Trip Interruption and Trip Cancellation Insurance with a Credit Card: How Does it Work?

Many credit cards – especially travel cards – come with two valuable travel insurances: Trip Interruption and Trip Cancellation. These cover unexpected costs if your trip gets cancelled, delayed or cut short unexpectedly, helping you get reimbursed for things that can’t be refunded otherwise. 

While these types of insurance are related, they are different coverages, protecting you in different ways. 

What is Trip Cancellation Insurance?

Trip cancellation insurance reimburses you for the non-refundable portion of your trip. It also covers cancellation fees or penalties a transportation company or tour operator might charge if you need to cancel.

Trip Cancellation Insurance kicks in once your trip is booked and paid for using your credit card, and is in effect until your scheduled departure date.

What is Trip Interruption Insurance?

Trip interruption insurance covers the extra costs you might have to pay if you need to return home sooner or later than planned. It also pays you back for travel arrangements you haven’t used but already paid for using your card, which are otherwise non-refundable and/or non-transferable.

This coverage takes effect after your scheduled departure date and runs until the end of the trip.

How to activate Trip Interruption and Trip Cancellation Insurance on your credit card

If your credit card comes with Trip Cancellation and Trip Interruption Insurance, you don’t need to do anything to set up your coverage. To activate it, however, you need to make sure that your trip is booked using the credit card that has these insurances. Note that different credit cards have different criteria – some require you to book and pay for your entire trip using this credit card. Others require only partial payment on the card. It’s important to understand how your trip is covered to ensure you have sufficient coverage.

Be sure to read the details of your credit card insurance document before deciding how to pay for your trip. Your certificate of insurance should be available online.

What’s covered – and what’s not      

The specific terms of Trip Cancellation and Trip Interruption coverages may vary across credit cards, so it’s always a good idea to read your insurance certificate. But here’s what’s normally covered:

What’s commonly covered by Trip Cancellation insurance:

• An unexpected illness or injury to you or your travelling companion

• The death of you or your travelling companion

• The death or hospitalization of your host

• A formal travel warning by The Government of Canada (an “Avoid Non-Essential Travel” or “Avoid All Travel” advisory) after you book your trip

• Unexpected and involuntary job loss

• Being called to active military, police, essential medical or fire duties

What’s commonly covered by Trip Interruption insurance:

• An unexpected illness or injury to you or your travelling companion that prevents you from continuing the trip 

• An unexpected illness or injury that forces you to return home early

• The death of you or your travelling companion during your trip

• A car accident, road closure or weather event that forces you or your travelling companion to miss a connecting flight

• A formal travel warning by The Government of Canada (an “Avoid Non-Essential Travel” or “Avoid All Travel” advisory) after you book your trip

What’s commonly not covered

As you would expect, you won’t get reimbursed for just any reason (a busy week at work or missing your cat won’t make the cut for reimbursement!). Rather, coverage is available for your trip’s interruption or cancellation only under certain circumstances, like those listed above. 

Here are some common exclusions:

• A pre-existing medical condition 

• A self-inflicted injury

• A medical condition that results from alcohol or drug use

• A claim that results from engagement in a criminal or illegal act

• A claim related to an act of war or rebellion

• Expenses related to space tourism

The advantages of built-in credit card insurance

As built-in coverages on your credit card, Trip Cancellation and Trip Interruption Insurance can save you time and money.

Most meaningfully, these coverages can protect you financially against unexpected events – having to pay out-of-pocket for a new plane ticket or losing your tour deposit can be a big blow to your finances. Getting reimbursed through Trip Cancellation or Trip Interruption Insurance can help offset these costs.

What’s more, these insurances are included – so you don’t have to research and buy travel insurance every time you travel. While you might choose to purchase some travel insurance to cover any gaps in coverage, these insurances provide a good foundation to build on.

Consider too the cost of insurance. While credit cards with this coverage will typically come with an annual fee, this amount is lower than the cost of paying for this coverage for every trip you take. When purchased separately, trip cancellation and trip interruption insurance plans can cost, on average, between 4% and 10% of a total trip cost. For a $5,000 trip, you could pay between $200 and $500 for this coverage – decidedly more than your typical credit card annual fee.

Other important details  

When it comes to Trip Cancellation and Trip Interruption insurance, there are certain details you will want to be aware of. Here are some things to keep in mind:

• Coverage limits: Most plans cap the maximum amount you can claim per trip. 

• Know who a “covered person” is: In many cases, a “covered person” refers to the cardholder, the spouse, and dependent children (under 21 – or under 26 if a full-time student). 

• Claim deadlines: You’ll need to notify the insurance provider within a specific timeframe – usually within a day of the cancellation or interruption.

• Trip Cancellation and Trip Interruption Insurance are valuable coverages for credit cardholders, offering protection, simplicity and savings.