Is this fair? They saved $74, but they lost $10,074

They missed Italy and lost their vacation. / Photo by Ryan Wood - Flickr.
Question: I’m writing on behalf of two friends who booked a trip of a lifetime to Italy recently. They also purchased trip insurance through Access America. A couple days after paying for the insurance, they found out that the husband had to have hip replacement surgery. It was a situation that became chronic within a couple of days.

The entire cost of the trip was $10,074. However, they didn’t read all of the fine print in the terms and conditions and didn’t realize that no refund would be available to them for cancellation due to a pre-existing condition because they didn’t purchase insurance on the full cost of the trip — only $10,000 of the trip.

I find it very disturbing that a couple who has worked so hard for their money, and purchased a trip in good faith, along with travel insurance, could find themselves in this predicament. Not all consumers are as computer savvy as others and they would never have purchased insurance for less than the full amount of the trip if they knew it voided the provisions for cancellation due to a pre-existing condition.

Elliott Advocacy is underwritten by Chubb. Chubb is the world’s largest publicly traded property and casualty insurance company, and recognized as the premier provider of insurance for successful individuals and families in the U.S. and selected international markets, offering coverage for high-value automobile, homeowners, recreational marine/aviation, valuables and umbrella liability coverage. As an underwriting company, Chubb assesses, assumes and manages risk with insight and discipline, and combines the precision of craftsmanship with decades of experience to conceive, craft and deliver the best insurance coverage and services to individuals, families and business of all size.

They saved $74, but they lost more than $10,000.

Personally, as a consumer, I find this practice revolting and would appreciate any suggestions you could offer. — Jennifer Chilton, High Point, NC

Answer: You’re right, this is a frustrating case, and I can certainly understand your anger. Basically, Access America is denying your friends’ coverage because they didn’t insure the full value of their trip.

I had a lengthy conversation with the company about your friends. According to the terms of their coverage, they had to buy their insurance within 14 days of making their first trip payment or deposit and had to purchase trip cancellation coverage for the full cost of their nonrefundable trip arrangements. In addition, they had to be a U.S. resident and medically able to travel on the day they purchased their insurance.

Your friends met all but one of those criteria: They failed to insure the full cost of their nonrefundable trip arrangements.

“It’s important for customers who need existing medical condition coverage to understand and meet the terms for this very valuable benefit,” a company spokesman told me.

Would an insurance company deny you $10,074 in coverage because you tried to save a buck or two on your policy? You bet. Is it ridiculous? If you’re a traveler, you bet. If you’re an insurance underwriter, maybe not.

Look, at the risk of repeating myself, you need to read the fine print carefully when you book travel — but especially when you buy travel insurance. I understand when you say not all consumers are as computer savvy, but if you’re not sure of something, you need to find a travel agent to help you or ask a family member who is computer savvy to review the fine print online.

Access America decided to “make a consideration in this case” and will honor your friends’ claim.

101 thoughts on “Is this fair? They saved $74, but they lost $10,074

  1. Folks, this isn’t rocket science.  These restrictions are not buried on page 43 in half-point type.  Why do people find it so hard to READ their policies, especially for something so significant?  Travel insurance policies are actually quite easy to read and free of legalese.  The exclusions are not, in fact, “fine print”, they are presented in the same manner as the rest of the policy.

    If I was Access America, I would not have caved.  The contract works both ways.  If there was, say a default clause saying that you must have the policy in hand before bankruptcy is declared, and bankruptcy gets declared the next morning, would you even consider cutting the insurance company a break?  No.  You’d file your claim, and your claim would get paid.

    The fairest thing to do is to hold both sides to their contact, no matter who that benefits.

    1. In general, your analysis is not how contract law works. And that’s a good thing.  The idea behind contract law is that each person receives the benefit of the bargain.  Gotchas and technicalities are highly disfavored.

       When one side has substantial good faith compliance with a contract, they are entitled to notice and an opportunity to “cure” minor deficiencies.  Once again, travel companies operate under their own Twilight Zone set of rules.

