The unsettling truth about travel insurance

Mike Brake /
Mike Brake /
CSA Travel Protection’s Web site promises that its policyholders can “travel with confidence,” so when Norma Tarrow’s flight from New York to San Francisco was canceled after the recent Asiana Airlines crash landing, she felt protected, she says.

But she wasn’t, at least not in the way she thought. When she filed a claim for the $565 she had to pay for a new flight when her trip was interrupted, her insurance company turned her down, saying that the flight cancellation wasn’t a “covered reason” under her policy.

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Her request didn’t seem unreasonable to Tarrow. She was in a wheelchair recovering from surgery when the aviation disaster left her stranded in a JFK terminal. Her airline told her that the soonest it could fly her home was two days later, so she asked her son to book a ticket to San Jose on another airline. If ever there were a time to invoke insurance, it was then.

“They weaseled out of paying a claim,” says Tarrow, a retired college professor who lives in San Mateo, Calif.

A new study by the Washington-based advocacy group National Consumers League (NCL) suggests that the travel insurance industry profits from customers like Tarrow by using misleading language to lure them into buying a policy, including making broad promises of traveling with “peace of mind,” but denying too many claims based on the fine print.

It’s particularly critical of the airline industry, which it claims enjoys a symbiotic relationship with travel insurers, making hefty commissions on the sale of useless policies. “Gouging consumers whose plans change because of a family illness or other unforeseen events is not a good business model,” says Sally Greenberg, NCL’s executive director.

CSA said that it didn’t do that when it denied Tarrow’s claim. In a letter explaining its decision, it said that her $788 policy, which had insured a European riverboat cruise she’d just taken, “only provides benefits if your loss is caused by an event listed in your description of coverage,” which included cancellations resulting from inclement weather, a labor strike or the mechanical breakdown of an aircraft on which the insured is scheduled to travel. “The reason for your loss does not meet the terms of the policy,” a representative noted.

This gap between a traveler’s expectation and the realities of travel insurance is hardly new. But the NCL’s conclusion that the chasm appears to be widening at the expense of the traveler is noteworthy.

The study says that while overall travel insurance sales are rising, surging 46 percent between 2006 and 2012 to $1.9 billion, so are airline change fees. The domestic airline industry collected more than $2.5 billion in cancellation and change fees last year, up 176 percent from 2007, according to the Department of Transportation.

Air travelers are left with two options to avoid a $200 ticket change fee: book a refundable ticket (the cheapest costs 350 percent more on average than the cheapest nonrefundable ticket, according to NCL’s research) or buy travel insurance. These policies are often sold online under high-pressure conditions, at the conclusion of an airline reservation and without adequate notification of the coverage terms, according to NCL. As a result, complaints about denied insurance claims for airline tickets are common, it says.

The US Travel Insurance Association, a trade group for the travel insurance industry, says that some of the report’s findings are flawed. “There’s no correlation between the increase in travel insurance sales and airline change and cancellation fees,” says the association’s spokeswoman, Linda Kundell. “That’s a totally erroneous conclusion.”

The growth in travel insurance sales is linked to stepped-up industry efforts to market its product, increased consumer awareness of the benefits of travel insurance, and a rise in travel spending, according to Kundell. But she didn’t disagree with all the NCL report’s conclusions. She says that the travel insurance industry is always concerned with the way its products are marketed online, such as on airline Web sites. Some airlines, for example, require passengers to accept or decline trip protection before they can book a ticket online, which to travelers often seems like a hard sell.

The NCL is calling for “common sense” reforms, including an industry pledge to market travel insurance in “clear, non-misleading” language. It wants the insurance industry to disclose its claim denial rate. It’s also calling for congressional oversight hearings to review the relationship between rising change and cancellation fees and the aggressive marketing of cancellation insurance.

The organization wants to reform the way airline tickets are sold, too. Rather than charging a flat cancellation fee, as most airlines do, NCL is proposing a tiered fee schedule based on the proximity of your travel date. Flights canceled or changed five to 10 days prior to the departure date should incur no fee, and airline tickets should be transferable.

It’s difficult to argue against any of the NCL’s suggested measures. Consumers would benefit from clearer policy language and from knowing the odds of a claim denial. And unless you’re an airline insider, it’s hard to justify the current fees and fare rules that render most tickets worthless when you try to change them. Even though some industry observers claim that the study doesn’t persuasively connect the dots, the conclusion is hard to avoid: This issue certainly calls for a little congressional attention.

By the way, Tarrow’s appeal didn’t have a happy ending, even after I took up her case. CSA stood by its decision.

“We are very sorry that Ms. Tarrow felt frustrated when her claim was denied,” a company representative told me. “We consider this case closed.”

The lesson? Take your time when you buy travel insurance and make sure that you understand what is — and isn’t — covered. Read the fine print. All of it. If you don’t understand something and have a question, call the insurance company before you buy a policy so that you won’t get stuck with a bill you didn’t expect.

Oh, and don’t believe all the ads about traveling with “peace of mind.” Unfortunately, the reality may leave you unsettled.

Does travel insurance come with too many restrictions?

