Unrest in Mexico and flight cancellations: Here’s when cancel for any reason travel insurance makes sense

Travel hasn’t exactly been smooth sailing this year. Major world events, conflicts and storms have led to numerous travel delays and flight cancellations.

In early January, tens of thousands of travelers were stranded in the Caribbean when the Federal Aviation Administration closed the region’s airspace to American commercial flights after United States’ strikes in Venezuela. In February, civil unrest in Mexico after the killing of a cartel leader prompted the U.S. State Department to advise Americans to shelter in place, and prompted airlines to cancel flights to Puerto Vallarta and Guadalajara. And the Transportation Security Administration halted TSA PreCheck and Global Entry amid a partial government shutdown, though the former has since been reinstated.

As these events continue to unfold, the travel plans you made months ago could get caught in a lurch.

While travel insurance is a useful tool, even the best policies have exclusions. Standard policies typically exclude cancellation coverage for unforeseen events, like military actions and government-ordered airspace closures, along with civil unrest.

If you’re feeling unsure about booking travel, adding “cancel for any reason” coverage — sometimes called CFAR — to your travel insurance becomes a standout option. With this, you can cancel your trip without being constrained to a list of reasons and travel on your own terms.

However, there are benefits and drawbacks to this type of travel insurance. Here’s what you need to know.

In certain scenarios, having travel insurance can be a lifeline.

A standard travel insurance’s cancellation policy only allows you to cancel for certain unforeseen reasons, typically like the death of an immediate family member, a divorce or sudden job loss. These policies may also allow you to cancel for covered unanticipated events, like terrorist attacks in a city on your itinerary.  

However, there are situations that are specifically excluded from travel insurance. Wars, civil unrest and military actions are broad exceptions from a standard travel insurance policy. Once an event or circumstance has started, it’s considered a “known event” and thus is excluded from cancellation coverage.

But policies can vary slightly in the reasons they do and don’t cover a cancellation. When you buy a policy, read it carefully. Look at the exclusions to see exactly which circumstances are covered for cancellation, and what are explicitly excluded. After you purchase a policy, you typically have between 10 and 15 days to review its terms. If you feel that the policy doesn’t adequately address your concerns, you can get the policy’s full cost refunded if you cancel it within that time frame.

When uncertainty feels rampant, getting a cancel for any reason policy adds an extra layer of protection. And interruption for any reason, or IFAR, is another coverage option sometimes bundled with CFAR, which lets you cut your trip short and go home for any reason you’d like.

However, there are three caveats to this type of travel insurance you should be aware of as you book. Firstly, you’ll only get about 50% to 75% of your nonrefundable prepaid expenses back. This amount varies by plan — the highest we’ve seen is Allianz, which offers a Cancel Anytime upgrade to its OneTrip Prime and OneTrip Premier plans. This add-on covers up to 80% of non-refundable expenses.

Secondly, this type of coverage does require you to work quickly. You typically need to buy within 10 to 21 days of booking your trip. Since insurers have different terms and time frames for coverage, shopping around can help you see all your options. Using a marketplace like Squaremouth also lets you see quotes from dozens of companies side by side with a single search.

Thirdly, if you decide you want to cancel your trip, you can’t wait until the last minute: you’ll need to cancel at least 48 hours before your expected departure, though some plans require 72 hours. Read your policy to see what time frames for notice are required.

CFAR travel insurance can be useful. But if you don’t have it on a trip you’ve already booked, even a standard travel insurance policy can be useful. Several benefits, like medical coverage and trip delay coverage, can help you keep your trip on track, even if your policy wouldn’t allow you to cancel.

Standard, comprehensive travel insurance plans include travel medical coverage, which can help pay for medical treatment abroad where your U.S. health insurance plan likely doesn’t apply. It can help you pay for costs related to unexpected illnesses and injuries, and some policies even include emergency assistance with translation or finding medical attention. If your injuries are severe or you can’t find adequate treatment where you are, medical evacuation coverage can kick in to help you get to a city with more robust healthcare facilities.

Additionally, travel insurance often includes trip delay coverage. If you’re stuck waiting for hours, a standard travel insurance policy can help with the cost of food, unexpected lodging or other expenses related to waiting for your flight. Typically, this coverage requires a delay of six hours or more, but exact requirements vary by policy. Common issues like weather, aircraft mechanical failures and road closures are often covered.

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