      There are of course exceptions to this general maxim, however, in those
      cases the law generally requires that the contract  highlight such rigid

      In this case, the OP insured 99.27% of the trip.   To deny coverage under these circumstances smacks of opportunism.  To make this more egregious, Chris’ math is wrong.  The OPs didn’t save $74.00.  That’s just the uninsured amount.  What the OP saved was the cost of insuring $74.00, which was probably about $4.50 (assuming 6% cost)

      1. I could be wrong but I thought you had to book insurance in increments of 500 to a thousand dollars and if they booked that $74 it would have cost a lot more than $4.50.  After all this reading of travel insurance claims not being covered due to such a small amount, just how do you calculate a trip?  Only using the non-refundable portions?  Then over insure?   My beef with travel insurance is that you have to book it within 2 weeks and if you cancel your trip within the allotted time that there are no penalities, you are still stuck with the expensive insurance cost and there is absolutely no risk to them anymore.

    2. I was recently pricing out travel insurance at squaremouth, and I was looking specifically at coverage for preexisting medical conditions (my wife has one). I found the requirement to insure the entire amount of the trip was communicated to me, and it was not buried at all.

      On the other hand, I think it can be tricky to figure out exactly what that amount is that needs to be insured. For instance, I’m booking a trip to a family event for this fall, but I only want to insure my wife’s portion. This is because if she is unable to travel, I will still make the trip, and she will stay home with relatives. 

      So obviously her plane ticket must be included, but what about the first night at the hotel, which is nonrefundable? As I talk through it, I think I answered my own question: don’t cover the hotel, because I’m still going to need the room, even if she can’t make it. But what if the insurance company comes back and asks why we didn’t insure her hotel stay?

      Also, I really don’t understand the point of requiring that the entire cost of the trip be insured. Why shouldn’t I be allowed to share the risk with the insurance company and save a few bucks in premium? Let’s say I’m comfortable losing 25% of the cost of the trip, but not the full cost. Why, in that case, couldn’t I insure just 75%? It’s not like it’s going to make me more likely to file a claim. If anything, it’ll make me do anything I possibly can to make the trip happen, since I’m on the hook for 25% of the loss!

      1. In cases like these, it is actually a bit easier.  You only claim the amount you need covered, and can easily provide proof of purchase for.  In your wife’s case, her plane ticket.  IF you had under-insured what you would claim, THEN you would run into a problem.  (We run into peoplenot wanting to cover event tickets, show tickets, etc, due to the cost of insurance not being worth it.  In those case, we can clearly show the total costs of airfare, hotel, rail, etc that would be claimed/covered). 

  2. @sirwired:disqus I don’t know the details of the documents here, and I don’t know how well placed the couple were to be able to understand how every many lines of t&cs there were, but the insistence that because it was written down it should have been obvious to everyone is the heart of the problem. 
    *You* might be able to read every page of seven or eight companies policies competing for your money, and juggle the possible implications of every clause across every product from every company as you make your choice. I suspect most people, even if they wished to do this, would struggle to be able to.

    What’s obvious here is that this is a clause that runs contrary to common sense. Common sense would say if you have $10,000 of cancellation insurance, and you cancel a trip that costs $10,074, you would expect to lose $74, not the rest.

    Drafting a clause that makes the insurance work in a way contrary to common sense is where the problem was created – if a company can’t afford to offer a product without making it confusing and, effectively, worthless, then perhaps they shouldn’t be offering the product.

    How can this sort of thing be fixed?

    Simple – how about asking the customer a few questions as they book – “How much is your trip?” Couple put in price. Get a flag back “The cost of your trip is greater than the value of your insurance. If you cancel, you will not be entitled to claim back the cost of your trip. Do you wish to proceed?”

    There’s no reason why online insurance sales can’t be as interactive – *more* interactive – than having a salesperson in front of you. Don’t airily assume that everyone has the literacy and financial skills to cope with a legal document without assistance.

