You think to yourself, there is no way I would ever cancel this trip. EVER. So why buy travel insurance?
Because it is not just about you. And it is not just about canceling your trip. There are many more components to travel insurance, so I wanted to take a couple of weeks to discuss the four main reasons you need travel insurance. At the end of this article, I will provide some real-life examples and how travel insurance helps in each.
- Emergency Medical & Medical Evacuation Coverage
- Trip Cancellation & Interruption Coverage
- Supplier Default Coverage
- Baggage Delay, Loss, or Theft
To reiterate a couple of the points that I made last week … travel insurance is not a scam. To be honest, I used to feel weary about buying it because I did not understand how much it actually would help me if I needed it. Surely, if something horrible happened to me, suppliers would be understanding and allow me to reschedule. I have learned that this is absolutely not the case. I will give examples that I know of first hand and will end each article with anecdotes from travel advisors that I work with directly.
Please keep in mind that I am referring to third party travel insurance in these examples, which is much more comprehensive than through a travel supplier. Do not buy the trip insurance offered when buying an airline ticket or vacation package. Contact me for help, even if you do not purchase your trip from me.
This week’s article is about what I consider the second most important reason to buy third-party travel insurance, Trip Cancellation & Interruption Coverage.
Most people think that there is no way they would not go on a trip, but we all know that some things are unplanned. Accidents happen. You need to be prepared in case an accident happens to you.
Reasons People Cancel or Shorten Trips
On December 23, 2013, I woke up barely able to walk. Sure, my back had been bothering me, but nothing to prevent me from getting around. After getting out of bed, I made it a few steps before passing out from the pain. An ambulance was called and I was admitted overnight and surgery was performed on Christmas Eve. We were scheduled to fly to visit my in-laws within a week of my surgery. We had to pay fees to change our flights since my recovery would not have allowed me to travel during the days after surgery. Luckily, we did not have hotels, cruises, tours, etc scheduled on the other side of those flights because we would have been too close to departure to receive a refund. Sometimes, if you are lucky, suppliers will allow you to re-book, but this is not a guarantee.
My emergency back surgery was a wake-up call for me and how quickly your life can be turned upside down. Not only could a health reason prevent me from embarking on a trip, but it could also cause me to shorten a trip. Either way, I would be covered with a travel insurance policy.
Someone Else’s Health
Not all trip cancellations involve you or your traveling companion’s health. Third-party travel insurance covers the health of you, your travel companion, immediate family members, and your business partner. Take, for example, what recently happened to an acquaintance of mine. He, his wife, and another guest were set to sail on a 21 day Mediterranean cruise. About six weeks before departure, his mother in law was diagnosed with cancer including a tumor on her brain. She was given a few weeks to live. Clearly, they were not going to leave during this time and thus had to cancel their cruise. This cancellation resulted in losing $11,000 because the cancellation occurred so close to the departure date. If this diagnosis had occurred while these people were already on their cruise ship, insurance would have paid for them to leave their cruise and fly home.
Travel insurance is not perfect. I recently dealt with Hurricane Dorian as it approached the east coast of Florida. My clients had purchased travel insurance, but were not allowed to cancel until the area where they were traveling was under a hurricane warning. I partially understand this because insurance companies can not have people canceling because there might be a storm. I own a vacation rental in Hilton Head, and I have actually had people ask if they could cancel a few days before a trip because rain is in the forecast. Um, no! However, when a hurricane is pointing directly at a location where people are scheduled to go and a hurricane warning will almost certainly be issued the day after they arrive, I do not understand why people would be expected to travel towards the storm.
The insurance representative I spoke to said my clients should submit a claim anyway because everything is handled on a case by case basis. However, after hours of back and forth, I was able to get my clients an extension on rebooking alternate dates with the resort they were scheduled to visit. They had changed their flights to not fly into Florida but then were evacuated from where they went instead, Savannah, GA. They were not able to get an earlier flight out of Savannah once the evacuation was issued and ended up renting a car one way home to Indiana. Not the fun weekend they had planned! They have submitted the claim to cover the cost of the one-way car rental and trip interruption expense for not using their return flight.
Remember that volcano in Iceland several years ago that disrupted flights for weeks? Travelers were stuck all over the world because of this and were forced to absorb many of the expenses associated with being gone longer than expected or changing flights to routes that could still fly. Those that had travel insurance had far less of a financial burden. There are many natural disasters in the news like wildfires and earthquakes, and travel insurance are covered when these types of events occur.
Jury Duty or Required To Appear In Court
If you are unable to leave for a trip because you have been served a subpoena or are not allowed to reschedule your jury duty, you are covered as long as you had the insurance coverage before you were notified.
I do not want to expand on this since it is too depressing. However, we sadly know this is a reality in the world we live in. If a terrorist action causes your trip to be delayed or canceled, then you will be covered by travel insurance.
