Travel Insurance and the Iran War: What Every Traveller Needs to Know in 2026

McKenzie McMillan, managing partner at The Travel Group, put it plainly on CTV News Channel this weekend: “That’s just another reason why it’s very important to make sure that you are insuring your travel purchases.” He was talking about the Iran war — and the very real risk that millions of travellers could find themselves stranded, facing multi-thousand-dollar out-of-pocket costs, with no financial backstop in sight.

1. What Is Happening Right Now to Canadian Travellers

The ripple effects of the US-Israel war on Iran, which began February 28, 2026, are now landing squarely in Canadians’ travel budgets. Jet fuel prices in Canada have surged approximately 55–60% from late February levels.¹ Airlines — which cannot absorb those increases indefinitely — are passing costs to passengers in two ways: by raising base fares directly, and by adding explicit fuel surcharges.

WestJet has announced a temporary fuel surcharge of $60 applied to all bookings made with companion vouchers starting April 8.² The Calgary-based airline is also cutting capacity by approximately 1% in April and 3% in May, consolidating flights on lower-demand routes. Air Canada Vacations announced a fixed $50 surcharge per passenger on new vacation packages booked from April 6 onwards.³ Air Transat has introduced fuel surcharges on flights to Europe and raised fares on peak travel dates. Porter Airlines is monitoring the situation and has hinted that higher costs may lead to higher fares.⁴

Wayne Smith, a hospitality and tourism professor at Toronto Metropolitan University, described the situation to CBC News with striking clarity: “There’s an old joke in the airline industry: ‘How do you make a billionaire a millionaire? Buy an airline.’ This is a really tricky business to make money. The surcharges and consolidations are pure survival.” He added that he would not be surprised to see baggage fees rise alongside ticket costs.²

The Canadian context: Air Canada spent more than $5.1 billion on jet fuel in 2024 — 24% of its operating costs and its single largest expense. The “recent sharp increase due to the situation in Iran has already made operating flights more expensive,” WestJet spokesperson Julia Kaiser told Global News in mid-March. “Based on this, it’s likely further pricing adjustments may be needed.”⁵

2. The Expert Warning: Why McMillan Is Sounding the Alarm

“That’s just another reason why it’s very important to make sure that you are insuring your travel purchases.”

— McKenzie McMillan, Managing Partner, The Travel Group (CTV News, April 5, 2026)

McKenzie McMillan, managing partner at The Travel Group, spoke to CTV News Channel on Saturday April 5 about what the Iran war means for Canadian travellers. His core concern is not just price — it is the risk of being stranded with no alternatives and no financial protection.

McMillan identified two groups most immediately at risk. The first are reward and companion fare holders, who are absorbing fuel surcharges that didn’t exist when they booked.⁶ The second — and more concerning — are travellers who have booked during peak periods, when planes are already full and reaccommodation is virtually impossible.

He pointed to a recent example from Mexico, where cancellations left travellers stranded for several days because there simply were no available seats on alternative flights. In that scenario, a traveller without insurance faces hotel bills, meal costs, additional flights, and lost work time — all out of pocket.⁶

On ticket prices, McMillan offered a measured view. For regular ticket holders, surcharges of $60–$100 or more are coming but he suggested they won’t be prohibitive for most travellers.^6, The bigger risk is operational disruption: “If this situation does escalate and get worse, we could be looking at more future flight cancelations as airlines reduce service to cut their fuel costs,” he told CTV.

3. What Airlines Want You to Know — And Why

Airlines are actively encouraging travellers to insure their bookings, and their motivation is not purely altruistic. When a traveller has insurance, they are more likely to book with confidence — and less likely to demand refunds or compensation from the airline directly when disruptions occur. A traveller with “Cancel for Any Reason” insurance who cancels a trip due to fear of conflict costs the airline far less in administrative burden than a traveller demanding rebooking, meals, accommodation, and compensation under passenger rights legislation.

