Cancellation cover is generally sold at or near the time a trip is booked, and buying it later reduces what it can do. The reason lies in how insurable risk is defined.
Insurance covers uncertainty, not certainty
A policy pools contributions from many people against events that may or may not happen to any one of them, and the pricing assumes the outcome is genuinely unknown.
If a policyholder already knows an event is likely, the transaction stops being risk transfer and becomes a claim arranged in advance.
Policy wordings exclude such situations explicitly, usually through language about circumstances known or reasonably foreseeable at the point the cover began.
The exposure begins at booking
Financial loss from cancellation starts the moment money becomes non-refundable, which is generally when a deposit is paid rather than when travel begins.
A policy purchased later leaves the period between booking and purchase uncovered, and events arising in that window may be excluded even if the trip is cancelled afterwards.
This is why cover is commonly arranged alongside the booking rather than as part of preparing to travel.
Known events are excluded once they are public
Insurers commonly apply a cut-off after which a named event, such as a developing situation at a destination, is treated as known and no longer covered by new policies.
The same principle applies to personal circumstances, including a medical condition already diagnosed or a family situation already apparent when the policy was taken out.
Disclosure requirements exist for that reason, and a policy issued on incomplete information may not respond when it is needed.
Covered reasons are listed, not general
Most cancellation cover responds only to specified causes rather than to any change of plan, and those causes are set out in the policy document.
Products offering broader discretion exist and are priced accordingly, typically paying a proportion of the loss rather than the full amount.
Reading the list of covered reasons before buying is more informative than comparing headline sums, which often describe limits that are rarely reached.
What differs between markets and providers
Terms, exclusions, waiting periods and the treatment of pre-existing conditions vary by provider and by jurisdiction, and they change as products are revised.
Cover attached to a payment card or a membership may exist alongside a standalone policy, with its own conditions and activation requirements.
This explains the general mechanism rather than any specific product, and the wording of an actual policy is the only authority on what it covers.