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What Is The Difference Between Trip Cancellation Insurance And Trip Insurance?


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If you’re about to go on a trip and want to find travel insurance to cover you in emergencies, you might have seen the terms “trip cancellation” and “trip insurance”. But what is the difference, and how do you choose the right one? 

We’ll get into the details below, but in a nutshell, trip cancellation reimburses you for a cancelled trip, while trip insurance reimburses you for a wide range of trip-related expenses. Both coverage types often go hand in hand.

What Is Trip Cancellation Insurance?

Trip cancellation insurance reimburses you for non-refundable expenses if you need to cancel your trip for an unexpected (covered) reason. If you’ve paid a lot for tickets, transport and accommodation, you can get your money back. 

Most trip cancellation insurance types have a “Cancel For Any Reason” (CFAR) option that provides more flexibility but at an additional cost. However, the catch is that you’ll only be reimbursed for 50% to 75% of the trip value. This cancellation option is typically time-sensitive, and you can only get it within roughly two to three weeks of your first trip deposit. To use it, you need to give a minimum of 48 hours warning. 

What Is Trip Insurance?

Trip insurance, more commonly referred to as comprehensive travel insurance, is a broad term that encompasses various types of coverage other than trip cancellation. It typically includes medical emergency cover, lost luggage cover, and trip interruption coverage. This type of insurance helps you stay financially protected during, rather than before your travels. 

Here’s what a standard trip insurance policy covers: 

  • Medical emergency cover: Medical emergency cover will reimburse you for hospital visitations, medicine, and doctor’s appointments if you get sick or injured.
  • Emergency medical evacuation: In some cases, you may need transport to the nearest hospital or to get airlifted out of a dangerous situation. Emergency medical evacuation can cost between $25,000 to $200,000, so being covered for this can take a lot of stress off your mind.
  • Lost or damaged luggage: If your luggage goes missing or your personal belongings get damaged, you can claim a reimbursement for the value of your luggage. If your luggage is delayed and shows up much later, you may be able to claim back the cost of the replacement items you bought.
  • Trip interruptions: If you need to go home for a medical emergency or a death in the family, trip interruption insurance will reimburse you for the remaining part of the trip.
  • Travel delays: Travel delay insurance can help you cover the costs of flight delays, including accommodation, travel and food.
  • Specific situations: You can get specific cover for unique situations. For example, if you plan on doing something dangerous such as an adventure sport, or if you’re going somewhere dangerous, you can find trip insurance to cover whatever happens.

In short, trip insurance covers all the other travel emergencies besides cancellations. You can find most of the features listed above in bundle deals or grouped in insurance policies.

What Are The Main Differences Between Trip Cancellation And Trip Insurance?

Trip cancellation insurance only applies if you end up not going on the trip, while trip insurance applies for the duration of your trip and kicks in if anything happens. In many instances, trip insurance includes trip cancellation coverage.

To illustrate the differences, here’s a table:

Trip cancellationTrip insurance
Trip cancellation coverYesYes/Sometimes
Medical emergency coverNoYes
Travel delay coverNoYes
Trip interruption coverYes/SometimesYes/Sometimes
Risky Area coverageNoPolicy-specific
Baggage coverNoYes

What Are The Covered Reasons To Cancel A Trip?

You may have noticed earlier that unless you get a Cancel For Any Reason (CFAR) package, you can only cancel your trip for covered reasons. But what are the covered reasons? These are anything that cannot reasonably be predicted or foreseen. Examples include:

  •        – Sudden illness or disability of yourself or someone else travelling with you. 
  •        – The unexpected death of a relative. 
  •        – When other modes of transport fail, such as when the bus you were supposed 
  •        to take cancels at the last minute. 
  •        – Sudden, unexpected natural disasters, such as earthquakes.
  •        – Legal reasons, such as jury duty. 

What Trip Cancellation Reasons Are Not Covered?

If you don’t have a CFAR package, there are several non-valid reasons for cancellation. Most of the time, these are examples where you should have known better or the event triggering the cancellation was known beforehand. Some examples of non-covered reasons include:

  • Named storms. If you cancel your trip due to a named storm (hurricane) that was predicted well ahead of time, you may not get your money back. 
  • Work-related obligations, as these should be well-known to you. 
  • Pre-existing medical conditions which worsen in the lead-up to the trip (unless specifically covered in the policy).

Of course, there may be events you did not consider when booking that can cause your insurance claim to be rejected. The best way to avoid this is to do your due diligence about weather conditions and medical issues before the trip so you don’t have to cancel at the last minute. 

How To Determine If You Need Trip Cancellation Or Trip Insurance

To determine whether you need trip cancellation or trip insurance, start by assessing your specific travel plans and circumstances. Consider the following questions:

  • 1. How much have you invested in non-refundable travel expenses?: If you’ve invested more than $5,000, it may be worth getting some form of trip cancellation insurance. 
    2. 2. Are you concerned about potential medical emergencies or other unforeseen events?: If you’re worried about getting sick or injured, consider getting trip insurance to help you relax and find peace of mind while you’re on the trip. 
  • 3. Will you be engaging in high-risk activities or travelling to a remote location?: These may include a higher level of risk and could warrant specific coverage with trip insurance. Make sure you’re clear on what you need from this cover.
  1. 4. What is your risk tolerance?: If you won’t mind losing your vacation or flight deposit, or if you’re confident nothing will happen, maybe neither insurance option sounds appealing to you. Ultimately, it’s your choice!
  3. Hopefully asking these questions will give you a better idea of where you stand on trip insurance. If you’re worried about a certain aspect of the trip, you can always get trip insurance tailored for that issue.

Common Trip Insurance Limitations And Exclusions

When you sign up for trip cancellation insurance or trip insurance, make sure to familiarize yourself with the terms and conditions of the policy. There may be hidden details regarding claim submissions and pre-existing medical conditions. We’ve compiled a few things to look out for in the fine print: 

  • Which events are covered?: When purchasing trip cancellation insurance, make sure you know which events are covered and which circumstances allow you to get your money back for a cancelled trip.
  • Information on pre-existing conditions: Most policies will have rules and limitations on pre-existing medical conditions. Make sure you look these over if you have any pre-existing conditions and ensure you understand them.
  • Coverage limits: Comprehensive doesn’t mean unlimited. Most policies have a cap on how much they can refund you, especially in the case of medical or luggage refunds. Make sure you’re happy with these limits.
  • Documentation: Make sure you know which documentation you’ll need in the event of a claim. This includes medical reports, receipts and other supporting documents.

By familiarizing yourself with these terms and conditions, you can make an informed decision and ensure you have the appropriate coverage for your travel plans.


Overall, trip cancellation and trip insurance serve two closely related purposes when it comes to protecting your travel plans and finances. If you don’t have another valid form of trip insurance lined up, then finding a specific plan to suit your travel concerns and priorities can go a long way to ensuring you have a safe and happy trip. 

Whether you choose trip cancellation, trip insurance, or a combination of both, investing in comprehensive protection can help you navigate any unexpected events during your travels. Safe travels!

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Author Bio

Mohamed Konate

Mohamed Konate is a personal finance expert, blogger, and marketing consultant based out of Toronto. He is a former financial services professional who worked for many years at major Canadian financial institutions where he managed the marketing strategy around various financial products ranging from credit cards to lines of credit. Mohamed is passionate about personal finance and holds a Bachelor in Business Administration from the University of Quebec (Montreal) and a Master in International Business from the University of Sherbrooke (Quebec).He is also the author of the Canadian Credit Card Guidebook.