    1. I totally agree. Normally you are covered up to the amount you have coverage for. if I purchase homeowner’s protection through my insurer and I place a value on all my stuff at $50k, and I have a total loss that comes in at $55k, they will pay me $50k. They aren’t going to deny the claim because I didn’t insure the entire value of what I actually had. Shame on the insurer for having a clause like that. Also, they had no problem taking the money from the couple. The fact that they accepted the monies to me, showed that they intended to insure the couple.

      1. I completely agree with both of you. The fact that we even have to debate what should happen if someone purchases $10,000 of insurance on a $10,074 trip is absurd. The only correct answer is that they receive $10,000 of coverage.

  3. Wow. I’m impressed that Access America came through. There was a similar story last week (?) about someone who didn’t insure for the full amount, off by a tiny bit. I was curious about why they didn’t declare the total value. Were they just ballparking it? Or was it to get a lower premium, as this post suggests? Wouldn’t seem worth it…

    Also, it wasn’t clear if the OP had had hip problems before or if this came out of the blue. I would think that if I had some serious condition, I’d certainly make sure the insurance would cover for it and get all the details.

    I’m normally a stickler for rules as well, but in these two cases, it seems as if the difference in the insured amount was so small as to be negligible. But I did notice that in both cases, they were insured for less than the full value, not more…

    (See? No voting pleas today! tee hee hee)

        1. You guys are hilarious… Just keeping you on your toes. Don’t worry, voting goes until June 11. I’m sure I’ll find a way to work it in somewhere… Maybe I’ll be the butt of Chris’ next piece – Vote Scammers! haha

          1. There is ONE Condition. If you win the 20K prize, you agree to be the largest benefactor to this site and you have WAIVED ANY and ALL [other] PRE-EXISTING CONDITIONS.

          2. I can’t remember if it was you, but did you perhaps share the name of your safari group with me at sometime? I was doing some research on an upcoming trip and can’t remember the name of the group you recommended. 

  4. As the consumer, I find this very confusing. Logic would indicate that somone could purchase insurance payable for a specific amount, and that is all they would get back in a claim. If the OP insured 10K of his trip, then what would that matter to the insurance company (other than they would like to exploit a loophole)–he insures 10K, het gets back 10K. If the policy clearly states that the entire trip must be insured, is that clearly defined? For example, is that just for tours? Does have to include airfare? Hotel accommodations? Taxi fare to and from the airport? Tolls, gasoline, food? The cost of the insurance itself? Why not just allow consumers to purchase coverage for the amount they would like to cover (up to the cost of the trip). Do other insurers have the same contractual exclusions? When you purchase car insurance, do you have to purchase an insurance amount to the penny of what you purchased it for (assuming you don’t have loans)? How about for homes? Medical insurance? Rental insruance (I imagining the conversation–“We’re sorry sir. We understand that you insured your personal belongings for 30K, but you did not list the value of this DVD. Your policy is invalid.”) Is there any other type of insurance where this is the practice? It just doesn’t make sense. By the way, what happens to the money he paid to the insurance company. They keep it, right? Even though they’re claiming he doesn’t have a valid policy?

      1. That would not make sense at all. The fact that they insured him and accepted his money, to me, would mean that they intended to enter into a valid agreement. They took his funds and insured him. Now they wanted to say that the OP never had insurance. Not a denial of a claim, but that they never had insurance in the first place. So how could they then decide to keep the monies paid for insurance?

          1. But here’s the thing. They are basically saying, “If you don’t buy insurance for the FULL COST of your trip, we will deny ANY claim.” 

            So from the moment they bought a policy for less than the Full Cost of their trip (a difference of $74), they technically held a policy, but that policy was worthless since ANY claim made against it would be denied. 

            It’s not that the policy would only pay out to $10,000 (the amount of the policy), it’s that it won’t pay out at all because they wrote the policy for less than the Full Cost of the trip.

            I’m curious to know from @elliottc:disqus if this “Full Cost” provision applies to any/all claims, or just medical condition claims. Are there any claims that would be paid out for $10k (rather than $10,074) even if they didn’t get a policy for the Full Cost of the nonrefundable costs of the trip?

