How to Calculate Trip Cost for Trip Insurance
Angela Borden | Mar 23, 2023
When you buy trip insurance as part of a travel protection plan*, you will be asked to provide your trip cost. That amount will be used to ensure you have the amount of coverage you need if you need to cancel your trip due to a covered reason. It’s also used to calculate the cost of the plan.
It’s possible that not every single dollar you spent as part of your trip is insurable. Refundable fees from your resort, for example, would not be included in your insurable trip cost. Keep reading to help figure out what to include when you calculate the trip cost you provide to Seven Corners, so you get the coverage you need.
How Does Trip Protection Work?
To know what expenses to include in your insurable trip cost, you first need to understand a little about how trip insurance works.
Several different trip insurance coverages are designed to reimburse you for the amount of unused nonrefundable prepaid payments or deposits you made for your travel arrangements. This means that if part of your trip cost is refundable if you need to cancel your trip, you do not need to include that as part of your trip cost.
Why don’t you need to include a refundable part of your trip as part of your insurable trip cost? Because another party — your airline, cruise line, hotel, tour provider — is going to refund you the money you spent (according to their stated refund guidelines, which you should review), there is no need to insure that amount.
Here’s an example.
Dave is planning a trip to Bermuda. His prepaid expenses are:
- Airfare $800
- Hotel $2,000 ($200 is refundable if he needs to cancel)
- Excursions $500
Dave’s total prepaid expenses are $3,300. His insurable trip cost, however, is $3,100. This represents the total expenses ($3,300) minus the $200 refundable amount for his hotel. He should not buy coverage for trip expenses that are refundable.
What Types of Trip Expenses Should You Include in Your Insurable Trip Cost?
Trip expenses can consist of prepaid, nonrefundable expenses for travel arrangements, which are transportation, accommodations and other specified services arranged for your trip. Examples can include airfare, the cost of a cruise, hotel cost, entertainment and excursions, rental of a house or condo, and other similar items.
Do I need to add free items to my insurable trip cost?
Just as you wouldn’t insure refundable expenses as part of your trip cost, you would not insure free items. If you receive part of your trip for free (maybe an excursion was thrown in for free as part of your hotel booking), then don’t include it as part of your insurable trip cost.
Why not? If you must cancel, delay, or interrupt your trip and miss the excursion, you would not lose any money, so that item does not need to be included as part of your insurable trip cost.
Can I insure frequent flyer miles?
Frequent flyer miles should not be included as part of your insurable trip cost. However, trip insurance can provide limited coverage for the cost of the airline-imposed fees to re-bank frequent flyer miles.
Are Insurable Trip Costs Per Person?
Yes. When buying trip protection, you should calculate the cost of the trip for each person, according to what he or she paid. Each traveler is covered up to the lesser of their insurable trip cost on the plan or their nonrefundable, unused trip costs. In other words, the plan will not reimburse you for more than the amount you insured.
Here’s another example.
Bob and Nancy are taking a trip, and they are buying one travel protection plan for both of them. Bob paid $1,000 and Nancy paid $2,000. (Maybe Nancy is going on a solo excursion without Bob.) When they buy their plan, Bob should provide $1,000 as his insurable trip cost, and Nancy should provide $2,000 as her insurable trip cost.
How Do You Calculate Trip Cost for Groups?
When you travel as a group, it’s possible you will have shared reservations. A common example of a shared booking is a rental house when there is one fee for the entire group.
If you are purchasing a plan to cover more than one person, it is important to calculate the trip cost per person, according to what each person paid. It’s up to the travelers to decide how to split the expense to pay for the shared reservation. If the group shares equally in paying for the booking, then the amount should be divided between each individual in the group, and each would calculate their share of the insurable trip cost.
Here’s an example of how that works:
Sarah’s bachelorette party booked a rental house for $1,000. There are five people going, and each of them paid $200. They should each list $200 as their insurable trip cost. If each person is not named on the booking, they may need to provide other proof they paid the $200.
Of course, not all groups divide their trip expenses the same way, or at all. Here’s another example:
Taylor rented a house for $1,000 for an annual golf trip. Again, there are five people going, but Taylor paid the full $1,000 for the rental. This means that when Taylor buys trip protection, he should provide $1,000 as his insurable trip cost.
In this instance, Taylor would be the one to lose money if the trip is canceled for a covered reason. That’s why he includes the full cost of the rental as part of his insurable trip cost.
Can You Adjust Your Insurable Trip Cost?
If you buy excursions or add additional travel expenses to your trip after your initial plan purchase, this could increase your insurable trip cost. In this case, you should let Seven Corners know as you must add expenses for subsequent travel arrangements to your trip cost within 15 days of purchase as outlined by the plan’s time sensitive period. Contact us to report additional expenses.
This is very important if you purchased Cancel for Any Reason (CFAR) or if you wish to have coverage for pre-existing conditions. **
How about another example? After booking a flight and hotel, Sanjeev purchased a Seven Corners Trip Protection plan. His trip cost at that time — for the hotel and airfare — was $1,000. A couple weeks later, he reserved an afternoon of deep-sea fishing. He should now call Seven Corners and add the $200 nonrefundable booking with the boat company to his insurable trip costs. This will update his protection so that if he must cancel his trip for a covered reason, he will be reimbursed for the fishing trip as well as his flight and hotel.
Cancel for Any Reason
CFAR is an optional benefit you can add to our trip protection plans for an additional cost. This optional coverage allows you to cancel your trip for any reason you wish, including fear of travel and other reasons that might not be covered otherwise.
Terms and conditions apply, so please read the plan document for full details.
Do I Need Receipts and Evidence of Payment?
Keep a record of each trip expense payment you make. While you don’t need them to purchase trip protection, you likely will be asked to produce proof of payment if you file a claim.
Still Have Questions About Calculating Your Trip Cost?
Correctly calculating your insurable trip cost is important. If you have questions, contact your agent or our sales team. They can help you sort through detailed expenses, so you buy a plan that covers all of your insurable trip costs. Email us at sales@sevencorners.com or call the numbers below:
Toll free: 1-800-335-0611
Worldwide: 317-575-2652
Collect: 317-818-2809
*Trip insurance is included as part of a travel protection plan, which consists of insurance coverages underwritten by United States Fire Insurance Company as well as non-insurance assistance services provided by Seven Corners. Insurance coverages are subject to the terms, limitations and exclusions in the plan, including an exclusion for pre-existing conditions.
**Pre-existing Conditions: Losses resulting from pre-existing conditions are normally excluded from coverage. However, such losses are covered on the same basis as losses from all other sicknesses and injuries if you meet the requirements for the Pre-Existing Medical Condition Exclusion Waiver. This waiver is not available with every Seven Corners Trip Protection plan. Additional terms and conditions apply, so please read the plan document for full details.
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