Cancel For Any Reason Travel Insurance: What is it? Should You Invest In It?

Cancel for any reason (CFAR) travel insurance offers the option to cancel your trip for any reason, such as a change of mind, personal reasons, work commitments, or relationship change with a travel partner. It covers unforeseen trip cancellations caused by sudden and unpredictable events such as terrorism, natural calamities, and serious injury or sudden sickness requiring a minimum of three days’ hospitalization of the insured person, his spouse, parent, or child, who are also scheduled to travel together. The reason for cancellation should not be publicly known before the policy issuance date and should be before the policy commencement.  The 'no questions asked' feature of CFAR offers a more flexible and broad coverage option. This increased flexibility in cancellation has resulted in the CFAR market reaching Rs 125 crore in premiums, with an expected growth potential to reach Rs 250-300 core by 2024-25, according to Howden Insurance Brokers India. 

Flight Insurance Coverage Inclusion: 

Flight cancellation coverage included in travel insurance shields you from financial losses when you need to cancel your trip due to a specific reason. Here are the factors covered by insurance.

Death, Illness, Or Accidents: 

If you, your travel companion, or family members become ill or experience an accident before the scheduled departure, or if there is a death in the family, you will be eligible for reimbursement of the non-refundable portion of your flight and accommodation expenses. This coverage prevents you from bearing substantial financial losses due to unforeseen circumstances.

Expense Reimbursement: 

Your travel insurance policy will cover the unused and non-refundable portion of your flight and accommodation expenses. This means that the funds you spend on booking your flights and accommodation will get covered up to the specified limit in your policy schedule. Having the assurance that your travel investment is protected provides financial protection and peace of mind.

Should You Invest In CFAR: 

According to Manas Kapoor, Business Head of Travel Insurance at Policybazaar.com, CFAR (Cancel For Any Reason) insurance offers significantly more flexibility of cancellation for any reason when traveling. Unlike standard travel insurance, which typically covers trip cancellation or delay only in cases of medical emergencies, CFAR travel insurance provides travelers with enhanced peace of mind and protection against various unforeseen events that are planned or unplanned. 

“However, this policy usually comes at a higher premium, costing around 50 per cent more than standard travel insurance.  For example, for a 60-day trip to the USA with a coverage sum of US $50,000, a regular travel plan might range from Rs 4,000 to Rs 5,500, opting for CFAR coverage would cost approximately Rs 7,000 to Rs 8,000. This illustrates that while CFAR offers enhanced flexibility and broader coverage, it does come with a noticeable price increase, a factor travelers must carefully consider when planning their travel insurance,” says Kapoor. 

Having said that, many travelers willingly choose the CFAR policy by paying an additional premium. Certain individuals' circumstances might make them a bit more prone to cancel their trips. In such instances, the slightly higher premiums offer complete peace of mind. However, some travelers may view the policy to be expensive and not worth it. Given that some of the CFAR policies now offer health coverage, this significantly strengthens their appeal.