What is trip interruption insurance?

Imagine meticulously planning a dream holiday – a scenic tour of New Zealand, a cultural exploration in Japan, or a relaxing beach getaway in Bali. You've booked flights, hotels, and tours, anticipating a seamless and memorable experience. But then, an unforeseen event occurs: a sudden illness, a family emergency, or a natural disaster disrupts your plans, forcing you to cut your trip short.

This is where trip interruption insurance steps in, acting as a financial shield to protect your travel investments. 

Trip interruption insurance is designed to cushion the financial blow when unexpected events force you to cut your trip short. It reimburses you for the unused portion of your prepaid, non-refundable trip expenses.

Think of it as a financial buffer against the unpredictable nature of travel. If you've booked a non-refundable tour in Europe, only to find yourself needing to return to Singapore due to a family emergency, trip interruption insurance can reimburse you for the unused portion of that tour. 

This coverage extends to a variety of pre-booked expenses, including hotel stays and transportation, ensuring that you’re not left out of pocket when life throws you a curveball. 

>> Learn more: 10 tips to buying the right travel insurance

When an unexpected event disrupts your trip and you need to file a claim, it's crucial to notify your insurance provider as soon as possible. You'll need to provide documentation of the event and your unused travel arrangements. This documentation may include medical certificates, police reports, or cancellation notices. 

Once submitted, the insurer will review your claim. If approved, you will be reimbursed for eligible expenses, covering the unused portion of your trip and any additional costs incurred to return home.

To detail precisely what trip interruption insurance commonly covers, here's a look at the key benefits you can typically expect:

• Medical emergencies: If you or a travelling companion experience a sudden illness or injury requiring medical attention during your trip, trip interruption insurance can cover the costs of returning home. This includes reimbursement for unused prepaid expenses like hotel stays, tours, and transportation.   

• Family emergencies: Unexpected events at home, such as the serious illness or death of a close family member, can necessitate an immediate return. Trip interruption insurance covers the costs associated with these unforeseen circumstances, including last-minute flight changes and unused travel bookings.   

• Travel disruptions: Severe weather conditions, natural disasters, or political unrest at your destination can significantly disrupt your travel plans. In such cases, this insurance covers the costs of returning to Singapore and reimburses you for any lost prepaid expenses. For example, if a typhoon hits your destination, and your flights are cancelled, this insurance covers the cost of new flights.

• Transportation issues: Unexpected transportation disruptions, like airline strikes or sudden cancellations, can force you to alter your travel plans. Trip interruption insurance can help cover the costs of alternative transportation and any associated losses.   

*Important note: Coverage specifics can vary significantly between insurance providers. Always review the policy's terms and conditions to understand the exact scope of coverage.

>> More: Travel insurance policies that offer COVID-19 coverage

While trip interruption insurance provides a valuable safety net, it's essential to understand its limitations. Not all situations qualify for coverage, and exclusions are designed to protect insurers from predictable or controllable risks. Here are some common scenarios where trip interruption insurance typically does not apply:

• Undeclared pre-existing medical conditions: If you have a medical condition that existed before purchasing the policy and did not disclose it, any related claim is likely to be denied. For instance, if you have a known heart condition and experience a cardiac event during your trip, the insurer may reject your claim if you failed to declare it.

• Participation in high-risk activities: Activities deemed inherently dangerous, such as bungee jumping, skydiving, or unguided mountain climbing, are often excluded. If you are injured while engaging in such activities, your claim may be rejected. If you’re planning to embark on any such high-risk activities, check out travel insurance plans meant for adventure sports.

• Travel against medical advice: If your doctor advises against travel due to a medical condition, and you choose to travel anyway, any related claims may be denied. For example, if you travel with a severe respiratory condition against your doctor's advice and require hospitalisation, your insurance may not cover the costs.

• Intentional self-harm or illegal activities: Any injuries or losses resulting from intentional self-harm or illegal activities will not be covered. This includes incidents related to drug use or criminal behaviour.

• Normal pregnancy or childbirth: While complications arising from pregnancy may be covered under some policies, normal pregnancy and childbirth are typically excluded. This is an important consideration for Singaporean couples planning babymoons.

• Financial default of travel providers: If an airline, hotel, or tour operator goes bankrupt, leading to trip cancellation or interruption, your travel insurance may not cover the losses. It is important to know that some insurance companies do provide financial default coverage as an add on.

• Lack of documentation: Failure to provide adequate documentation, such as medical reports, police reports, or receipts, can result in claim denial. It is important to keep all relevant documentation.

