12/06/2013 -- Mary Simpson
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Without holiday cancellation cover, you could be thousands of pounds out of pocket.

What it covers

All non-refundable, upfront costs paid for travel and accommodation cancelled because of:

  • Accident
  • Illness
  • Bereavement
  • Foreign Office travel advice
  • Home or office emergency (fire, flood, burglary)
  • Redundancy
  • Pregnancy
  • Jury duty

Accident, illness or bereavement refers to you, a close relative, travel companion, business partner or holiday host.

What it doesn’t cover

  • Death/accident/illness of a family member, fellow traveller, business associate or host if you knew about their poor health when you booked (see pre-existing medical conditions).
  • Tour operator/budget airline/villa owner going bust.
  • Panic attack, anxiety, depression.
  • Bad weather at the resort.
  • Deciding you don't want to go.
  • Bad reviews on Trip Advisor.
  • Breaking up with your partner.
  • Fear of flying.

How much cover?

Cover levels vary among insurers, from £500 to £8,000.   It should meet the full cost of your trip including things like visas and jabs.

Check the excess - what you have to pay if you claim. Cheap travel insurance policies with just £500 cancellation cover can charge an eye-watering £200 excess.

That's OK if your holiday is a last-minute bargain basement buy, not for a luxury cruise or expensive family break.

Shop around.  For a few extra pounds, you can get up to £5,000 cancellation cover with an excess of just £75.

Get cover from when you pay for the trip, or put down a deposit, not the start date of the holiday.

If you do need to cancel, tell the travel agent or tour operator immediately so the insurer doesn't sting you for avoidable late cancellation charges.

Airline failure

  • Not usually covered unless you've paid for Schedule Airline Failure.
  • Pre-booked flights that are part of a package are ATOL (Air Travel Organiser's Licence) protected.
  • If you've bought a last-minute flight only with your credit or Visa debit card, you can get a refund from the card issuer.

Package holiday cancellation

  • If your tour operator cancels your package holiday or changes your hotel/resort, you can get a full refund under Package Travel Regulations (PTR).  Or the price difference if the substitute package is cheaper.
  • Under PTR rules you can transfer the holiday to someone else on payment of an admin fee.

Having to cut your holiday short, sometimes called curtailment, trip interruption or holiday abandonment, is similar to cancellation coverage, but protects you while you’re on your trip.