Updated on - 09 Feb 2026
Travelling to a foreign country can be expensive. When planning a trip abroad, you have to put in all the effort and money to make it an unforgettable experience. However, life may take an unexpected turn and force you to cancel your plans, leaving you with financial losses. Nothing causes anxiety than having to cancel your tour after days or months of preparation. Luckily, when in such circumstances, trip cancellation insurance can come in handy.
This article delves deeper into what trip cancellation insurance is, how it works, its benefits and more.
What is trip cancellation insurance?
Trip cancellation insurance is a policy that reimburses the policyholder for prepaid, non-refundable travel expenses if their trip is cancelled for a covered reason before departure. It can be purchased as a standalone plan or included within a comprehensive travel insurance policy. This coverage safeguards your travel investment against unforeseen events, but it must be bought before the travel.
How trip cancellation insurance works
Trip cancellation insurance compensates for prepaid, non-refundable travel costs if you cancel your trip for a reason included in the policy clause. To claim, you must provide valid proof, such as a doctor’s note in case of illness or other required documents. Most insurers allow online submission of claims, and once approved, you receive reimbursement for eligible expenses.
When choosing a plan, compare coverage options, read the policy carefully and familiarise yourself with the claim process to ensure smooth and timely compensation.
Benefits of buying trip cancellation insurance
Trip cancellation insurance protects your prepaid travel investment if unexpected circumstances force you to cancel your trip. Here’s how it benefits you:
- Financial protection: It reimburses you for non-refundable expenses like flight charges or accommodation costs if you cancel your trip for a covered reason.
- Peace of mind: Knowing your money is protected in case of sudden trip disruptions helps you plan confidently.
- Broader flexibility with add-ons: You can enhance your policy with optional covers such as Cancel for Any Reason (CFAR), which allows partial refunds even for reasons not included in the standard policy.
- Protection from supplier failures: If an airline, hotel or cruise line shuts down or becomes insolvent, the insurance can reimburse your prepaid costs.
- Stress-free planning: Whether it’s a family trip or business travel, you can focus on your journey without worrying about losing money if plans fall through unexpectedly.
Coverage under trip cancellation insurance
Trip cancellation insurance covers specific, valid reasons that might force you to cancel your trip before it begins. When a covered event occurs, the insurer reimburses your prepaid, non-refundable costs for flight tickets, accommodation and tours. Commonly covered situations include:
- Medical issues: Illness, injury or death of the policyholder, a travel companion or an immediate family member.
- Unforeseen disasters: Natural calamities, extreme weather or terrorism at your destination or hometown that make travel unsafe.
- Work-related reasons: Sudden job loss, emergency duty or revoked leave preventing you from travelling.
- Official obligations: Being called for jury duty, military service or emergency public duty.
- Accidents or travel disruptions: Traffic accidents before your trip, national strikes or shutdowns that disrupt travel arrangements.
Coverage begins the day you purchase the policy and remains valid until your trip starts, which is why it’s best to buy it as soon as you start making bookings.
Conclusion
Trip cancellation insurance can be a lifesaver when unexpected events force you to cancel your travel plan. It gives you peace of mind, knowing that you will not lose your hard-earned money on non-refundable bookings if unforeseen circumstances prevent you from travelling. Remember to carefully review and understand the policy terms, coverage limits and exclusions before buying a policy.
If you need help finding the right trip cancellation or single trip travel insurance for your international travel, fill out the form on this page. Our experts will help you find the right one.
FAQs
1. How does trip cancellation differ from trip interruption insurance?
Trip cancellation insurance applies to issues that occur before your travel date. On the other hand, trip interruption insurance covers unexpected issues that can occur during your trip.
2. What is CFAR travel insurance, and when do you purchase it?
Cancel for Any Reason (CFAR) insurance is an optional add-on that lets you cancel your trip for reasons not covered by standard travel insurance. It reimburses 50–75% of your prepaid, non-refundable expenses. This is useful if personal plans change unexpectedly before your trip.
3. When is trip cancellation insurance considered a good idea to purchase?
Trip cancellation insurance can be a good idea if you are likely to lose the funds you paid for your flight ticket, accommodations, rental car, and other activities if you have to cancel your trip.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It may contain outdated data and information regarding the topic featured in the article. It is advised to verify the currency and relevance of the data and information before taking any major steps. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information.