My cruise line canceled the trip — so why should AIG keep my money?

When James Pfeifer’s cruise is canceled and a full refund is issued, does he stand any chance of getting a refund on the premium paid for travel insurance?

Question: A cruise I booked on Regent Seven Seas through the Northwest Passage in July 2017 was canceled by Regent due to logistical reasons. My travel agent indicated that Regent subsequently decided that July was not a good time to go through a potentially ice laden passage but did not reschedule the trip. I purchased travel insurance directly from Travel Guard for $6,551 in May 2016.

After cancelling, Regent refunded 100 percent of my deposit. Travel Guard refuses to refund my insurance premium under the auspices of their “Fifteen Day First Look” rule (that is, you must cancel within 15 days of purchase).

I contend that their policy is now valueless as it has no exposure. Their policy references “Cancellation by the Insured”. I am the Insured and I neither canceled the trip nor had any control over the cancellation. Travel Guard instead issued a voucher for insurance on a future trip.

Can you help me persuade Travel Guard to refund my money? — James Pfeifer, Tucson, Ariz.

Answer: Your case is a perfect example of whether an insurance company, with a contract and all its fine print in hand, can choose to do the right thing for a customer.

Insurance companies are skilled at keeping customers’ money through specific contract language, exclusions and the occasional ‘gotcha.’ That’s what makes insurance cases so tough for consumer advocates to shoulder.

Even less promising are cases where a customer hopes for a return of an insurance premium. For example, when rental car customers decline optional coverages but are erroneously billed for the coverage, the insurance carrier’s defense is often that the renter benefited from coverage, in the sense that had damage occurred, a claim could have been made on the policy.

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Tricky, indeed.

Here, however, Regent called off the trip, refunded all of your money and didn’t charge you any penalty. Since you didn’t cancel and never filed a claim, there is nothing that TravelGuard could ever compensate you for.

And since the insurance game is one of risk, you’re also correct that TravelGuard, underwritten by AIG, no longer has any exposure with regard to this trip.

By the way, my first question to you was to clarify that you actually paid $6,551 in insurance premiums, and not for the cruise fare. After I got up off the floor, it suddenly seemed a smart decision to have invested in trip protection for such a big financial investment.

When you wrote to AIG, the company cited its “Fifteen Day Look” policy, which states, in relevant part:

You may cancel this insurance by giving the Company or the agent written notice within the first to occur of the following: (a) 15 days from the Effective Date of your insurance; or (b) your Scheduled Departure Date. If you do this, the Company will refund your premium paid provided no insured has filed a claim under this Certificate.

In light of the facts surrounding your trip’s cancellation, AIG told you it would issue a voucher valid for two years for use on a future trip. In that way, the company keeps your cash and if you don’t travel within that time frame, it makes pure profit.

Your appeal to a supervisor didn’t get you very far, so you appealed to us for help. You didn’t like their proposed voucher, because per its terms and conditions, it had to be spent on a single trip. That placed some risk on you. In other words, if your new cruise cost less than the canceled cruise, you’d lose money in the process, a solution you found to be unreasonable.

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I agreed. I wrote to AIG on your behalf and got no response. When I wrote to a second contact at the company, AIG issued you a full refund in the amount of $6,551.

Jessica Monsell

A writer and natural advocate, Jessica joined our consumer advocacy effort following a decade of work on behalf of air crash victims at one of the nation's largest plaintiffs' law firms. She has lived in Europe and Asia, but now calls Charleston, S.C. home.

  • mbods2002

    You guys are great!

  • Chris Johnson

    $6,561 for travel insurance? How much did the cruise cost? That seems like an awfully pricey policy, unless she was bringing a whole bunch of relatives together on the cruise.

  • Inquirer1111

    Whoa, that is way too much for travel insurance. Normally, if you don’t need it because they cancelled the trip, i’d expect no refund. Surprised you got one. How much did the trip cost?

  • AJPeabody

    Buying an uber-expensive cruise in retirement makes sense if you have enough money and don’t want to leave it to your estate. It’s the ultimate in use it or lose it.

  • Lindabator

    Insurance is based on cost of total trip, so you cannot say what is “too much” for a luxury cruise – I’ve had insurance policies top this amount for my luxe clients, and have had them move the insurance to another booking several times (but usually luxe clients are travelling more than once every 3 years)

  • AAGK

    Wow! You guys are amazing. I’ve never heard of such a pricy travel insurance policy but I assume it made sense. Mr. Pfeifer surely deserved a refund. AIG didn’t do anything wrong as it was ready and able to cover this trip. Royal made the coverage moot. From an equity standpoint, Royal should have reimbursed the premium along with all foreseeable expenses (airfare, insurance, not swimsuits, etc), but no complaints that AIG kindly did so.

  • PsyGuy

    WOW, that is one very expensive travel policy. I too was under the impression that the cost cited was for the cruise not the insurance premium. Very happy you got your money back.

  • Kairho

    $6562 for travel insurance is not unreasonable, especially considering we know nothing about how long the cruise was nor how many people Pfeifer was bringing along. A fair assumption of insurance pricing is roughly 6% of the total price. So Pfeifer is looking at about $100k total, plus or minus.