But there is a genuine consumer benefit too. Rob Kokonis, President of Toronto aviation consulting firm AirTrav Inc., told Open Jaw that airlines have limited options when fuel prices spike: “Ultimately, an airline can increase prices one of two ways: either raise the base fare, or levy a new surcharge or increase an existing fuel surcharge. But at the end of the day, it doesn’t matter how the airline does it, because the bottom-line price they see at checkout is the same.”⁴

United Airlines was among the first to offer flexible rebooking — certain passengers booked through Dubai or Tel Aviv through March 7 were allowed to reschedule without change fees or fare differences.⁷ But that flexibility was temporary and airline-specific. A comprehensive travel insurance policy provides a consistent, contractual safety net regardless of what any individual airline decides to offer.

What Cathay Pacific did: Cathay Pacific doubled its Canadian fuel surcharge from $101 to $202.60 CAD, effective March 18, 2026. ¹ A traveller who booked a Cathay Pacific flight before knowing this was coming and did not have insurance has limited recourse — the airline is within its rights to adjust surcharges. Insurance purchased before travel would cover the unexpected additional cost under certain policies.

4. What Travel Insurance Actually Covers

Travel insurance, at its core, protects against events that are unexpected and outside your control. Standard policies typically cover trip cancellation, trip interruption, medical emergencies abroad, emergency evacuation, lost baggage, and travel delays. In normal times, these cover the vast majority of things that can go wrong on a trip.

In the context of the Iran war, however, the coverage picture is more complicated — and knowing the difference between what is and is not covered could be worth thousands of dollars.

Sources: CNBC⁷, Allianz Travel Insurance⁸, Gulf News ⁹, MoneySuperMarket ¹⁰.

5. Where Standard Insurance Falls Short — The Harsh Reality

Bloomberg reported on March 5, 2026 that hundreds of thousands of travellers scrambling to get home after the initial strikes were “discovering a harsh reality: their travel insurance won’t cover replacement flights or extended hotel stays.”¹¹ Insurers including Allianz and Zurich issued advisories making clear that standard travel policies do not cover claims tied to the conflict.

The key exclusion is nearly universal: standard travel insurance does not cover losses resulting from war, declared or undeclared, acts of war, political unrest, or government-enforced airspace closures.⁷ This is the “known event” problem: once a crisis becomes public knowledge — which for this conflict means anything after February 28, 2026 — policies purchased after that date cannot claim for losses arising from it.

The known event cutoff: Allianz confirmed that for this conflict, February 28, 2026 is the “known event” date. Any travel insurance plan purchased on or after March 1, 2026 is not eligible for war-related accommodations under standard policy terms. If you bought insurance after the strikes began, you have significantly less protection than someone who bought it in advance. ⁸

Kennedys Law, a global insurance legal firm, published analysis noting that “airline losses from flight cancellations, diversions and airspace closures often fall outside standard aviation liability or hull policies” — and the same principle applies to passengers.¹² Gulf News put it plainly: “Travel insurance is structured around unexpected disruptions — not large-scale geopolitical conflict. Understanding where coverage stops is critical before relying on it.”⁹

There is, however, one important passenger protection that applies regardless of insurance: under Canadian law and international conventions, if an airline cancels a flight, it is obligated to issue a full refund to passengers who choose not to rebook. Airlines are also typically required to provide meals and accommodation while passengers wait — though they may argue conflict-related cancellations are “extraordinary circumstances,” potentially limiting additional compensation.¹⁰

6. The Key Solution: Cancel for Any Reason (CFAR) Coverage

The single most important upgrade available in travel insurance right now is Cancel for Any Reason (CFAR) coverage. Unlike standard trip cancellation insurance — which only pays if you cancel for a covered reason (illness, death, natural disaster) — CFAR allows you to cancel for literally any reason and still receive a partial refund of your non-refundable costs.

CFAR typically reimburses 50–75% of non-refundable trip costs. The trade-off is cost: a CFAR policy generally runs 40–60% more than a standard travel insurance plan. But in the current environment — with the US “Worldwide Caution” advisory in effect, 14 countries on Canada’s “Avoid All Travel” list, and the conflict now in its fifth week with no clear end date — that premium reflects genuine risk.¹³

Critical timing rule: CFAR coverage must typically be purchased within 14 to 21 days of making your initial trip deposit. If you already have a trip booked and have not yet purchased CFAR, the window may have closed. Check with your insurer immediately — some have extended time limits during declared emergencies. Allianz, for instance, is allowing some date changes on plans affected by the current conflict if the plan was in effect on or before February 28.⁸

Interruption for Any Reason (IFAR)

A companion product worth knowing about is Interruption for Any Reason (IFAR) insurance. Where CFAR covers pre-departure cancellations, IFAR covers situations where you’ve already departed but need to cut your trip short for any reason — including personal concern about escalating conflict in a nearby region. Like CFAR, it reimburses a percentage (typically 50–75%) rather than the full amount.

