Trip Cancellation Insurance
A type of travel insurance that reimburses prepaid, non-refundable trip expenses if you must cancel your trip for covered reasons. Common covered reasons include illness, injury, death in the family, or severe weather affecting travel.
Example
“When the hurricane forced the cruise line to cancel their ship's departure, the family's trip cancellation insurance reimbursed their $6,000 in prepaid cruise and flight costs.”
Memory Tip
Think 'Cancel = Cash back' - when you have to cancel for covered reasons, you get your cash back for prepaid expenses.
Why It Matters
Trip cancellation insurance protects your financial investment in travel plans, which can be substantial. Without it, you could lose thousands of dollars in non-refundable bookings if unexpected circumstances force you to cancel.
Common Misconception
Many people think trip cancellation insurance covers any reason for canceling, but standard policies only cover specific listed reasons. 'Cancel for any reason' coverage is a separate, more expensive option that typically reimburses only 50-75% of costs.
In Practice
Mark books a $4,000 African safari six months in advance, paying $200 for trip cancellation insurance. Three weeks before departure, he's hospitalized with appendicitis and cannot travel. The safari company keeps his $4,000 deposit per their policy. However, his trip cancellation insurance reimburses the full $4,000 since illness is a covered reason, meaning he loses only the $200 premium instead of the entire trip cost.
Etymology
Developed in the 1960s as air travel became more common and expensive. The term combines 'trip' from Middle English and 'cancellation' from Latin 'cancellare' meaning 'to cross out' or 'annul.'
Common Misspellings
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Related Terms
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