Should You Buy Travel Insurance?
Given the uncertainties of travel now, buying insurance (or considering it) is a better idea than ever.
The stateside terrorism attacks signaled a redefining moment for U.S. travel insurers. Prior to September 11, many policies offered reimbursements to travelers for terrorism-related disruptions in foreign cities only, if they covered terrorism at all. However, in response to the unprecedented logistical and psychological impact of recent events, travel insurers have been reviewing their policies. Travel Guard International, a leading private insurer, retroactively expanded its policy to cover the domestic incidents of September 11.
SIGN OF THE TIMES
Going forward, it's impossible to know whether travel insurers can afford to remain so accommodating. Still, in the past few years, Travel Guard's sales have shown increases of about 30 percent annually; sales were up well before the recent attacks, and in the weeks that followed they remained steady even as travel declined. Industry officials note that the United States still lags behind Europe, where the majority of travelers—upward of 80 percent by some estimates—take out insurance. Among U.S. travelers, the figure is between 10 and 15 percent.
According to Dan McGinnity, a spokesman for Travel Guard, travel insurance costs about 5 to 7 percent of a trip's value and generally can include five components: 1) trip cancellation and interruption coverage; 2) trip delay coverage; 3) emergency medical expenses during travel; 4) emergency medical evacuation; and 5) round-the-clock medical and travel assistance. Typical cancellation policies provide refunds for the nonreimbursable portion of a trip when cancellation is due to reasons such as medical problems or the death or illness of a family member. "It's for the stuff you don't have control over," says Beth Godlin, senior vice president for marketing and sales at Access America, a travel insurer. Most third-party insurance is sold through travel agents, though it's also available directly from insurers.
There are several key differences between policies offered by third-party travel insurance companies and those offered by travel suppliers, i.e., cruise and tour operators. Travel suppliers rarely protect you from their own failures. If you buy directly from a cruise operator that happens to go belly-up, chances are you won't be covered under the operator's insurance. And operators often don't provide waivers against pre-existing medical conditions. Finally, most travel suppliers don't offer terrorism coverage—though many were more flexible after the September 11 attacks.
Travel Guard now allows such coverage for any destination where an incident has occurred within the past 12 months—which, obviously, now includes the United States. Trips are covered for cancellation within 30 days of a terrorist attack. Other providers, including CSA Travel Protection and Access America, are reviewing their terrorism coverage. Given the circumstances, it's understandable that the rules are changing from moment to moment. "We look at each claim—we really want to be sure the intent of the coverage is considered," McGinnity says. "It's case by case."
The American Society of Travel Agents advises its more than 26,000 members to tell clients about trip insurance. "Many people aren't aware that they have that option," notes ASTA spokeswoman Kristina Rundquist. Most policies come with a "free look" grace period, so customers can read the fine print before the sale is finalized. "It's insurance," says Godlin. "Some things are covered, some things are not covered. Make sure you read the policy. That's the best advice."
Travel Guard International, 800/826-1300; www.travelguard.com. Access America, 800/227-9384; www.accessamerica.com. CSA Travel Protection, 800/348-9505; www.csatravelprotection.com. American Society of Travel Agents, www.astanet.com.
If you haven't bought insurance, canceling at the last minute can be expensive. Penalties vary, but the following will give you a general idea of what uninsured travelers face.
Airlines The policies depend on the type of fare you've bought. Rescheduling a non-refundable ticket usually costs $100.
Some require as much as three days' notice; others give you until 6 p.m. on your intended arrival day. After the deadline, you'll be charged for one night's stay, plus tax. (This policy is likely to be more strictly enforced if a convention is being held in your hotel.)
You're required to give notice anywhere from 72 hours to a full week before arrival. The penalty might equal the price of one or two nights, plus tax. For Christmas reservations, however, some resorts charge 100 percent of the booking if they haven't received 60 days' notice.
The schedule of penalties begins 75 to 120 days prior to departure. The fee for canceling increases incrementally over this period, up to the full fare if you cancel from 14 to 30 days in advance.
Normally, you must give two to three months' notice; the closer to the departure date, the more you'll pay. Most operators charge 100 percent for canceling from 14 to 30 days before your tour.