Do You Need Holiday Cancellation Insurance?

Few jobs are as exciting as booking a holiday, especially when you haven’t been able to travel for a while.  But what if something happens to prevent you going on the trip?

Every year, thousands of holidays have to be cancelled due to unexpected illnesses or accidents. 

You might also have to abandon your travel plans due to unrelated events, such as a natural disaster – or, of course, a global pandemic. 

Fortunately, most travel insurance policies include some level of cancellation cover as standard, and many will now pay out if your trip is unable to go ahead due to Covid-19.

What is holiday cancellation insurance?

Holiday cancellation insurance is one of the main benefits offered by travel insurance policies.  It’s designed to cover losses due to having to cancel a trip, for example because you have an accident.

However, you can only claim if you have travel insurance in place. That’s why it’s always a good idea to buy cover as soon as you book a trip – just in case something happens to derail your plans.

What does it cover?

Cancellation cover can cover expenses such as unused accommodation, flights, car hire, and even pre-booked excursions, but the level of protection offered varies between providers and policies.

The amounts you can claim, both overall and for individual aspects of your trip, will depend on the limits set in your travel insurance policy.

It’s worth noting that circumstances preventing you from travelling must also be unforeseen events. Some examples below:

• Accident or illness
• Redundancy
• The death of a loved one
• A last-minute incident at your home, such as a fire
• A natural disaster, such as an earthquake
• A sudden event, such as a military coup 

Does it cover Covid-19?

During the earlier stages of Covid-19, many travellers had cancellation claims refused because they had booked trips despite the pandemic, which insurers viewed as a ‘known event’. 

However, in recent months, some providers have updated their cover to include protection against cancellations due to the pandemic.

A small number of insurers are even offering cover for holidays to destinations where the Foreign, Commonwealth & Development Office (FCDO) advises against all but essential travel due to Covid-19. 

But whether or not you can make a Covid-19 cancellation claim will depend on the level of cover provided by your policy. For example, while some will only pay out if you have to cancel a trip because you test positive for the virus, others will also cover cancellation because you have to self-isolate, or due to changing lockdown restrictions.

What isn’t covered?

You can’t make a holiday cancellation insurance claim simply because you simply no longer want to go on holiday.

If, for example, you feel your chosen destination has become unsafe, but FCDO advice still states it is safe to visit, you probably won’t be able to make a claim. 

Other circumstances in which you’re unlikely to be able to claim include:

• You are ill due to a pre-existing medical condition
• You can’t travel due to a known event, such as a close relative’s ongoing illness
• You sustained an injury under the influence of alcohol or drugs
• You can already get a refund from your travel company, or via your credit card provider

Even if you can claim for unused flights, you may also have to cover the cost of the airport taxes and air passenger duty.

And in almost all cases, you’ll have to pay an excess towards any claim (which is why it’s generally better to get a refund from your supplier or card company where possible).

How much does it cost?

Cancellation cover is offered as standard with most travel insurance policies. 

However, while a cheaper policy may only allow you to claim up to £2,000 for your trip, a higher-end policy could include cancellation cover of up to £7,000 or more.

The amount of cancellation cover you need can therefore impact on the cost of your travel insurance policy.

When does cover start?

Whether you take out annual or single-trip travel insurance, you can benefit from holiday cancellation cover as soon as you buy a policy.

The main difference is that while single-trip policies will only cover costs relating to the holiday they are bought to protect, the cancellation cover you receive with an annual policy runs for 365 days.

If you already have annual travel insurance, you therefore have cancellation cover from the moment you make the payment for a trip within that period.

Either way, cancellation cover for each holiday ends as soon as you begin the trip in question. 

If you have to cancel part of the trip after that point, you’ll need to make a curtailment claim. 

Can I claim due to illness?

You should generally be able to make a cancellation claim if you or someone travelling with you falls ill and is unable to travel.

You may also be able to claim if a close relative – or in some cases a business colleague – falls ill and you cannot travel as a result.

However, you can’t make a claim relating to a pre-existing medical condition you were already aware of, unless you declare the condition when you buy your policy – and usually pay an extra premium for it to be covered.

How can I make a claim?

Ideally, you should contact your travel insurance provider as soon as you realise you need to cancel your trip. You can usually do this over the phone or online but check your policy to find out how. 

You’ll need documentation to support your claim, so it’s worth gathering together the necessary paperwork first.

This could include:

• Confirmation of your accommodation reservation 
• Flight or train tickets
• Excursion booking receipts
• Cancellation invoices
• Proof of any medical conditions

How can I find the best holiday cancellation insurance?

When shopping around for travel insurance, the level of holiday cancellation cover is one of the main aspects to consider.  Check the following:

• That the cover provided will reimburse the full cost of your trip if necessary
• The list of the reasons you can make a claim – does it include emergencies involving close relatives, for example?
• Whether or not you will be reimbursed if your holiday provider (or airline, hotel group etc.) goes out of business
• Whether you will be covered if you or one of your group is unable to travel due to a positive Covid-19 test