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85 thoughts on “The unsettling truth about travel insurance

  1. I’ve never purchased travel insurance so I can’t comment, but I like the NCL’s suggestions. Change fees are punitive fees which in general are not enforceable and against public policy. They should be staggered based upon the proximity of the travel date. Airline tickets should be transferable.

    I know this sounds strange coming from me, but airlines operate an oligopoly. That’s a strong justification for consumer protection laws with teeth. Will there be fraud? Yes. But it’s better than this crazy system of draconian laws. Only an industry with monopolistic powers could impose rules which penalize you if you only use part of the product.

    1. “Change fees are punitive fees which in general are not enforceable and against public policy.”

      All evidence, via decades of change fees being charged, to the contrary? If they were unenforceable, wouldn’t some judge and/or the Feds have noticed by now? (That said, I agree that current change fees do need to be reworked.)

      And I don’t think you really want airline tickets to be transferable. That would lead to leisure fares being much more expensive (and business fares dropping.) That doesn’t sound so bad until you realize that price-sensitive leisure travelers would travel less. It’s a lose-lose-lose situation: Leisure travelers get higher prices, airlines get reduced cashflow, business travelers get reduced schedules (because leisure travelers aren’t taking up as many seats as before.)

      1. I also think that having all non-refundable airline tickets be transferable would go a long way to solving the current consumer-rights mess. Here in Arizona, all event and game tickets are freely transferable, and everybody loves the system. If something comes up and you can’t make it to the ball game you can advertise your ducats in the paper or sell them to a ticket broker. Special areas are set up outside sports arenas so you can get tickets at the last minute. And no, there is no tendency for speculators to snarf up all the tickets to drive up the prices. Tickets are a time-limited ‘wasting asset’, so buying for speculation is just too big a risk. Brokers make their money on the bid/ask margin.

        I think the real reason that airlines won’t agree to transferability is that they make extra money on tickets that are never used.

        1. For sporting events, there’s essentially a single “market price” for any given ticket. (And seriously? There are no price-spiking scalpers in Arizona for big events with limited capacity? I can get a ticket to see the Rolling Stones at nearly face value a couple of days after they go on sale? I highly doubt that; there’s nothing magic about the Arizona ticket market vs. other states that do not ban scalping that would somehow scare them and their ticket-buying bots off.) And yes, outside selling tickets to badly sold-out events, ticket brokerage is not a particularly lucrative business.

          For air travel, there are two distinct markets: Leisure travelers (who are price sensitive, book in advance, and generally do not change travel plans) and business travelers (who are far less price sensitive, book later, and often change their plans.) If airline tickets were freely transferable and leisure vs. business fares stayed constant, there would be rampant arbitrage in fares, and much equalization of the fares charged to the two markets. After all, on any given weekday, it’s a pretty good bet that there will be quite a few people that need to get from NY to LA. A ticket broker could make a pretty penny buying a nonrefundable “leisure” fare six months in advance and selling it to a business traveler that needs to get to LA tomorrow (charging a business fare.) Airlines aren’t stupid and would raise leisure fares (and drop business fares) to discourage this practice and capture the money for themselves.

          Yes, airlines do make some money on tickets that are never used, but even Southwest (with their zero change fees, and therefore little revenue due to abandoned tickets) won’t let you transfer reservations.

          1. Since airlines have never tried making non-refundables transferable, that “disappearance of leisure fares” thing is a talking point being echoed in a vacuum.

            And Southwest isn’t under as much pressure to make its tickets transferable because it doesn’t have change fees. The problem doesn’t really arise.

          2. Until just last year Southwest allowed every passenger to effectively transfer any ticket to any other traveler. You couldn’t actually do a name change on an existing ticket, but if you didn’t use your ticket the funds would be available for you to apply toward any new ticket purchase. Now, since they are becoming more and more like every other airline, you are restricted to using the funds only for a new ticket for the same passenger.

            Frontier currently allows name changes on any ticket for $50. I have never tried this so I don’t know how much of a change is allowed, but their web site doesn’t say it can’t be a completely different name. This would make the ticket transferable.

            So, having transferable tickets is not impossible in the airline world. It just is more financially advantageous for the airlines to not allow it when you have infrequent flyers stuck with a ticket credit that will most likely expire before they fly again.

          3. Transferring ticket credit is VERY different from transferring the ticket itself. Transferring a credit is no big deal, but transferring the reservation for specific flight at the price you paid? Nobody lets you do that.

            The Frontier Name Change doesn’t work like you think it does. At the time you change the name, you have to also pay the fare difference between the current price and what you paid originally (in addition to the Name Change fee.) So, in pracitce, it’s just a ticket credit transfer with the additional restriction of having to pay a change fee if you want to use it on a different flight.

          4. Southwest used to allow the ticket credit transfer to a different traveler, they no longer do that at all. That is the point I was trying to make. And I agree it is not an actual transfer of the ticket itself. I remember the good old days when WN just sold you a book of flight coupons for travel between specific airports and all you had to do was turn in a coupon to get booked on the next available fight where you were going. So at the place I worked, we were just handed coupons when we had to fly somewhere WN went.

            Frontier has changed its name change policy since the last time I looked at it and I was not aware of the additional airfare requirement. As I mentioned, I have never tried to do a name change with them so I was unsure of the whole process anyway. But at least they do allow a name change where every other airline I am aware of won’t even think of allowing it.