• Travel to war zones or regions under travel advisories: Travel to destinations where the Singapore Ministry of Foreign Affairs (MFA) has issued travel advisories against may void your insurance coverage.

>> More: 5 things you must know about travel insurance

The cost of trip interruption insurance, typically included within comprehensive travel insurance plans, varies based on several factors, including the duration of your trip, your destination, the level of coverage you require, and your age.

• Trip duration and destination: Longer trips and destinations with higher medical costs or political instability generally lead to higher premiums. For example, a two-week trip to Japan might cost more than a one-week trip to Thailand due to the higher medical expenses in Japan. Trips to regions with known risks, such as certain parts of South America or Africa, can also increase costs.

• Coverage amount and type: Higher coverage limits for medical expenses, trip cancellation, and trip interruption will increase the premium. Some plans also offer add-ons like "Cancel For Any Reason" (CFAR) coverage, which will add to the overall cost.

• Age and health: Older travellers and those with pre-existing medical conditions may face higher premiums. Some insurers may require medical screenings or charge higher rates to cover increased risks.

For a typical two-week holiday to a popular European destination, a comprehensive travel insurance plan with trip interruption coverage might range from S$80 to S$300. This translates to roughly 2% to 7% of a S$4,000 trip.

For a shorter trip to a neighbouring ASEAN country, premiums can be lower, ranging from S$30 to S$150.

Many premium travel credit cards in Singapore also offer complimentary travel insurance, most including trip interruption coverage, as a cardholder benefit. However, it's crucial to review the terms and conditions to understand the coverage limits and exclusions, and to note such insurance coverage may not be as comprehensive as a standalone policy.

>> More: Best credit cards with free travel insurance

Understanding the distinction between trip cancellation and trip interruption insurance is crucial. These two types of coverage address different stages of your travel journey and offer distinct forms of financial protection.

Trip cancellation insurance provides a safety net before your departure. It allows you to recoup prepaid, non-refundable expenses like flights, accommodations, and tours, provided the cancellation is due to a covered reason.

Trip interruption insurance, conversely, kicks in during your trip. It reimburses you for the unused portion of your trip, such as pre-booked hotel stays and tours, and covers the additional costs of returning home. It protects you from financial losses when unforeseen events force you to cut your trip short.

When travel plans are disrupted, it's essential to know whether you're dealing with a delay or an interruption, as these situations trigger different types of insurance coverage.

Trip delay coverage addresses situations where your travel is temporarily postponed. It covers expenses incurred due to temporary disruptions in your travel itinerary.

Trip interruption coverage, as discussed earlier, comes into play when you have to completely abandon your trip due to unforeseen circumstances. It reimburses you for the unused portion of your trip and covers the costs of your emergency return.

You can typically secure trip interruption insurance by purchasing a comprehensive travel insurance policy from a provider in Singapore. When choosing a policy, pay attention to the coverage limits, exclusions, and the provider's reputation. Look for plans that suit your specific travel needs.

Many premium credit cards also offer complimentary travel insurance, including trip interruption coverage. Remember to book your travel with the eligible card. Check the card's terms for coverage details, as there are often limitations and exclusions. Keep in mind that credit card insurance might not be as comprehensive as a standalone policy.

Travel agencies and online platforms often offer insurance during booking, but it's wise to compare these with standalone policies for the best value. If travelling for work, check if your employer provides coverage.

Regardless of how you obtain it, always review the policy's terms to understand coverage, exclusions, and the claims process.

Choosing the right travel insurance involves more than just price. Consider the nature of your trip, the level of coverage you require, and your personal circumstances. For high-value trips, a comprehensive policy with robust trip interruption coverage is essential. If you're a frequent traveller, a policy with higher coverage limits and additional perks like "Cancel For Any Reason" (CFAR) might be worth the investment. 

Explore reputable providers like Allianz Travel Hero, SingLife, or Direct Asia, and carefully compare their offerings. If you rely on credit card travel insurance, ensure it covers COVID-19-related disruptions if travelling during periods of known outbreaks, and understand its limitations compared to standalone policies.

Maximising your travel perks

Unlock the full potential of your travel experiences by leveraging credit cards with robust travel insurance benefits and rewards:

• Citi Rewards Card: Up to S$1,000,000 coverage with HL Assurance

• UOB PRVI Miles Card: S$500,000 coverage with UOI

• Maybank Horizon Visa Signature Card: Up to S$1,000,000 coverage with Etiqa

• CIMB Visa Signature Card: Up to S$500,000 coverage with Sompo

• Standard Chartered Journey Card: Up to S$1 million coverage with Allianz