A Few Examples of “Other Covered Reasons”
- Any pregnancy that occurs after Effective Date
- Your residence or destination being rendered uninhabitable for listed reasons
- A permanent job transfer of 250 miles or more
- Military orders
- Being involved in a traffic accident en route to the airport
- Involuntary employer termination or lay off and various other reasons involving your employer
- Your family or friends living abroad with whom you are planning to stay are unable to provide accommodations due to life-threatening illness, life-threatening injury or death of one of them
- Unplanned extension of school year
Medical Pre-Existing Conditions
Like with the Emergency Medical coverage, pre-existing conditions are only covered if the policy is purchased within 14-21 days of the initial deposit of trip. For example, I would have to buy a policy within 14-21 days of the initial deposit of a trip for my back to be covered as a reason to cancel a trip. I can not wait for my back to start bothering me for me to decide to buy insurance coverage after that initial window.
Something else to think about is cancellation or interruption due to an immediate family member’s pre-existing condition. Let’s say your parents are scheduled to watch your kids while you are away. Your dad had a heart attack several years ago but has been fine since. Shortly before you leave, your dad suffers another heart attack rendering you unable to go. If you had purchased coverage within 14-21 days of the first payment on the trip, you will be covered.
Even if the condition did not exist before you made the first payment towards a trip, you may still want to purchase within 14-21 days because something may come up between first payment and departure travel date. Let’s use my back as an example. Before December of 2013, I never had a serious back issue. It would not have been considered a pre-existing condition. If I had failed to buy travel insurance at the onset of trip planning, then my back issues occurred between then and the departure date, when I went to buy my travel insurance, my back at that point would be considered a pre-existing condition. Thus, it is always best to buy when you first make payment for a trip.
Cancel For Any Reason (CFAR) Coverage
Perhaps you want the ability to cancel for more than just covered reasons. Maybe you want to be able to cancel because a hurricane is heading for your destination but a hurricane warning has not been issued. Or maybe you have an older dog and you worry his or her health may prevent you from being able to go on your trip. There is a policy for that!
CFAR coverage is exactly what it says it is, but it does come at a premium. Not only does it cost more, but you will only be reimbursed at 75%. This product is not for everybody, but it is an option.
Credit Card Cancellation Coverage
The credit cards with travel perks have decent cancellation and interruption insurance. However, there are some pretty important differences. For one thing, pre-existing conditions are not covered. Also, the amount of coverage is much less with credit card travel coverage. Finally, the list of other covered reasons is far shorter than that of third-party travel insurance. It is always safest to buy a third party policy. However, if you are comfortable with the limits and restrictions of your credit card coverage, you can always buy a travel insurance policy with only emergency medical and evacuation coverage since virtually none of the credit card travel coverage includes emergency medical and evacuation coverage.
Anecdotal Examples From Other Travel Advisors
- A client fell and broke hip before their river cruise and her travel insurance allowed her to be reimbursed for the cruise.
- Clients were heading to the airport and the client’s mother in law got sick and wound up in the hospital. They had to cancel their trip and were reimbursed.
- A client fell off a ladder a week after the final balance was paid. It was all reimbursed thanks to travel insurance.
- The wife of a couple who were clients did not want travel protection but the travel advisor convinced her to purchase it. Her husband ended up having a serious car accident before the trip, his SUV turned over several times. He could not go on the trip. She called and thanked travel advisor for convincing her to take the insurance.
- A family of four was booked on a Royal Caribbean cruise and said they didn’t “need” insurance because they were “going no matter what”. Then, the wife’s brother died suddenly the morning they were leaving for their cruise. Of course, they did not go on the cruise. Since they did not have insurance, they lost a fortune on airfare from penalties. With the help of the cruise line representative, the travel advisor was able to get the clients a future cruise credit for a portion of what they spent, but their pre-cruise hotel would not refund the amount they paid.
- A client’s 25 year old son was diagnosed with cancer, and she was able to cancel.
- Bad weather in New York made clients miss flight to Italy. They lost a whole day of their honeymoon but were reimbursed $1500 for lost expenses.
- A honeymooning couple were going to Bora Bora and on the outbound, their flight was cancelled from LA to Paris. The airline paid for them to stay overnight in LA so they could fly out the next day, but they missed the first day at their resort in the over-water bungalow. On the return there was an airline strike and they had to leave a day early or risk having to stay two extra days. They opted to leave early. Their travel insurance reimbursed them from the missed hotel night at the beginning and the interruption that caused them to miss the last day of their trip. They ended up getting about $3,000 back which helped take the sting out of the missed days of their honeymoon.
As you can see, having travel insurance can give you peace of mind as you plan your upcoming journey. Hopefully, you will never need to use your travel insurance, but knowing that you are covered if something does go wrong allows you to relax when departing for your next adventure!