          5. It leads to far too many cases of fraud. Sorry – these new low cost carriers haven’t been hit over the years like the legacy carriers have been, but even Southwest has changed its rules, due to abuse.

          6. Tickets in the old days WERE transferable – hence the reason there is the problem – ticket brokers used to buy up large amounts and leave the public with full fares – something to REALLY complain about.

          7. Airfare consolidators? No, not really. They buy super-restricted “bulk” fares well in advance, but those tickets are generally unsuitable for business traveler use. They’ll use inconvenient connections, long layovers, no FF miles, no changes (or truly crazy change fees), unpopular flights leaving at strange hours, etc. Flights of the sort where they are usually quite empty, and the only reason the airline runs the flight at all is either because the hold will be stuffed to the gills with cargo, or because they need the plane somewhere else for a flight they actually do want to run…

            You generally won’t find decent consolidator fares for well-traveled routes at convenient travel times.

          8. No always true – its just that they have limited tickets at that price in the LOWEST classes of service – so as they sell out, they see an increase in pricing as well. BUT if you know who travels where regularly, you can get a pretty good deal booking farther out. AND NOT ALL ARE AS RESTRICTIVE AS YOU THINK. 🙂

          9. No – consolidators get special pricing upfront – and their numbers in each category are limited, which is why you may not ALWAYS get the best rates from them.

          10. Southwest has, in the past, allowed my husband and I to transfer tickets that weren’t used to one of our kids wanting to come home for some reason. It takes some tap dancing, but it can be done. No other airline has allowed us the privilege of using our tickets for our pleasure.

          11. We did pay a difference, but it was a $2.50 change fee plus the difference in fare, which we expected. The one I recall the best was a difference of around $100, which one of our kids paid us back for later. We got full credit from them for the price we’d paid for the original ticket.

        1. Again, simple economics leads one to the inescapable conclusion that should deeply discounted-fare tickets be transferable, then the airline industry must find a way of making up for lost revenue. When you eliminate $3 billion of annual fee revenues (including cancellation and change fees and baggage charges), how does one expect airlines to make money? From other fees or other charges? From higher fares? From filling more seats?

          With all US airlines’ load factor at 87% in June in spite of rising capacity (+2.0% in available seat miles), the airlines industry is not flying with readily available empty seats. (DOT statistics) Considering this load factor is for 24 hours every day of the week and sometimes serving “thin” or marginal city pairs, this is at effective capacity.

          When you create one revenue hole for the airline industry, it must be filled with another source with a similar net profit, unless there are other efficiencies or increased sales because of empty seats.

          So every blogger can theoretically challenge this fee or that. They can advocate fully refundable tickets or transferability. They can rant that baggage fees are deceptive and a scam. But the fact remains, the revenue must come from somewhere. Almost 34 years since airline deregulation, every major domestic carrier has gone through bankruptcy to improve productivity and lower costs. Where are the efficiencies to be gained in such a competitive market?

          According to Airlines for America, formerly the Air Transport Association of American, fares (not including fees) have dropped on an inflation-adjusted basis 16.4% in the period 2000-2011. When you include the fees, they have dropped 12%. So fares, even including all the fees and charges, are a bargain.

          Over a thirty-year period, fares including fees have dropped almost by half on an inflation-adjusted basis. What else in your family budget has dropped by half in inflation-adjusted cost in the past 30 years?

          Deregulation has done a magnificent job lowering costs, increasing efficiencies and improving the overall quality of air transport, including such measures as safety and more flights serving more city pairs on a nonstop basis. Speed and safety are the essential elements of any transport method, and the airline industry has increased these while costs have decreased. Start regulating the airlines’ basic market mechanisms of revenue by re-regulating fees and charges, and then you begin the path back to a regulated and inefficient marketplace.

          Everyone seems to want something for nothing. You simply cannot pay less in fares while the tickets can be changed willy nilly, transferred at will, and include all baggage you wish to carry. Ain’t gonna happen in this lifetime or next.

          1. Lets stick on topic instead of ranting.

            My question was regarding specific assertions made by Sirwired. He asserts that leisure travel fare (fares, not fees) will increase, and simultaneously, business class fares will drop.

            None of your post addressed any of the specific assertions made by Sirwired, but rather merely ranted about the benefits of deregulation (incidentally a point I wholeheartedly agree with though completely irrelevant to this discussion)

            Yes, the if airlines lose one source of revenue they seek alternative means. That’s completely not the issue. The issue is can those alternative means of revenue be fairer to passengers. The structure exists because of monopolistic power of the airlines (ok technically oligopolistic behavior).

          2. What part of my response is off point to you? You propose denying airlines a good chunk of $3 billion in annual revenues, and think the industry pricing will be maintained as is. Silly and simplistic.

            You say, ” I think the real reason that airlines won’t agree to transferability is that they make extra money on tickets that are never used.” Of course they do, rightfully so. And what is wrong with that? You buy a nonrefundable, nontransferable ticket and you live with the consequences. Airlines derive highly profitable revenues, cash for services not rendered, and a chance at making a profit over the long term.

