Even with Hurricane Dean taking aim at Cancun, Mexico, last August, Miguel Guillen wasn’t worried. After all, he had insured his vacation.
A quick call to his insurance company, Access America, left him with the impression that he’d get a full refund in less than two weeks. So as the Category 5 storm threatened to blow away his hard-earned getaway, “I was told to cancel my flight and file a claim,” he said.
Then the hurricane changed course, leaving Cancun unharmed. Guillen’s flight took off as scheduled, and his claim was denied. “It was unfair and it was inappropriate,” said Guillen, a computer engineer from Seattle.
Guillen’s story isn’t that unusual. More travelers are buying insurance, and more are encountering the difficulties that sometimes ensue.
Before Sept. 11, about one in 10 Americans insured their vacations. Now, about one-third of all trips are insured, according to industry estimates. That’s translated into big profits for insurers. The U.S. Travel Insurance Association, a trade group, estimates that the industry rakes in about $1 billion in annual revenues. In the past year alone, the association’s membership rose nearly 40 percent, to 56 member companies.
It may be a good time to be in the travel insurance business, but is it a good time to buy travel insurance?
Depends. Before taking out a policy, it’s important to determine whether you need protection at all. Experts say that with so many travel insurance products available, thorough research is critical — and that means reading the policy in its entirety, not just the brochure.
If it ever comes to a claim, a little insider knowledge of the process won’t hurt, either.
For example, Guillen’s denial was completely preventable, if he had only reviewed the policy before canceling his vacation, according to Access America (www.accessamerica.com). His policy would have covered him if his airline had canceled the flight because of a hurricane, according to company spokeswoman Caroline Platt. “His claim was denied because there was no disruption in service by the airline,” she said. “His plane took off as planned.”
But Access America, one of the largest travel insurance companies in the world, is concerned that Guillen and others like him may be left with the feeling that they are covered when they aren’t.
The company has started simplifying the language of its policies through a campaign called “Plain English.” Platt described it as “taking the pen back from the underwriter’s hand,” and using charts, tables and policies written in easy-to-understand language to clearly communicate what a policy does and doesn’t cover.
Would that have helped Guillen and travelers in a similar situation?
Maybe. Maybe not. It was a phone agent who assured him that he could cancel the vacation, not his reading of the policy.
What do you need?
He might have had the wrong policy. At least that’s the assessment of travel insurance expert Zain Jeewanjee, chief executive of g1g.com (www.g1g.com), an aggregator of travel insurance products based in San Jose, Calif. A “cancel anytime” policy might have saved the day for Guillen. That type of policy would cost two to three percentage points more than the average policy, which usually runs about 6 to 8 percent of the cost of the trip.
For example, TravelSafe Insurance (www.travelsafe.com ), based in Wyomissing, Pa., has what it calls a “Cancel For Any Reason” policy that offers up to 100 percent of a traveler’s nonrefundable trip costs in cash, depending upon the amount of penalty assessed by the trip or tour provider.
So who needs insurance? The general rule is that a major vacation purchase — anything over $10,000 — should be insured. But the insurance industry prefers to use another measure: If you can’t afford to lose it, you should insure it.
This isn’t to say you should buy the first policy you find. “The most basic advice I would give to someone looking to purchase travel insurance would be to ask questions,” said Rob Jordan, a regional sales manager for Travel Insured International (travelinsured.com) of East Hartford, Conn. And don’t wait. He says getting insured the day you book your trip ensures that you have the widest range of coverage.
Sounds simple, but in practice, it can be tricky. There are so many types of coverage, from trip interruption policies to products that include multiple components, such as medical evacuation, baggage coverage and collision damage insurance. How do you determine what you need? How do you know what you can afford to lose?
The only way is to actually read and research the policies, including the fine print.
Do your own research
Jim Crutcher, a retail sales trainer in Charlotte, N.C., carefully assessed the options before buying a policy for a cruise. He was disappointed with what he found. Like Guillen, he had a probable weather problem — specifically, he wanted to make sure a weather delay didn’t mean he would miss his cruise from Miami. A close look at one of the policies under consideration revealed that the weather would have to “cause complete cessation of services of your [airline] for at least 24 consecutive hours.”
“With the policy’s wording,” he griped, “I’m not sure we’re even covered.”
