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What your clients need to know about trip cancellation insurance


February 19, 2019   by David Gambrill


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Your clients have a lot to learn about trip cancellation insurance.

Almost two-thirds of Canadians either don’t buy or are unsure if they have trip cancellation insurance before leaving on holiday, according to a recent study of 960 Canadians by Kanetix.ca.

Assuming that trip cancellation coverage costs no more than 10% of a trip, that’s an insurance premium of about $300 for the average vacation costing about $3,000.

For a significant number of Canadian travelers, that cost is too high, the Kanetix study found. Thirty-six per cent of survey respondents believe that cancellation insurance is too expensive.

The Kanetix study lists a number of other reasons why your clients are hesitant to purchase cancellation insurance.

For example, 28% of Canadians surveyed said they have it on their credit card.

“Value adds” on a credit card such as travel insurance and/or damage to a rental car are typically underwritten by the insurance company with which the consumer’s financial institution has an agreement, Kanetix observed in a follow-up email with Canadian Underwriter. “People should check their credit card agreement documents for the specifics — including the insurance company.”

Another 15% of Canadians said they already have trip cancellation coverage through their workplace benefits. However, that not all policies cover the same limits. “It’s always best to check what your employee group coverage is, versus purchasing privately,” Kanetix advises travelers.

Twelve percent believe that their travel medical policy includes cancellation coverage. But does it?

“They are separate coverages and must be purchased separately,” Kanetix notes. Unless an all-inclusive policy has been purchased, which bundles emergency medical, trip cancellation and baggage loss coverage into one policy, there’s a chance that your clients may not have the coverage they think they do.

It might be worth it for brokers to raise the matter with clients just for educational purposes alone. Thirteen percent of people in the survey had not even heard of trip cancellation insurance.

And then there are the skeptics: 18% of those surveyed said they were not confident a claim would be paid.

Whatever reasons a client may cite for declining trip cancellation coverage, there are plenty of opportunities for brokers to educate the client about the coverage, said Janine White, vice president of marketplaces and strategy at Kanetix.ca.

“For all that trip cancellation insurance covers, it’s an inexpensive way to protect the money you’ve invested into going on vacation,” Smith said in a press release announcing the survey results. “Whether it’s due to a death in the family, being called to jury duty, or a sudden injury or illness that prevents you from travelling, trip cancellation insurance can help you recoup travel expenses that are non-refundable or prepaid should you need to cancel your plans.”

Trip cancellation insurance can also provide coverage if the client is laid off from his or her job, if the home suffers a catastrophic loss like fire or flooding, severe weather, or if the Government of Canada issues a new “avoid travel” advisory, among other reasons why a client would want the coverage.