            You are advocating revenue shifting.

            Instead of a rant, my logical and factual response proves that the airline industry really has no where else to turn to make up billions of lost revenue through elimination of fees and charges. Sirwire made a clear point:

            “And I don’t think you really want airline tickets to be transferable. That would lead to leisure fares being much more expensive (and business fares dropping.) That doesn’t sound so bad until you realize that price-sensitive leisure travelers would travel less. It’s a lose-lose-lose situation: Leisure travelers get higher prices, airlines get reduced cashflow, business travelers get reduced schedules (because leisure travelers aren’t taking up as many seats as before.)”

            All that is quite true, proven by facts or elementary logic, as exhibited in my so-called “rant.”

            I am amused that when obvious conclusions are not backed by itemized facts, you say, “You’ve made some large conclusions. Can you substantiate or at least explain them.” Then when you are presented with the logical facts leading to the unavoidable conclusion that fares will go up overall, you call it a rant about deregulation.

            Plain and simple, you want to re-regulate the airlines by mandating fare types and conditions. Those were the old days, where every fare had to be approved by the government, including the terms and conditions. That clearly failed as demonstrated by the overall success of deregulation in lowering fares, speeding up overall travel time, and improving safety.

          3. Obviously you don’t read my posts. Because nothing you said is remotely true

            1. I do not wish to re-regulate airlines, a point I took pains to make in my post. By saying otherwise casts your entire post into disrepute. Let me make it crystal clear for you. I am 100% percent in favor of deregulation. It has lowered price and given more options. I am often one of the lone voices in favor of unbundling.

            2. What I want is for the same rules that apply in most consumer contracts to apply to airline contracts. One contractual maxim is “the law abhors a forfeiture”

            [Airlines]make extra money on tickets that are never used.” Of course they do, rightfully so. And what is wrong with that? You buy a nonrefundable, nontransferable ticket and you live with the consequences

            First, you are quoting Alan, not me. And that’s highly illegal in most (not all) non travel consumer contracts

            3. Leisure travelers get higher prices? Maybe. Airlines generate revenue from fares and ancillary fees. Either one or both might be increased. You cannot arbitrarily choose one without defending that choice. For example, I would opine that the more likely place for an increase is in the fees arena as those aren’t necessarily presented immediately. That has been the airlines preferred method of raising revenue.

            4. You completely sidestepped the point that I took additional pains to make

            Yes, the if airlines lose one source of revenue they seek alternative means. That’s completely not the issue. The issue is can those alternative means of revenue be fairer to passengers. The structure exists because of monopolistic power of the airlines (ok technically oligopolistic behavior)

            So, no, this is simply a rant of limited substance, seeing re-regulation bogeyman everywhere.

          4. By its very nature, regulating the terms and conditions of the ticket is re-regulating. Call it by any other name, a pig is a pig.

            You conveniently forget that the day before Chris “ranted” about unbundling being illegal. You say the current terms are illegal in most other consumer contracts. So everything is illegal and let’s get everything for nothing? The free market has led to unprecedented low fares, high safety and faster travel. It ain’t broken. Don’t start re-regulating.

          5. Is that truly the best you can do.

            All contracts are regulated. All business transactions are regulated. Minimum wages, child welfare, taxes, safety regulations, environmental regulations, civil rights, etc. To equate that with what is generally known as regulation/deregulation of airlines is disingenuous at best.

            You say the current terms are illegal in most other consumer contracts. So everything is illegal and let’s get everything for nothing?

            These leaps should qualify for the Olympics. The terms discussed related to nontransferability, forfeiture, and the ability to dictate odds terms like prohibiting throw away ticketing. I can think of no other industry that requires you to fully consume your purchase. And even within the travel industry, this prohibition against throw away ticketing is unique to airlines because of oligopolistic powers. Hotels don’t require you to actually sleep in the hotel room after you check in. Car rental car company don’t make sure that you drive the rental car every day.

            Applying normal consumer safeguards to travel contracts Is about leveling the field, not getting something for free.

        2. In a world where reservations can be transferred…

          Let’s say the owner of, and 10 other “travelers” (they can be fake, as no ID is ever required until check-in, and they’ll never be traveling) buy round-trip tickets from JFK to LAX dated six months from Monday, returning Friday. (This is a really common business trip, especially if I’m in the entertainment business.) We pay leisure fares. (I can buy this, non-stop, today, for $378, all-in.) They can make a VERY safe assumption that I’m going to be able to find 10 people that are going to want to make this trip six months from now.

          Fast-forward our calendar… I’m a business traveler; I go to purchase a ticket for my business JFK/LAX/non-stop/rt because I need to babysit the new act ThunkHead while they do a recording session for their debut album. Wowza! That’s an $876 ticket! (Using today’s prices for a last-minute ticket.) I go to “” and they are offering the same ticket for $500. Score! I save $376, made a 37% markup (in reality, they’d likely take a bigger slice), the airline loses out on $600 by selling a seat at a leisure fare that they could have filled with a business traveler paying the rack rate. Airline panics! They were depending on that desperate last-minute traveler for the profit on the flight! (Only making a few hundred bucks on an entire flight is par for the course in the airline industry; margins are that tight.)