The services of a competent travel agent can help, but don’t rely on one exclusively. Agents can’t take the time to read every policy, and even though they take a commission of between 5 and 30 percent for the insurance they sell, they shouldn’t be expected to do your homework.
“Here in the United States, when we buy insurance, we throw the policy in the drawer and wait for something to go wrong,” said Dan McGinnity, a spokesman for AIG Travel Guard (www.travelguard.com) in Stevens Point, Wis. “And then when something goes wrong, we pull it out and ask, ‘Am I covered?’”
Instead, it’s vital to know you’re covered before buying the policy, according to experts. If you don’t, you could end up like Faith Frank, a loan administrator from Horsham, Pa. She thought she was covered by the insurance recommended by her travel agent when she missed her connecting flight after disembarking from a recent Princess cruise in Vancouver, British Columbia.
She had followed the cruise line’s instructions, leaving at 9:45 a.m. for a 1 p.m. flight. But there was a series of unforeseen delays. She missed her flight home and had to pay $1,900 for two new plane tickets. Frank said she filled out the paperwork, but the company rejected the claim and directed her to Princess for compensation. The cruise line also turned her down.
“Princess said they could not control what conditions would be like once we left the ship,” she said. “They apologized and said they considered the matter closed.”
Persistence pays off
Frank might have had her claim honored if she’d known a little about the inner workings of travel insurance, said Jeewanjee of g1g.com. For starters, most travel insurance companies have a formal appeals process for grievances. When a claim is rejected, that isn’t necessarily the final answer.
Sometimes the company doesn’t have enough information to make the right call. Sometimes it needs a little nudge. Once, Jeewanjee phoned an insurance company that had rejected a customer based on a preexisting medical condition, which is one of the most common reasons an insurance company denies a claim.
“I got on the phone with them and said, ‘Look, here are the real facts,’” he said. “And it worked. They honored the claim, which just goes to show you … the importance of the human touch.”
Nor should you underestimate the importance of being persistent when arguing your case to a travel insurance company. The industry’s claim denial rate is about 5 percent, meaning that the odds of being successful your first time around are pretty decent. If you get a “no,” don’t be afraid to ask again.
Better yet, buy the right policy to begin with, and you’ll get a prompt refund for your missed vacation the first time around.
Where to buy insurance …
G1G Insurance Services: Lets you browse a selection of policies, from medical and trip insurance protection plans for individuals, to group insurance. (www.g1g.com; 1-800-257-7718)
InsureMyTrip.com: Offers more than 100 plans from 18 insurance providers, but also publishes useful tips about travel safety. (www.insuremytrip.com; 1-800-487-4722)
SquareMouth: Offers online applications that help travelers “easily and instantly” compare
all the major travel insurance plans. (www.squaremouth.com; 1-800-240-0369)
Travel Insurance Center: Offers Policy Picker, a tool that helps you compare travel insurance packages. (www.travelinsurancecenter.com; 1-866- 979-6753)
Travel Insurance Services: Offers a variety of products, from annual travel medical insurance to medical coverage for frequent trips. (www.travelinsure.com; 1-800-937-1387)
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{ 9 comments… read them below or add one }
If Access America told Miguel to cancel – and Access is not the carrier – then he has a claim against Access America – reliance is a sufficient basis to create a claim. Miguel lost something of value the result of his reliance on someone who should have known. It is clear that Access is not an insurer.
Access is a broker – here are a few questions – are they licensed to sell insurance in Miguel’s state? If not – he can get a refund of the premium paid AND they cannot defend themselves in a lawsuit.
Access is the agent of the insurer – if he can PROVE Access told him to cancel [proof being some evidence that he called from their records and see if the call center maintains a recording or customer record of the nature of the call, then he probably wins since NO ONE at Access, BCS or Jefferson Insurance will remember the call or be able to testify as to its content] then, since Access is the agent of the insurer – he wins again. He may even win solely against Access – but they have the money to pay for a couple of airline tickets. . . .
Travel insurance is worthless in my book since absent accident or death or an actual calamity – they do not pay. I had one insurer several years ago tell my client that because he had high cholesterol that the heart attack he had was a pre-ex. . . . trust me -they do not make any money paying claims.
