What is CFAR travel insurance? Here's what you need to know

Anyone who’s traveled knows that even the most carefully planned trips can go awry. Travel insurance can be a helpful tool to make things right in some situations, like an injury, inclement weather or natural disasters. But it doesn’t cover every possible situation. 

Cancel for any reason, or CFAR, coverage can do that. But it often won’t cover 100% of your travel costs. 

Here’s what you need to know about CFAR travel insurance, including how it compares to other travel insurance coverage and how to decide if it's right for you. 

A destination wedding you were planning to attend was called off. Your passport didn’t arrive in time. There’s political unrest in the city you were hoping to explore. For many of these situations, a trip cancellation travel insurance policy wouldn’t help you get your money back. But a CFAR travel insurance policy might.

CFAR travel insurance is an additional travel insurance that lets you cancel your travel plans for any reason and receive reimbursement for your expenses, generally up to 75% of the non-refundable costs of your trip. 

The broader range of scenarios CFAR travel insurance covers may give you peace of mind, but you'll pay for it — these policies can cost as much as 40% more than the standard travel insurance policy. And despite its name, CFAR policies still have some exclusions and requirements you should know about, including:

• You’ll need to cancel no later than 48 hours before your trip. CFAR travel insurance generally won’t cover last-minute cancellations, and you’ll need to cancel about 2 days before your scheduled departure. While every travel insurance company has a different policy, you’ll want to make note of this deadline for any travel insurance you’re considering. 
• You’ll only get between 50% to 75% of your trip costs reimbursed. Most CFAR travel insurance won’t reimburse you 100% of your trip costs — expect to get about half or three-quarters of the money you put into your trip if you cancel for a reason not covered by a trip cancellation policy. Only one of the companies we reviewed for the best travel insurance policies, Allianz Travel Insurance, offers a Cancel Anytime policy that can reimburse up to 80% of prepaid on select policies, non-refundable trip costs.

• You need to buy coverage within several days of booking the trip. If you booked your trip months ago, you probably can’t buy CFAR travel insurance. You’ll generally need to buy a CFAR policy within 10 to 21 days of booking your travel plans. 

Travel insurance can cover a wide variety of situations, from losing a bag to being transported after a medical emergency abroad. And while CFAR policies expand the coverage provided by regular travel insurance policies, they also differ in other ways. Here's what you should know to make an informed decision. 

Covered reasons for cancellation

With CFAR coverage, you can cancel for almost any reason you’d like, including reasons that wouldn’t be covered under a standard trip cancellation policy. 

Standard travel insurance with trip cancellation coverage will only allow cancellation for a few covered reasons. These reasons can include: 

• Illness of a covered traveler (excluding some pre-existing conditions)
• Illness or injury of a family member
• You or a travel partner has a legal separation or divorce 
• A destination becoming uninhabitable because of a natural disaster

Each travel insurance company (and even policy) has different rules about the specific reasons and timeframes for cancellation, so you’ll want to carefully read any policy you’re considering to fully understand what’s covered. 

Time frame to buy coverage

With any travel insurance, it’s best to buy coverage shortly after booking. To purchase CFAR coverage, you’ll sometimes need to buy as soon as 10 days after booking your trip (though some policies allow you to purchase as late as 21 days after booking). For standard travel insurance, you usually have a bit more flexibility — Travelers suggests booking no later than 15 days prior to your trip. 

Time frame to cancel your trip 

With CFAR coverage, you’ll need to cancel your trip at least 48 hours before your departure date, though that time frame can vary between companies. Standard travel insurance, on the other hand, allows you to cancel your trip for covered reasons even if you're on the trip and you need to cut it short.

Reimbursement rate

CFAR coverage can help you recoup between 50% and 75% of your non-refundable travel costs, depending on your policy. Trip cancellation coverage will reimburse 100% of your non-refundable travel costs, though only if you’re canceling for one of the covered reasons on your policy. If your reason for canceling is outside of those covered reasons, a trip cancellation policy won’t cover those expenses. 

Anyone who’s concerned about their travel plans for reasons that aren’t covered by a standard trip cancellation policy might also want to consider this type of coverage. Despite its costs and limitations, CFAR coverage could be useful for someone who is feeling uneasy and provide some peace of mind that a portion of your trip costs would be returned if needed.

Just make sure you have room for this type of coverage in your travel budget. Travel insurance generally costs between 4% and 10% of prepaid, non-refundable trip costs. Since CFAR coverage bumps up the cost of a standard travel insurance policy by about 40%, it can quickly inflate the overall cost of your vacation. 

CFAR travel insurance can help recoup some funds from a canceled trip. But it won’t fully cover the cost of your trip and can be expensive. To decide whether it's for you, weigh the pros and cons and read the fine print of any policy you’re considering carefully. 

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