          The airline isn’t filled with morons. They’ll want that $600 (or at least part of it) for themselves. To squeeze out of the market (and take in some of that cash), they’ll raise the advance-purchase fares (and maybe drop the last-minute fares.) now has no business model, as their margins become too tight. However, Billy and Betty Jones now can’t afford their dream vacation (because the advance-purchase fares went up), so they don’t go. The airline drops capacity because Billy and Betty (and their similarly-situated fellow consumers) don’t travel and now the load factors are too low for the flight to make sense flying a big plane. They either move it over to a smaller plane, or reduce frequency.

          1. If the main concern is ticket scalpers, I bet you could design rules that would mostly thwart these scenarios and yet still provide consumers with far better protections against forfeiting their entire ticket value than they have today with most carriers.

          2. There are lots of laws on the books in various locations that make it illegal to sell concert tickets and such for more than face value. Similar laws could be enacted that covers airline tickets. That would address that problem.

          3. Such laws would be difficult, at best, to enforce. (Scalping laws today are largely ignored unless you are a real moron about it.)

            The best solution would be less draconian change fees, and permission to re-sell ticket credit (but not actual tickets.)

          4. Guest points out one way to do it (with laws). Sure, there would still be some illegal scalping (just like for concerts) but it would be hard to pull off on a large scale. Unlike for a typical concert ticket, the name on an airline ticket is already tracked. You could potentially verify the ID of the seller as part of the transfer process (and charged an admin fee for that) — and impose a reasonable limit on the number of transfers per person per year.

            But sure, less draconian change fees and permission to re-sell ticket credits accomplishes much the same thing, so whichever you prefer 🙂

          5. Unfortunately, its the past instances of abuse which have lead the airlines into more and more stringent rules and regulations.

  2. This is exactly the loophole I was afraid of and that I pointed out 5 days ago when Douglas Kauffmann’s Celebrity cruise was cancelled by a mechanical failure that occurred on a prior sailing.


    Even policies that cover mechanical failures use language that technically only covers failures that occur on the very trip(s) that the passenger has insured with that insurer.

    But that didn’t stop many posters from claiming that Mr. Kauffman should have gotten travel insurance and that it would have avoided his problem.

  3. Did her policy not cover Trip Delay? That particular part of the policy will cover daily expenses until you can get home, the triggering condition is usually “Any Common Carrier Delay” (over X hours), and this certainly would have qualified. She’d still be late getting home, but her expenses (or at least a decent amount of them) would have been covered.

    Also, could her original airline not route her to another Bay Area airport?

    1. I took a look at my own policy. My Trip Delay benefit is $150/day up to 5 days or $750. I don’t know what the OP’s policy benefits were, but if they’re anything like mine, I’d have paid the $565 to get home rather than spend 2 days in New York, as $565 may very well have been cheaper!

      Now the thing I don’t understand is why her own airline couldn’t have made arrangements (like codesharing!) to get her home, as you suggested. Someone needs to explain it to me. Her airline couldn’t provide the flight home – seems to me they were the ones who canceled. Was the reason for the cancellation the reason the airline could weasel out of refunding that leg of her journey?

      1. – Not all airlines fly into all Bay Area airports.
        – Airlines are extremely resistant to sending a passenger to another airline unless the flight is one of their code shares.

        – Most flights are full or nearly full. There’s no way they could have gotten all affected passengers onto other same-day flights to the Bay Area when SFO closed.

        – The other planes that were already en route had to land somewhere. I haven’t verified this, but logically, I’d think that Oakland and San Jose must have been taking the traffic that was meant for SFO, thereby causing delays and possible cancellations in their own inbound flights.

        1. Thank you for taking me seriously. Ms. Tarrow *was* able to get a flight home to San Jose that fit her needs, but had to ask her son to arrange it for her. So, there was a space available to a “nearby” airport. So why couldn’t the airline have done that for her? I know, rhetorical question – goes back to some of the fundamental philosophy of this site in the first place, right?

          1. It was space available on another airline. There would be no financial benefit to the original airline to put her on another airline’s flight. And the airline probably has policies that state if the delay is because of circumstances out of their control like an airport closing because of a crash, they won’t get you a hotel or even a meal voucher and owe you nothing other than eventually getting you to your destination.

          2. Without knowing the airlines involved, I can’t say why they were unwilling to rebook her. I can tell you my own story though …

            We were in NJ during hurricane Irene in 2011, and had tickets to fly home from PHL Monday morning on Frontier Airlines. Frontier canceled the flight on Saturday, stating it was weather related, and they rebooked us on a Wednesday morning flight. I talked to the agent on the phone Saturday night and asked about other flights out of other airports on any airline. I knew all the NY airports were planning to stay closed through Monday, but thought maybe we could drive to Pittsburgh or anywhere else. No dice. Frontier was not interested in helping us in any way other than to rebook us on the Wednesday flight.