    For comparison, a quick look at Regency’s website show a base price of $25,999 for a 40 day Asia cruise in January (four people on that nicely hits $100k). Their round-the-world cruises start (that’s START) at $55k. Silversea has an 18 day Antarctic cruise at $37k in a suite. So it’s not all that difficult to imagine a cool $100K dropping.

  • Sharon

    The cruise line was Regent Seven Seas, not Royal. I can’t imagine Royal (Caribbean) has any cruise offerings that would be expensive enough to trigger an insurance policy for more than $6,000.

  • Extramail

    Shame on AIG. I often wonder how many other people have a similar problem with an issue raised on thus site and they just accept what they are told by the company doing wrong. Especially in this particular story. How much money did AIG keep because other passengers didn’t contact Chris’ team?

  • AAGK

    I’ve never beeen on a cruise so I have no idea. I will edit my post.

  • lvswhippets

    Insurance is insurance. Do we get refunds from health or car insurance if we don’t use it. That is how I see it anyway. I insure for travel on cost of trip. Never have used it but glad I had it. But would hate to be in these folks situation

  • Sharon

    We do quite a bit of cruising, and would probably very much enjoy Regent, but not at their prices!

  • cscasi

    Good points. I am glad he got that huge amount back.

  • The Original Joe S

    ” For example, when rental car customers decline optional coverages but
    are erroneously billed for the coverage, the insurance carrier’s defense
    is often that the renter benefited from coverage, in the sense that had
    damage occurred, a claim could have been made on the policy.”

    Here’s the same logic:

    A man and his wife went on vacation to a hotel. When he checked out, there was a charge for using the TV. He told the manager that he didn’t use the TV. The manager replied that it was there for him to use if he wanted to. The man then said he’d charge the manager for making love to his beautiful wife. The manager said he did no such thing. The man replied that she was there for him to use if he’d wanted to. The manager got so flustered he refunded the TV charge.

    The man told this story over and over at parties while his wife rolled her eyes. So, next trip, he tried the same thing.

    “The TV was there for you to use if you wanted it.”

    “I’ll then charge you for making love to my wife.”

    “Ok, ok, I’ll pay you, but keep it down please! I’m new here, and you’re apt to get me fired!”

  • The Original Joe S

    Reading of the will: I, being of sound mind, spent it ALL! Nyah-nyah!

  • The Original Joe S

    Let’s say you are gonna buy a house, so you get an insurance policy to cover the house. You pay the premium in anticipation of closing on the house. THEN, something goes bad, and the deal is not completed. Should the company keep your premium for a policy which never applied to the house which you never possessed? The cruiser never set foot on the boat. Same logic.

  • Carchar

    In September 2015, I purchased travel insurance with AIG Travel Guard for a birding trip to Honduras. I always buy insurance right after booking a foreign or prepaid group trip, so as to waive any preexisting conditions. The trip was to have occurred in March of this year, but it got cancelled in November of 2015 for lack of interest. I had paid $300 as a down payment for the trip, which was fully returned, but $400+ to insure the full trip. Travel Guard used to have a 60-day cancellation policy, but had evidently changed to a less customer oriented one.

    I wrote to them asking for a refund minus a transaction fee and they told me that it was non-refundable. I wrote back saying that I had paid more to insure my trip than to the tour company and that I was required to insure right away in order to waive preexisting conditions. Now, there was nothing to insure. Perhaps because I was a fairly good customer of theirs, a policy each year for a dozen years, they said they would “make an exception” and refund my payment, minus a small fee. I did write them back thanking them, but I also told them that I thought that keeping all of the money, when there was nothing to insure, was not good customer service. Soon we will need insurance policies for insurance policies. Yes, I still insure with them and hope my trips don’t get cancelled.

  • ArizonaRoadWarrior

    Insurance is based on 1) cost of the total trip (my wife had a patient at the hospital where he and his wife spent $ 100,000 for a cruise…it was over 90 days long, around the world, etc.); 2) age of the traveler (most travel PROTECTION plans do not); 3) optional features (waiver of pre-existing conditions); etc.

    Why is car insurance is expensive for teenagers…greater probability of having an accident. Why is life insurance inexpensive for 20 YOs…a low probability of dying. Why is life insurance expensive for a 70 YO…a greater probability of dying.

  • ArizonaRoadWarrior

    I will agree that most travel PROTECTION plans are a ‘scam’; however, there are several benefits and values of a travel INSURANCE policy.

    In regards to this situation, there are missing facts especially 1) when was the cruise cancelled by the cruise line and 2) when did the OP filed the request for the refund.

    The OP purchased the insurance in May 2016 and the cruise was in July 2017.

    According to the terms in the policy, the OP could cancel the policy with 15 days from the Effective Date of the policy (May xx, 2016) or 15 days from the (July xx, 2017).

    If the cruise line cancelled the cruise sometime within the first 15 days and the OP filed a request within the first 15 days then wet noodles to the insurance company.

    Since it was NOT disclosed in the article, it is my guess that the cruise was cancelled after the 15 days from the Effective Date of the Policy (May xx, 2016)…the OP could request a refund within 15 days of the departure (July xx, 2017) but who want to wait a year for your money even when the bank saving rates are around 1%.

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