March 29, 2010

Don't Be Tripped Up by Travel Insurance

It’s not only a waste of money to pay too much for travel insurance, but if it's the wrong type of policy, a family can still end up losing their entire vacation investment should they have to cancel a trip unexpectedly. And as I have pointed out before, often the insurance provided by a travel supplier, such as an airline or cruise line, is not the best choice for travelers.

As with any purchase, the keys are to know what you need, and understand what you are buying. That means actually reading through the policy so that you understand what is and isn't covered, rather than assuming it will cover you ‘no matter what.’ The most common mistake I see travelers make is purchasing insurance because they have a specific concern, such as a family member who is ill, or an uncertain employment situation, but the policy they chose specifically excluded these situations. Hurricane coverage is also frequently misunderstood. Your resort may offer a "Hurricane Guarantee" but they are certainly not going to reimburse you for missed flights!

To avoid purchasing the wrong policy, read through the list of benefits to verify that they cover anything that might cause you to cancel your trip. (This type of detail may not be in the brochure. You need to find a dcoument called Description of Coverage, Schedule of Benefits, etc.) For example, a basic policy may not offer coverage for work-related reasons, which is often needed by lawyers, doctors, and business owners. This is where insurance sold by travel suppliers may fall short, and they usually charge more to boot! But with a third party insurance policy, you can purchase an inexpensive upgrade which will provide this additional coverage.

It helps to understand insurance terminology, and many policies provide a glossary. Important definitions to check are “trip delay,” “trip interruption,” “family member,” and “pre-existing condition.” For example, does trip delay coverage start after 3, 5, or 12 hours? Is flight cancellation due to inclement weather covered, or just for mechanical problems? Does the policy cover non-related traveling companions and domestic partners?

Here’s one scenario I learned about recently. Let’s say a group of friends who are not related book a cruise together, and purchase insurance. A few weeks before the trip, when most of the cruise fare is nonrefundable, one family has to cancel due to a medical emergency. Their insurance policy covers them, but can the rest of the group also cancel and get a refund? If they purchased the cruise line insurance, probably not. However, if they had purchased a third party travel insurance policy which includes coverage for traveling companions, then the rest of the group could cancel as well.

No matter how you book your vacation, consult a professional when buying travel insurance. Any travel agent should be happy to help you sort through the various options to select the policy that is right for your family. For more information, contact Suzette Mack at suzette@family-treks.com.

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