            Luckily we had power and Internet at the hotel and I was able to find a Delta flight out of BWI on Monday afternoon at a cost of $200 more than we had paid Frontier. I booked that one; called Frontier back and told them we had found an alternative, and they issued a refund immediately. The extra $200 for airfare was less than we would have spent on hotel and meals and it allowed us to get back to work on the day we had planned without having to burn two more vacation days, so it was well worth it to us. I don’t know if a typical travel insurance policy would have paid off in this case; but these events are so rare that we’ve saved far more by not buying insurance on every domestic trip than we’ve spent on fixing problems.

      2. A refund for the unused leg isn’t an issue. Airlines (even low-budget outfits like Spirit) will refund you on request for a cancelled flight. However, a last-minute one-way from JFK to SJC will cost a lot more than an advance-purchase single-leg as part of a much longer journey.

        And while you aren’t staying on Times Square for $150/nt, you can get a livable hotel near JFK for that much. It won’t be a lot of fun, and you might have to chip in a little yourself, but it’ll cover most of your expenses.

        1. I had to go to Queens last weekend, which is near JFK and the place was $159/night plus tax. That was cheap and very livable. Thought of that right after I posted – I was thinking Manhattan, Times Square, which was $399/night in March and only that cheap (!!!) because my husband was a conference attendee. So you’re right, you could defray much of your expenses at $150/day in Trip Delay benefits.

      3. I’d have paid the $565 to get home rather than spend 2 days in New York, as $565 may very well have been cheaper

        Note that Trip Delay benefits typically cover only “Reasonable Additional Expenses” which are defined as “hotel accommodations, meals, telephone calls and local
        transportation” (I quoted that from a CSA policy; other companies like Travel Guard have virtually identical language).

        So it’s not generally a choice — the $565 to get a new flight is not covered, while the meals and accommodations in New York may be covered.

      4. And if she called the insurance company, they could have worked with the airlines to get her home earlier – why decide to do something on your own without checking with the insurance company first????

    1. It is because of the link. I figured that out when I posted a comment awhile ago that got the awaiting, but posted a cut and paste version without the link and it was posted immediately.

    2. Can anyone cite a travel insurance policy (from any company) that “covers” mechanical cancellations but that doesn’t have equivalent language that could have been used to deny this claim on exactly the same basis?

  4. ” airline industry, which it claims enjoys a symbiotic relationship with travel insurers, making hefty commissions on the sale of useless policies…”

    So the truth about travel insurance comes out! The OP’s problem is exactly the kind of issue we are generally told to buy travel insurance to cover, and yet they wiggled out of it. Well, at least we know not to buy CSA under any circumstances.

    Another question arises: did the airline offer the OP a hotel room at JFK during the interruption? Wouldn’t this kind of a problem be treated the same as a mechanical? If she could have put up with a couple of lost days, she might have been able to avoid invoking the insurance in the first place.

    1. I think that’s common language. I went to the Trip Insurance I’ve purchased for a trip coming up in January, from a different company and took a look. If my airline’s plane breaks down, it’s covered. Someone crashing into an airport and shutting down the airport? Nope. It’s Trip Delay coverage that would kinda sorta come to the rescue.

  5. I recently paid $490 to insure a friend and me to “cancel for any reason” airline tickets worth close to $1500. That’s 30% of the cost
    of the tickets only to discover that the insurance company will not pay unless the tickets are cancelled. The Airlines involved would not cancel non-refundable tickets, only the itineraries. The tickets would be good for one year from purchase with a $250 change fee for each. The insurance was valid for “any reason” before the date of the start of the trip. So — I was out of luck. Obviously any reason does not include airlines that will not cancel tickets.

    1. Why was the trip cancelled, though? The airlines NEVER cancel tickets (illegal under FAA rules) – but I’ve never had a problem getting a refund on nonrefundable tickets when we’ve had a covered reason – did you even ASK the insurance company what the claim options were???

    2. Did you buy the insurance directly through the airline? Our experience has been that when buying insurance directly through the airlines this happens, but if you purchased through a third party insurance company – they do refund.

  6. “If you don’t understand something and have a question, call the insurance company before you buy a policy so that you won’t get stuck with a bill you didn’t expect.”

    From what I read on this site, calling the insurance company may result in being told what you want to hear and not what they actually pay for.

    1. As those of us who have lived through Hurricane Sandy have been paying for FEMA Flood insurance for years and got screwed anyway have found.

  7. The change fees being so high seems arbitrary and entirely too high when you consider it takes no more than a few minutes to do this. Sadly, there’s only one airline who doesn’t charge a high change fee, Southwest, and they’re taking much of the business market due to the capricious nature of business travel and companies making last minute changes to itineraries.

    The other airlines couldn’t care less, nor do they seem to make any noise they’re about anything BUT the airline and their bottom line. Seems the travel insurance they hawk when you make your reservations follows through with the same “laissez-faire” (or is “malaise faire” more apt?) attitude they seem to maintain. It’s good to know, I guess, that some things never change.

    I can remember a time when the airlines were happy to have your business and treated you as such. Now it’s a matter of every man for himself and that’s not a good way to run a business.

        1. On my two preferred carriers, Virgin and American, effectively there are no change fees in coach except for the cheapest tickets which tend not be to appropriate for business travel.

          1. Not that I don’t believe you, but … 🙂

            Looking at the AA web page trying to find fee listings just gave me a headache, especially since I thought a clearly accessible link to fees was supposed to be present on an airline’s web page. Only thing I could find there after extensive searching was a $75 fee for same day changes to any ticket.

