What Is Cancel for Any Reason (CFAR) Insurance

Cancel for any reason (CFAR) is an optional benefit that you can add to some trip protection plans. Many standard trip insurance plans include a trip cancellation benefit that reimburses you for nonrefundable prepaid trip costs if you cancel your trip for a named peril that is covered by your protection plan.

If you add CFAR to your protection plan, you can get a reimbursement for nonrefundable prepaid trip costs if you decide to cancel your trip for any reason, not just those listed as a covered peril in the terms of your trip cancellation benefit.

What Does Cancel for Any Reason (CFAR) Travel Insurance Cover?  

The trip cancellation benefit of most travel insurance plans will reimburse you up to 100% of nonrefundable prepaid trip costs if you cancel all or part of your trip for certain covered reasons, such as:

• Loss of employment suffered by you or a traveling companion (restrictions may apply)
• Serious illness or injury that inhibits you or a traveling companion
• Serious illness or injury experienced by one of your family members
• You enter into legal separation or divorce procedures prior to departure
• Your travel destination is uninhabitable following a natural disaster or other catastrophe

CFAR benefits vary by insurer, but these plans typically reimburse you for 50% to 75% of prepaid trip costs if you cancel your trip for a reason not listed in your travel insurance policy’s trip cancellation terms.

For example, let’s say you pay a nonrefundable deposit for a cruise, but you decide not to go on the voyage after reading negative reviews about the cruise line. Your trip cancellation benefit would not offer a reimbursement, but your CFAR coverage would.

Common reasons to use the CFAR benefit can include:

• Change in itinerary
• Concern over the state of the economy
• Family problems or personal issues
• Financial hardship such as a bankruptcy or reduction in salary
• Health concerns such as a viral outbreak on a cruise ship or at a travel destination
• Political unrest in your destination
• Preexisting health condition that impedes your mobility
• Safety concerns about your destination
• Work obligations
• You change your mind about traveling

CFAR has strict eligibility criteria. You must purchase CFAR coverage within a certain period, typically within 15 days of making your initial trip deposit. Your prepaid trip arrangements must be insured when you make the purchase.

CFAR Travel Insurance Costs

Travel insurance policies that include trip cancellation typically cost 5% to 10% of your total trip costs. Adding CFAR will increase the cost of your trip protection plan by 40% to 50%.

We surveyed eight travel insurance companies and found that CFAR costs an average of $222. The study was based on a 28-year-old Florida resident, traveling to Costa Rica for 10 days, with a total trip cost of $3,500.

Bear in mind that costs can vary widely by insurer. In our study, we found premiums as low as $121 and as high as $315. Before buying a trip protection plan, shop around to compare coverages and rates.

CFAR Travel Insurance Limits and Exclusions

It’s important to understand all CFAR requirements and restrictions before you purchase the coverage. Common CFAR exclusions and limitations include:

• Availability: Some travel insurance providers do not sell CFAR coverage.
• Coverage requirement: Typically, CFAR policies require you to insure 100% of your prepaid trip costs. For instance, you cannot insure your airfare costs, but exclude hotel deposits.
• Travel insurance policy requirement: You can add CFAR to a trip protection plan, but you cannot buy the coverage as a standalone policy.
• Purchase time limit: Typically, you must add CFAR coverage within 10 to 21 days of making your first trip deposit.
• Trip reimbursement limits: CFAR only reimburses up to 50% to 75% of your nonrefundable prepaid trip costs.
• Trip cancellation time limit: Most CFAR policies require you to cancel your trip no later than 48 hours prior to your scheduled departure.
• No trip interruption benefit: CFAR coverage only pays when you cancel your entire trip before departure. It will not reimburse prepaid costs for mid-trip interruptions that require you to return home earlier than scheduled.

CFAR Travel Insurance vs. Trip Cancellation Insurance

Many comprehensive travel insurance plans include a trip cancellation benefit. This benefit offers up to 100% reimbursement of nonrefundable prepaid costs if you cancel your trip for a covered reason. For example, you might decide to cancel your trip if a family member dies, or if your destination experiences a natural disaster.

CFAR is optional coverage, which you can add to your standard travel insurance policy for an additional cost. You can use your CFAR benefit if you decide to cancel your trip for a reason not specified in the terms of your trip cancellation coverage. For instance, if you’ve recently experienced unexpected financial difficulties and cannot afford your trip, you can cancel it and receive a 50% to 75% reimbursement of prepaid costs through your CFAR coverage.

Some travel insurance companies offer multiple trip protection plans with varying levels of financial protection. Although some insurers do not provide CFAR coverage, some offer product upgrades that feature benefits equal to or better than CFAR protection.

Should You Add CFAR to Your Travel Insurance Policy?

Travel plans can change at a moment’s notice, making CFAR a valuable benefit, particularly for high-cost trips. To understand the value of the CFAR benefit, look no further than the daily news. Events such as viral outbreaks, violence, social unrest, and natural disasters occur without warning, wreaking havoc on communities.

Although the trip cancellation benefit of most trip protection plans enables you to cancel a trip for certain clearly defined reasons, CFAR gives you the option to abandon your travel plans based on your own circumstances.

The Bottom Line

Travel insurance is a valuable investment when you’re heading off on an expensive vacation. Although the trip cancellation benefit of most trip protection plans enables you to recoup costs when canceling your trip for specific reasons, it doesn’t give you the option to cancel on your own terms.

CFAR coverage expands your trip protection by reimbursing you for a percentage of your trip costs if you decide to cancel for reasons not allowed by your trip cancellation coverage. However, CFAR is a pricey add-on coverage, so it’s not necessarily the best option for all travelers or all itineraries.