Allianz’s emergency accommodation: For travellers whose plans were already in effect before February 28, Allianz announced it is providing special accommodations under its Trip Interruption benefit — including removing the standard five-day limit on additional accommodation and transportation expenses for those stranded in impacted countries including Bahrain, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Qatar, Saudi Arabia, Syria, UAE, and Yemen.⁸

7. Your Pre-Travel Insurance Checklist for 2026

Whether you’re booking new travel or reviewing protection on trips already planned, here is what every Canadian traveller should verify right now:

• • Buy insurance immediately after booking. Do not wait. The known-event cutoff (February 28 for this conflict) means policies purchased later offer far less protection. For future trips, buy within 14–21 days of your initial deposit.

• • Read the war and conflict exclusions. Every standard travel policy has them. Know exactly what is excluded before assuming you are covered for Iran-related disruptions.

• • Consider CFAR if you’re uncertain about travelling. If there’s any chance you might want to cancel a future trip due to concern about the conflict, CFAR is the only product that will cover you.

• • Book changeable fares, not basic economy. Aviation experts advising on CBC and CNBC agree: buy the fare that lets you rebook. If fares fall, you can capture the lower price. Non-refundable tickets are a significant liability in this environment.¹⁴

• • Check your travel dates against government advisories. Canada advises avoiding all travel to 14 countries in the region. Travel to any Level 4 country could void your standard insurance entirely.

• • Register with the Government of Canada’s travel registry. The Registration of Canadians Abroad (ROCA) service alerts you to emergencies and helps consular officials reach you. It is free and takes two minutes.

• • Check if your credit card includes travel insurance. Many premium credit cards include trip cancellation and interruption insurance. Verify whether it includes CFAR or conflict coverage, and whether it requires you to have paid for the trip on that card.

• • Call your insurer before you travel, not after. If you have questions about whether your policy covers your specific trip, call your provider and get the answer in writing. Save all correspondence. ⁷

• • Monitor the Canada.ca travel advisory page. The Government of Canada updates its travel advice daily. A destination’s advisory level directly affects your insurance coverage.

8. What the Canadian Government Is Saying

The Government of Canada has issued some of its strongest travel guidance since the COVID-19 pandemic. As of the time of writing, Canadians are advised to avoid all travel to: Bahrain, Iran, Iraq, Israel and Palestine, Kuwait, Lebanon, Qatar, Syria, United Arab Emirates and Yemen. Non-essential travel should also be avoided to Jordan, Oman and Saudi Arabia.¹⁵

Foreign Affairs Minister Anita Anand held a press conference at Global Affairs Canada in early March, briefing Canadians on the government’s evacuation assistance efforts. At the time, Canadians were returning from the Middle East on repatriation and commercial flights as the region gradually reopened.¹⁶

Travelling to any country under a Level 4 “Avoid All Travel” advisory after it has been issued is typically considered reckless by insurers and will void most standard travel insurance policies. Specialist conflict-zone policies do exist — offered by providers such as Battleface, Battleface and some Lloyd’s of London syndicates — but they are expensive, require specific underwriting, and are generally unavailable to consumers booking leisure travel.⁹

For travellers already abroad: If you are currently in a country under a Government of Canada advisory and need consular assistance, contact the nearest Canadian embassy or consulate, or call Global Affairs Canada’s 24-hour Emergency Watch and Response Centre at 1-613-996-8885 (collect calls accepted). You can also register at travel.gc.ca.