            Virgin has an easy to find chart that says $100 change fee for any ticket that is not refundable other than the Select Cabin or 1st class cabin tickets. Since Select cabin on random flights I chose is 7 times the price of main cabin (and 1st is oddly about the same as Select), I don’t see this being a viable option for many business travelers with the current restrictions most corporations have on what class employees are allowed to be ticketed in and ticketing price limitations.

            Of course I’m not taking into consideration frequent flyer membership and any impact that would have on pricing and fees. However, your statement that there are “effectively” no fees doesn’t pan out for me based on my findings. Either there are fees, or there are no fees.

          2. 🙂

            On AA, the basic domestic classes that us laypeople see are: Choice, Choice Essential, Choice Plus, Business, Fully Flexible, and First. Of those choice pays a $200 change fee, the remaining classes do not have change fees.

            On Virgin America, its a little different and a little more complicated. It has a travel bank that all nonrefundable fares can be refunded to, less the change fee which varies by class. The easiest way to see it is to do a booking and click on the link showing the fare classes

      1. Depending on how it’s bought, it can have them. Not every business travel ticket is business class. My husband’s company uses American Express Travel, who charges no change fees, but not every company uses them or another similar service.

        1. As I mentioned to Markkelling. On my two preferred carriers, Virgin and American, the coach tickets marketed to business travelers effectively don’t carry change fees. I can’t speak for other airlines.

          1. Indeed. I used them once. American had a business class ticket LAX to LHR for $2500, but it made a stop in Boston. United had the same flight for $5,500.00 nonstop. The AMEX travel agent berated me for electing to “endure” the stopover to save $3000.00.
            Needless to say, I refused to work with them ever again.

          2. They are written that way because historically it is the business traveller who makes the most changes – so it gives them option to do so without penalties, but they DO pay for that privelege.

  8. Insurance companies all make money avoiding risks – and their policies are nothing more than a manifestation of of risk avoidance. If the planets don’t align specifically – you won’t get paid. When you buy a policy, read what is covered – buy multiple to cover the gaps if needed, or accept the risk on the areas that are not covered.

    “Civil unrest or act of war” is a good catch-all as well….imagine being in a city that has a huge protest going on and you miss your flight, or get trampled, whatever – I can see no policy paying out on that one.

  9. Another lovely example of consumer fraud … we’ll take your money and KEEP IT. Sounds like a good business plan to me these days.

  10. My TravelGuard policy always comes with a card with the policy number and 24 hour domestic and international hotline numbers. Before you made a decision such as buying an alternative ticket, call the insurance agency hotline. At least then you are less likely (not certain, of course) to learn your particular chosen solution is not covered when you have already laid out the cash.

  11. I don’t know a single person who ever benefited from travel insurance. It provides peace of mind, and ends up taking a piece of your pocket. I really feel for this lady, but I do hope she enjoyed her river cruise.

    1. I have to disagree – I have seen many clients who were fully refunded for trips they could not take because they did have insurance and canceled for a covered reason. As Lindabator says, you need to know what you are buying and should read the fully detailed policies before buying or within the allotted time you can cancel a policy to make sure of the coverage.

      I agree with everyone else that she should have called the insurance company before changing flights, but I can certainly understand not doing so too – you are panicked worrying that your entire trip is going to be canceled because of the airline and want to make alternate plans immediately. A good travel agent for her to call would have been able to help.

  12. Insurance is no different in Australia. You pay the premium to the company and they refuse to honour a claim. It’s the same the world over.

  13. What an awful outcome from CSA. As you know, since Jan 01, 2013, agents are very restricted about any advice regarding insurance.. Also don’t wait for transferable tickets, the airlines and TSA don’t want them.

  14. I am questioning CSA’s insurance. I don’t recall seeing a policy that doesn’t cover trip delay unless it is one of the policies you purchase online with the airlines at the time you purchase your tickets.

    Our agency does not sell this companies insurance, but the ones we do sell policies with coverage for travel delay and Ms. Tarrow’s flight cancellation falls under that umbrella. There is usually a time frame associated with travel delay, depending on the policy purchased, from four hours to 24 or 48 hour delay due to a canceled flight.

    The third party policies we sell in most cases do not have to be purchased immediately and we give clients the full policy information so that they can contact the insurance company with any questions before purchasing.

    I have to agree with you that there are so many hidden clauses in travel insurance that unless you read the entire policy it is difficult to understand what is and isn’t covered. For example, pregnancy and what the term “mental disorders” are not covered. Mental disorders can run the gamut of what the insurance company determines vs. what the true condition is.

    Consumers need to be able to see what they are actually purchasing (or have a travel agent that explain the differences) to ensure the coverage they think they have is actually what they have.

  15. Learn to read the small print., and it’s not too small! What is covered? 9 times out of 10 the main coverage is listed right on the brochure, or on-line. Mine is easy to read. The what’s not covered is in teenie tinie print. I sell and buy insurance for what is covered, so that’s what I read. The odd situation here and there just happens and you live with it. Now…..the airlines were under tremendous pressure to re-route everybody away from SFO. Had she had an agent working with and for her, she would have been home the same day at no extra cost. We had 3 stranded people at SFO and simply spoke to the agent desks of the respective airlines, got them transfers to Oakland then home on the red-eye.

