Choosing the right Travel Insurance: Cancellation of journey for any reason

Recent global events and rising fuel costs have led some airlines to consolidate or cancel flights – primarily across short-haul, Southeast Asian, and Australian routes. For most of us, vacation days are hard-earned and precious. There is nothing more frustrating than taking leave only to find out your flight has been moved or cancelled entirely.

In the face of such sudden disruptions, how can travel insurance provide protection and help mitigate potential financial losses?

"Will travel insurance compensate me if the airline changes the flight time?" This seems like a simple question, but the answer depends entirely on the reason for the change. Travel insurance is designed primarily to cover sudden and uncontrollable events, such as delays or cancellations caused by adverse weather, mechanical failure, natural disasters (e.g., earthquakes, typhoons, rainstorms), industrial actions, riots, or airport closures. If a flight is cancelled or delayed beyond a specified period due to these reasons, forcing the insured to cancel their trip, the policy will typically reimburse non-refundable transportation and accommodation expenses.

However, if an airline cancels or modifies a flight due to fuel shortages or crew rescheduling, these are considered commercial considerations, or "operational arrangements." In most travel insurance policies, such scenarios are listed as "exclusions." Furthermore, the recent conflicts in the Middle East have been clearly defined by the insurance industry as "war." Any claims directly or indirectly caused by such events fall under the "War Exclusion Clause" and are similarly not covered. If a traveller learns of a cancellation a day before departure or upon arriving at the airport, they should first request the airline to arrange an alternative flight, as the primary liability rests with the carrier. Travellers should also inquire about compensations such as free accommodation, meal vouchers, or transport subsidies.

Currently, some insurers offer " Cancellation of Journey for Any Reason" coverage to provide greater travel flexibility. In other words, even if you "simply don't feel like going," are concerned about the situation at your destination, or need to cancel for any personal reason, you can receive partial reimbursement for pre-paid expenses. 

Using the Middle East conflict as an example: while flight cancellations or delays caused by the conflict may be excluded, an insured person who decides to cancel their trip out of concern for the local situation can still claim under the "Cancellation of Journey for Any Reason" benefit. This allows for a specified limit of compensation for losses related to transportation, tours, and accommodation deposits. It is important to note that insurers usually require the policy to be purchased within a specified number of days after the initial trip payment or deposit to qualify for this coverage.

If a flight delay or cancellation falls within the scope of the policy, the insured should obtain a written certificate from the airline. This document must clearly state the reason for the delay, flight number, original and rescheduled departure times, and the point of origin and destination to facilitate the claims process. Please note that a boarding pass is not considered valid proof for a claim; providing sufficient documentation is essential for a smooth process.

In addition, if an insured traveler is forced to stay behind due to adverse weather or special circumstances, thereby delaying their return to Hong Kong, most travel insurance products in the market offer a free automatic extension of the grace period – usually ranging from 10 to 14 days. During this period, extra accommodation and transportation costs incurred are covered, ensuring travellers are not left without protection due to a delayed return.

Finally, it is a reminder that most travel insurance products in the market require the journey to originate from Hong Kong to be valid. One should also pay close attention to the specific regions and countries covered by the plan. By choosing a product that matches your actual needs before you depart, you can explore the world with true peace of mind.

This Chinese version of this article was published in the Hong Kong Economics Journal 

If you have any queries regarding Travel Insurance, please feel free to contact us or find out more about our insurance plans:

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