Free Legal Advice – read the fine print before you file a claim and make sure the facts in your claim do NOT give them the ability to deny it. The facts need to be basic. NOT detailed. Detailed is like telling the cop why you were speeding. . . .
I’ve never purchased travel insurance, but I’m organizing several tours in the New Year and I was wondering, do you know of any travel insurance companies that specialize in tour insurance? Since our average tour will be about $3,000 I want to be able to recommend the best to my fellow travelers but because of the complexities of tours I am worried about finding an insurance company that will cover all aspects of the tour… any suggestions?
Hi Chris,
Good shake-it-up article on travel insurance. It is a very complicated issue as your article illustrates. Almost all policies I’ve seen come with a “free look” period of about 10 days, during which one is a fool not to read the entire policy and comprehend it (or call the maker for clarification). Cancel for any reason policies tend to cost quite a bit more and aren’t (IMHO) a reason for not reading every word. Don’t rely on representations made by the agency you bought from, as they aren’t the insurer.
We buy insurance for some of our trips, primarily for the following reasons: significant money won’t be refundable (e.g. cruise), health/accident insurance (almost no U.S. insurance covers you outside of N. America), and health issues for family members not traveling (read pre-existing clauses).
I could go on and on, and perhaps I’ll be inspired to write a follow-on article.
“…left him with the impression…” is the operative phrase here. Impressions can be wrong. As Joe F. pointed out, “…if he can PROVE Access told him to cancell…then he probably wins.” If he can’t prove it, he doesn’t have much of a chance, because it would be his word against that of someone at Access America.
Lots of good advice in the rest of the post and interesting comments too.
Claire @ http://travel-babel.blogspot.com
Claire – youse is missing da point. Proof comes from testimony. Who testifies for Access America that they did not tell him to cancel? The ONLY person is the person who took the call – or the corporate record and notes of the call. Otherwise they testify about corporate policies – and then it becomes who is more reasonable and who a judge or jury belives. Reliance is the issue – not facts at some level. . .
If an insurance agent ‘leaves a client with the impression that have coverage’ then, in 49 of the 50 states, they have coverage. Sometimes from the carrier, and sometimes from the E&O coverage of the agent- but coverage they doth have. The standard is would a reasonable person believe under the totality of the circumstances that they were covered and would they take steps that the insured took . . . .
I say yes and yes, assuming that under good cross examination that Miguel’s story stands up . . .. I see lots of people who conclude one thing based on what is said, and what is said is a far cry from that conclusion in the cold light of day. . . .
I’m an insurance agent. Most travel insurance companies have 1-800 numbers that you can call to ask questions about your policy. My baby sister moved to France and needed medical insurance to get her visa. I called the company my brokerage represents and didn’t like the answers they were giving me or the coverage they were offering. I called the company that my old brokerage represents and they were able to give me a quote over the phone. Coverage was better and price was the same. Called the sis and she said she would take it. Now of course she had me to know what questions to ask. They both had a clause in them that said if the policy was cancelled prior to her departure date she would received a full refund less a $25 administration fee. That meant she had more than a month to review and read her policy.
It all comes down to do your homework. Don’t assume that what they are offering you is exactly right. I chose to give up the commission on the policy to make sure that my sister was properly covered.
hey chris. i was inspired by your post, so much so that today i did a post on our blog on shopping for travel insurance. aloha, jeff
Do NOT buy from AccessAmerica. Regardless they will not pay. Tried to make a claim. They made me jump through paperwork hoops, then the onus is on you to remember to continuously check the web site for statusas they will not contact you. You’ll find out your claim is rejected.
AccessAmerica is a scam. A rip off. Plan accordingly and don’t waste your money on tme.
TravelSafe insurance company has very poor claims service. hoping i wil actually see claim proceeds. first claim submission by fax “not received” although i have a fax receipt. refaxed and confirmed receipt by phone. more than 9 days and claim not assigned to anyone for review. telephone assistance gives runaround every day – after 9 days from original receipt, still get “just received your claim yesterday…takes time” . so i haev a medical emergency that requires my wife to be hospitalized, trip cancelled, and lots of out of pocket med costs and Travelsafe takes their sweet time. i’m sure the next i hear is they need more info even though they received 40 pages of documentation from hospital, doctors, etc and copiues of all payments and travel contracts.