    1. Learn to read the small print., and it’s not too small!

      That’s funny, because some of the commenters here who claim to be travel agents have endorsed the idea that this sort of situation is covered. For example, see Chris’ article just last week about Douglas Kauffmann’s Celebrity cruise cancellation — that was another example of a Carrier’s mechanical failure that occurred prior to the customer’s scheduled travels.

      The people who push insurance often want it both ways — they criticize anyone who doesn’t get insurance (“if you can’t afford to lose your non-refundable payments you should have gotten insurance”)…. and then they still criticize insured travelers who lose non-refundable payments anyway for not reading the fine print (fine print which actually demonstrates why you shouldn’t make non-refundable payments you can’t afford to lose regardless of whether you buy insurance….)

  16. She has the insurance number WHEN she travels – she should have called them IMMEDIATELY when the flight was cancelled – then she would have known what her options were, and the insurance company could have gone to bat for her if they could change her flight. I HAMMER that into my clients’ heads before they decide to do ANYTHING on their own. There are restrictions to most things in life – so don’t cut out the middleman form the final decision and then expect him to pay up when the muck it up!

    1. then she would have known what her options were

      Not really.

      The written insurance contract alone spells out the insurer’s obligations, and I don’t see any provision that mentions an obligation to “go to bat for her if they could change her flight.”

      If she had received any promises over the phone — even if they advised her to book a new flight on her own and get reimbursed — you would be the first to tell her that any verbal promises are worthless. Only promises endorsed on the policy in writing count, and you would tell us that she should have read the terms of the contract which make that abundantly clear.

      Straight from a CSA insurance policy:

      The plan may be changed at any time by written agreement between us. Only our President, Vice President or Secretary may change or waive the provisions of the plan. No agent or other person may change the plan or waive any of its terms. The change will be endorsed on the plan.

  17. This is insurance company should be put out of business!! Every reason possible can never be listed that is why it takes a human being with some brains to go over the documentation and make an educated decision. I sell travel insurance everyday (Travel Insured) and have never never had a problem like this. I have many happy clients because they purchased travel insurance and the claims were covered.

  18. Of course I can’t see the policy this woman bought, but CSA’s Custom Plan policy states this:

    Post-Departure Trip Interruption Benefits

    We will reimburse you, less any refund paid or payable, for unused land or water travel arrangements, plus one of the following:

    1. the additional transportation expenses by the most direct route from the point you interrupted your Covered Trip:
    a. to the next scheduled destination where you can catch up to your Covered Trip; or
    b. to the final destination of your Covered Trip; or
    2. the additional transportation expenses incurred by you by the most direct route to reach your original Covered Trip destination if you are delayed and leave after the Scheduled Departure Date.

    However, the benefit payable under 1 and 2 above will not exceed the cost of a one-way economy air fare (or first class,if the original tickets were first class) by the most direct route
    less any refunds paid or payable for your unused original tickets.

    3. your additional cost as a result of a change in the per person occupancy rate for prepaid travel arrangements if a Traveling Companion’s Covered Trip is interrupted and your Covered Trip is continued.
    Travel Delay
    If your Covered Trip is delayed for 6 hours or more, we will reimburse you, up to the amount shown in the Schedule for reasonable additional expenses incurred by you for hotel accommodations, meals, telephone calls and local transportation while you are delayed. We will not pay benefits for expenses incurred after travel becomes possible.
    Travel Delay must be caused by or result from:
    a. Common Carrier delay; or
    b. loss or theft of your passport(s), travel documents or money; or
    c.quarantine; or
    d. hijacking; or
    e. natural disaster or adverse weather; or
    f. a documented traffic accident while you are en route to departure; or
    g. unannounced strike; or
    h. a civil disorder; or
    i. your, a Family Member traveling with you or a Traveling Companion’s Injury or Sickness; or
    j. a Family Member traveling with you or a Traveling Companion’s death

    So if this is the policy she had, the insurance company apparently would have paid for a hotel, meals, calls and local transportation is she had stayed in NY until her flight could get her out two days later , vs. paying $565 for her new airline ticket. A hotel, meals and transportation in NYC near JFK would have certainly cost more than $565 for two nights.

    Stupid reasoning by CSA. But I bet she will call the insurance company next time before doing something like this.

  19. Chris, your poll results speak for themselves. As of now, with 855 votes received, 98% believe that travel insurance comes with too many restrictions. In the case mentioned in the article, I happen to agree that the event was sudden and unforeseen, and the insurance company should pay for claims like this.

    The problem is that a travel insurance policy is a named-peril policy, meaning it lists the specific events that are covered. This list is generous in many ways, including events like sickness, home burglary, traffic accident on the way to the airport, job loss, jury duty, and even extension of school year caused by snow days. However since ‘crash landing of another plane causing delays’ is not listed, there is no coverage.

    Your advice to read and fully understand your purchase is essential. The worst way to buy insurance is by leaving the checkbox marked during checkout on Expedia.

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