Definition
Travel insurance cover that reimburses non-refundable prepaid trip costs, such as flights, hotels and tour deposits, if you must cancel for a covered reason like serious illness or a death in the family. A change of mind is not covered.
What is usually covered
- Serious illness, injury or death of the traveller or a close family member
- Hospitalisation shortly before departure
- Natural disasters or major disruption at home or at the destination (varies by policy)
What usually isn't
- Change of plans, work commitments or cold feet
- A pre-existing disease flaring up, unless specifically covered
- Visa refusal, unless the policy names it
- Airline or tour operator insolvency, unless named
The limit is often too low
Many Indian policies include trip cancellation of only a few hundred to about USD 1,500 per person. A ₹3.5 lakh Europe fixed departure can lose half or more of its value if cancelled a few weeks before travel, so the default cover may refund only a small share. Look for plans with a higher cancellation limit, and read what the tour operator itself refunds.
Example
A Jaipur couple pays ₹3 lakh for a Europe group tour leaving on 20 May. On 2 May, the wife's mother is hospitalised and they cancel. The operator's cancellation terms keep ₹1.5 lakh. Their policy covers trip cancellation up to USD 1,500 (about ₹1.3 lakh) each, enough between them to recover the ₹1.5 lakh they lose, once they submit hospital papers and the operator's cancellation invoice.
Practical advice
- Buy insurance the day you pay the deposit, not a week before departure; cancellation cover starts from purchase.
- Read the operator's cancellation slabs alongside the policy, and check fare rules on separately booked flights.
- Keep medical records and cancellation invoices for the claim.
Compare cancellation limits through our travel insurance service.