Yes, your travel insurance policy can be canceled.
Maybe no one bothered to tell you. Maybe your travel insurance company and your travel agent want you to think your money’s gone. But maybe, just maybe, it isn’t.
First, a reality check: Travel insurance is usually nonrefundable. For example, I remember Kathryn Scott’s recent case. She purchased a policy for a spring break vacation and then had second thoughts about taking the vacation.
“I had bought travel insurance through the tour company,” she explains. “The tour company has refunded my deposit, but I am still out of pocket for the insurance cost for a trip I am not taking. Is it reasonable to expect either a refund or transfer of that expense?”
Unfortunately, no. Most insurance companies offer a two-week “free look” review period, after which the policy is nonrefundable. However, if her tour operator had canceled the trip, she might have had a stronger case for at least some credit with the travel insurance company.
So when is travel insurance refundable — and when isn’t it? I asked the experts.
You have at least a week, maybe two, to call the whole thing off
That’s the assessment of Damian Tysdal, who publishes the site Travelinsurancereview.net and reads thousands of policies. Typically, the “free look” period lasts between 10 and 15 days. “I think, ideally, this period of time is used by the insured to fully understand what they are covered for,” he says. “I always advise travelers to purchase insurance sooner rather than later, for multiple reasons. However, by trying to purchase sooner and lock in coverage, you might not have time to read and understand your coverage 100 percent.”
There’s a fee — and some paperwork
While some travel companies reimburse in full, the majority of them will deduct a “processing” fee. “This is usually around $5 to $8,” explains Julie Loffredi, the Travel Editor of InsureMyTrip.com. And you can’t just make a phone call to cancel. Companies like InsureMyTrip require an email from you as proof that you are requesting that the policy be canceled. If the credit card used to purchase the plan has expired, you also need to call and provide the company with a new number. Cancellations are typically processed within 24 to 48 hours, but a premium refund usually takes three to seven business days to appear on your credit card statement.
There are exceptions to the rules, but they’re rare
“To cancel a policy after the free trial period is usually much more difficult,” says Alan Rosen, president of Sand & C Travel, a travel agency in Boynton Beach, Fla. “It is extremely rare that an independent insurance company will refund the premium after the trial period. However, most insurance companies that we have worked with will give the client a credit that can be applied toward a policy for another trip.”
So when can I expect a full refund even when I’m outside the “free look” period?
None of the insurance pros I interviewed would go on the record to answer this thorny question, but it’s something I can answer as a consumer advocate. Insurance companies consider refunding policies on a case-by-case basis, weighing the circumstances carefully. Businesses don’t like to give refunds, and insurance companies are no exception. But I’ve seen them consider refunds for extenuating circumstances, which may include the death of a policyholder, a serious illness, or a trip cancellation that’s no fault of the policyholder. Also, it helps to have a consumer advocate hold the insurance company’s feet to the fire — which, of course, is not always possible.
The takeaway: Review your travel insurance policy very carefully when you book your trip and buy your policy. You have at least a week, maybe a little more, to determine if it covers you. After that, the best you can reasonably hope for is a credit. Full refunds on a policy outside the review period are exceedingly uncommon. You shouldn’t count on getting one.