes or cancellations due to fear of an epidemic (though some will reimburse you if you have to cancel because you have been diagnosed with COVID-19 or are quarantined). To learn about the sole exception to this rule that we have found to date, read this article. With other insurance providers, the only way to be protected in the event that you choose to cancel a trip due to concerns about the 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.

It adds 40% to 65% to your insurance premium. As an example, standard travel insurance for trip cancellation/interruption and medical expenses on a $20,000 safari may cost $1,000; adding CFAR bumps that up to about $1,500. And it’s likely to get even more expensive soon, given the rapidly increasing demand for such policies—so you might save some money by booking your trip sooner rather than later.

Don’t expect to get all your money back.

Exact figures 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 21 days.

You can’t cancel at the last minute, either.

You’re out of luck if you turn around on your way to the airport: You must call off your trip at least 48 hours prior to departure in order to be reimbursed.

Coronavirus is impacting the availability of CFAR coverage.

CFAR policies had previously been unavailable to residents of New York State due to state insurance regulations; on March 6, in light of concerns about coronavirus, New York’s governor announced that travel insurance companies could sell CFAR policies in the state. However, several providers have discontinued offering CFAR coverage entirely. Given the huge increase in demand for this coverage—and likely the increase in associated claims filed—we expect that other providers may change the terms of their CFAR offerings in the near future.

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 the late-breaking possibility of being quarantined 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 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.  Not all of them offer CFAR coverage, though, as noted above.

Be a smarter traveler: Read real travelers’ reviews of Wendy’s WOW List and use it to plan your next trip. You can also follow her on Facebook, Twitter @wendyperrin, and Instagram @wendyperrin, and sign up for her weekly newsletter to stay in the know.

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1 Comment

  1. Benjamin Troemel

    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.

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