References & Sources

1. 1. BNN Bloomberg — Global jet fuel supply crunch: Implications for Canada. Jet fuel prices more than doubled since the war on Iran began, soaring to around $1.92 per litre. Dan McTeague, president of Canadians for Affordable Energy: “the greatest energy crisis of a generation.” April 5, 2026. bnnbloomberg.ca
   2. CBC News — WestJet introducing temporary fuel surcharge. $60 surcharge on companion vouchers from April 8; 1% April capacity cut, 3% May; Wayne Smith, Toronto Metropolitan University, on survival surcharges. April 5, 2026. cbc.ca
   3. Daily Hive — WestJet adding temporary fuel surcharge. Air Canada Vacations $50/passenger surcharge from April 6; WestJet VP Steve McClelland on pricing flexibility. dailyhive.com
   4. Open Jaw — Fuel Crisis: Canadian Carriers Raise Fares. Air Transat surcharges on Europe; Air Canada adjusting pricing; Porter monitoring; Rob Kokonis, AirTrav Inc., on how airlines pass fuel costs. March 2026. openjaw.com
   5. Global News — WestJet adding fuel surcharge. Air Canada fuel spend $5.1B in 2024 = 24% of operating costs; WestJet Julia Kaiser on likely further adjustments. globalnews.ca
   6. CTV News / CP24 — Expert urges travellers to insure travel purchases amid rising risks. McKenzie McMillan, The Travel Group: companion fares affected first; Mexico stranding example; “insuring your travel purchases.” Published April 5, 2026. ctvnews.ca
   7. CNBC — As Iran strikes disrupt flights, why travel insurance may fall short. Standard policies exclude war, military action, political unrest; known event date; United flexible booking policy; travel advisor McCormick. March 2, 2026. cnbc.com
   8. Allianz Travel Insurance — Coverage Alert: War in the Middle East and Surrounding Region. Standard exclusions for war; known event Feb 28, 2026; CFAR/IFAR options; impacted countries list; emergency accommodations for pre-Feb 28 plans. allianztravelinsurance.com
   9. Gulf News — Iran war: 10 reasons why your travel insurance may fall short. CFAR/IFAR must be bought shortly after booking; war exclusions; specialist conflict-zone insurance. March 2026. gulfnews.com
   10. MoneySuperMarket — Middle East travel disruption and travel insurance. UK/EU passenger rights; extraordinary circumstances exclusion; FCDO evacuation coordination; steps if disrupted. March 2026. moneysupermarket.com
   11. Bloomberg — Iran War Flight Disruptions Test Travel Insurance. Allianz SE and Zurich Insurance do not cover conflict claims under standard policies; 23,000 cancellations; passengers relying on airlines for rebooking. March 5, 2026. bloomberg.com
   12. Kennedys Law — Impacts of war in Iran on the insurance sector (Aviation, Australia). Airline losses from cancellations outside standard hull/liability; war risk premiums up 10%+; coverage gap analysis. April 2026. kennedyslaw.com
   13. Nomad Lawyer / Travel and Tour World — Global Travel Alert 2026. Non-refundable tickets are a liability; CFAR as essential; US Worldwide Caution advisory; Level 4 destinations. April 2026. nomadlawyer.org
   14. NPR — How the Iran war is disrupting air travel. Sean Cudahy, The Points Guy: buy changeable fare; use miles; book now. March 11, 2026. npr.org
   15. Government of Canada — Canada’s response to the situation in the Middle East. Avoid all travel to Bahrain, Iran, Iraq, Israel, Kuwait, Lebanon, Qatar, Syria, UAE, Yemen. Avoid non-essential travel to Jordan, Oman, Saudi Arabia. international.gc.ca
   16. CTV News — More Canadians arriving from Middle East as Iran war reaches one-week mark. Anita Anand press conference; repatriation flights; Government of Canada evacuation assistance. March 2026. ctvnews.ca

This article is for informational and educational purposes only and does not constitute insurance, financial or legal advice. Travel advisories, airline policies and insurance coverage terms change rapidly. Always read your full policy document, consult your insurance provider directly, and check Government of Canada travel advisories at travel.gc.ca before making decisions about travel or insurance purchases.

Stay tuned to Finaviation.com for more articles at the intersection of finance and aviation.

Tags: Travel Insurance, Iran War, Canada Travel, WestJet, Air Canada, CFAR Insurance, Flight Cancellations, Fuel Surcharge, Travel Risk, 2026