Trip cancellation insurance provides coverage when a trip is canceled due to an unanticipated event. It covers paid non refundable reservations like flights, hotels, and other bookings. Usually, the entire expense of the trip is covered. To be eligible for this coverage, the cancellation must be due to a covered reason (e.g., jury duty, job termination, extreme weather).
For instance, your three-week trip to a place like Costa Rica costs you $3,000 in advance (flight, accommodation, and $500 in excursions totaling $800). However, you experience a car accident three days before departure and sustain injuries.
After you stay in the hospital for two days, your doctor advises against traveling. Suppose you've purchased a policy that includes trip cancellation coverage. In that case, you'll receive a refund for the total amount paid because unintentional injuries that cause medically imposed restrictions verified by a doctor qualify as a covered reason.
On the other hand, trip interruption coverage is a post-departure benefit that protects paid, non refundable reservations if a traveler has to return home or miss some of their vacations abruptly. Similar to when a trip is canceled, the reason must be unexpected to be covered.
Think about the previous holiday scenario, which was the same: After arriving in Costa Rica by plane, you trip and hurt your foot on day four of your vacation, unable to even stand up. The doctor diagnoses you with a fracture when you go to the hospital for X-rays and advises you to avoid vigorous exercise. As the anguish intensifies, you decide to return home.
If your travel insurance plan includes trip interruption coverage, you will be reimbursed for the unused portion of your hotel stay, new return flight, and the rescheduled return flight. Trip interruption coverage can range from 100% to 200% of the trip cost, depending on the plan, and can be very helpful because a last-minute flight home might be pretty expensive.
The critical thing to remember about these benefits is that you can only get a refund if you cancel your trip for a legitimate reason.