Travel Insurance in Uncertain Times

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Living temple photo by Linda Walten
Living temple photo by Linda Walten

Eight Important Things to know before you go

By Ed Hewitt
The Independent Traveler

After a recent flight to the United States, a British airline employee had this to say: “None of these people have travel insurance – nutters!”

When an airline employee, who in the event of trouble can get themselves shipped home within hours free of charge, thinks it essential to have travel insurance, it makes me wonder what the heck I’m doing tooling around the planet with only the specious airline Contract of Carriage, my own homeowner’s insurance, and Blue Cross Blue Shield as a safety net.

In the immediate aftermath of the September 11 attacks,travel insurance tripled in popularity, according to Travel insurance three times as popular since Sept. 11.

Still, many folks are not sure exactly what is and isn’t covered. Additionally, recent developments also point to the increased utility of travel insurance: With several airlines operating under bankruptcy protection, with the prospect of more to come; new and tighter restrictions on non-refundable fares; the effects of heightened security; the prospect of war.  Does Travel Insurance Address All of The Above?

The answer: sometimes yes, sometimes no.

For example, in the case of bankruptcy: Most basic, entry-level trip-cancellation insurance (TCI) policies cover airline bankruptcies. However, if the company issuing the insurance is the same company as the one going bankrupt, as is possible in the case of cruise lines, you may be out of luck. Another example: if you miss a flight due to a road closing caused by a traffic accident, you are covered; if you oversleep, you are not. Clearly, there are undeniably situations wheretravel insurance decidedly does not cover you; here’s a look at some of the major caveats the average emptor should know about.

Caveat Emptor #1: When the Travel Provider and the Insurer Are One

Insurance that is held by the same company providing your travel, as in the case of a tour operator or cruise line, probably does not cover you if the company itself goes out of business. In most cases, your best bet is to stick with the independent insurance companies.

Caveat Emptor #2: Do You Have Primary or Secondary Coverage?

Primary cover is when thetravel insurance pays all claims first and fully; secondary cover is when thetravel insurance is paid out only after you have made and settled all other claims (with your airline, car rental company, tour operator, even homeowner policy, etc.). For obvious reasons, the primary cover is preferable.

Caveat Emptor #3: Coverage For Events “Under Your Own Control”

While some top-end policies cover cancellations of any stripe, other policies do not cover you for events deemed “under your own control” – you fail to wake up in time for your flight, read the train schedule incorrectly, show up with an expired passport, etc.

What is under your control? That depends. For example, for a long time, this exemption included business and work-related events; if you couldn’t travel because your boss said you couldn’t, you were out of luck. Recently, however, some policies will treat work-related cancellations as legit claims; if your work might require that you cancel trips, inquire about this directly with the insurance agent.

Caveat Emptor #4: the “Named Peril” Exemption – Terrorism and More

Most TCI policies operate under “named peril” conditions; that is, only those perils actually named in the policy fine print are covered. For example, most policies will cover cancellation if the State Department issues a Travel Warning or Public Announcement in your destination country. By checking and establishing that “named peril” conditions include acts of terrorism, you will be covered.

Historically this coverage applied primarily to terrorism abroad; insurance companies are adapting in order to cover domestic terrorism. Inquire with your insurer to make sure you are covered irrespective of your destination. Almost without fail, TCI policies do not cover losses caused by war or the threat of war. However, many companies are now offering supplemental insurance that will cover you for war-related cancellations and claims; obviously, this is very highly recommended at present.

Caveat Emptor #5: Know What Your Existing Insurance Covers

Before you purchase your travel insurance, it may be helpful to learn what is already covered by your car and home insurance. Don’t assume that all your property is covered; for example, your home insurance covers your belongings in the event of peril, such as when you are robbed. If you drop your laptop in the pool… sorry.

More importantly, know health insurance benefits remain in effect when you are abroad. If you have very limited or no coverage outside the country, a beefed-up medical policy may be a must-have.

Caveat Emptor #6: Have Enough Insurance to Cover You

If you need to be helicoptered out of the jungle, have a family member flown in to hold your IV bag as you are ferried down the Amazon on a raft, transported by a cabal of camels from a desert trek, have a translator to talk the local shaman out of bleeding you with snake bites to fix a broken bone, or merely require a full first-class row to lie your busted behind across on a flight home, the cost is going to add up. Make sure you have enough insurance to cover whatever method and distance required to get you to safety and medical care.

Caveat Emptor #7: Pre-existing Conditions

Many policies exclude pre-existing conditions, and few among us doesn’t have some form of pre-existing condition when we buy a plane ticket. Liver shot from your pre-AA days? It might not be covered if it bails on you during your travels.

As with business-related cancellations, many insurers are now waiving these policies, especially if you purchase insurance immediately (usually within seven days) after you purchase your travel. This behavior mitigates the appearance of insurance bought late in the game after you know you are going to have to cancel.

Caveat Emptor #8: Know How To Make a Claim

Your carefully chosentravel insurance won’t mean a thing to you if you don’t know how to contact your insurer and initiate coverage while traveling. Many insurers have 24-hour toll-free numbers for policyholders; you may want to choose a company that offers this on all policies.

Ed Hewitt is the Features Editor of The Independent