          2. Carver, he paid EXTRA or early for nothing. Usually, the way to get a WAIVER for pre-existing conditions is you need to upgrade the plan you are buying and pay early. Oops he didn’t know there was a gotcha.

        1. But per the terms of the policy, should you UNDER INSURE the total cost, the policy is void.  And it is clearly explained in the policies – in plain English, at the start.  People just don’t pay attention, unfortunately, until its too late.

          1. To be specific, the RIDER that WAIVES PRE EXISTING CONDITIONS will not apply. But the rest of the insurance policy may still apply. See how tricky this is?

  5. What items have to be included to the the full cost of the trip?  The airfare or cruise, of course.  The cost to get to the airport?  Parking?  Hotel – but what about the resort fee? Kennel fee at home (not an insignificant item for me with three non-traveling dogs)?  Added tours if scheduled in advance?  What if added later?  How can one be sure one has insured for everything?  If I did not insure one of these items because I was willing to bear the risk, could
    the insurance company say too bad, we pay for nothing?

    1. Exactly.  It’s especially confusing for certain surcharges and taxes — like port charges, airport taxes– which are in a gray area in terms of refund-ability.   And for hotel reservations which could be cancelled close to the arrival date (how close is close enough?)

    2. Per TravelGuard, Coverage only included for prepaid trip costs as identified on the enrollment form and if the required plan cost has been paid.  It clearly asks then for airline, tour operator, cruise line and car rental company.  This was probably a case where everything was booked together by one company, so the FULL amount must be covered to initiate a claim.

    3. Here’s what Allianz (AA) says:

      What is included under non-refundable costs?
      Non-refundable costs include the total sum of all of your trip payments that would be forfeited due to cancellation prior to trip departure. Some examples include cruise, tour and airline ticket costs. Be sure to consult your travel coordinator to determine what costs are non-refundable for your particular trip as cancellation policies vary.  Examples:
      Cruise – If a cruise costs $3,000 and the cruise policy is 50% loss at 90 days out, 75% loss at 45 days out and 100% loss up to 7 days within departure, you would need to insure for the full $3,000 since you would be out the full amount in the event you cancelled within the week before departure.
      Airline – If an airline ticket costs $700, and the ticket is 100% non-refundable at the time of purchase, you would need to insure for the full $700 in order to qualify for the pre-existing conditions waiver (other requirements still apply).
      Here’s the kicker, if you have to consult with the seller of travel what part of what you bought is non-refundable then it kinda makes sense you buy your travel insurance from the seller of travel (since s/he may know more than you). But travel insurance is sold willy-nilly, ONLINE! Makes we wonder, if travel insurance should be sold online if the buyer does not even know what is non-refundable or not.

      Frankly, most Americans cannot even read much less understand the fine print. The law must adapt to the dumbing down of American consumers. Even dumb people need protection, possibly more protection.

  6. I’m sitting here wide-eyed with this one.  $10K?  In this day and age, that’s just about enough to make somebody go postal.   That is way, way too much money to pay out without ever reading the fine print… very good for Access America to come through anyway, with Chris’ help. 

    This couple is lucky – but we all know there are so many more out there that have not been as fortunate.  I wonder what it is going to take to get it across to everyone to do the absolute fundamentals to protect yourself.

    1. Except that even reading the fine print still doesn’t unambiguously define what constitutes a “nonrefundable trip arrangement.”

  7. There needs to be a law which states that once all other conditions are met, the insurance company is only required to pay out the insured amount.  Of course this make it sound like it’s good for the insurance company, but it will close this loophole that these companies are using to weasel out of paying a legit claim.

  8. According to the OP, they didn’t read the policy. PERIOD.

    Why cave on this one? Usually I’m the first one slamming these insurance companies, but when you don’t read a contract, you shouldn’t be stupid enough to SIGN it! 

    I also could’ve done without the “trip of a lifetime” card and “couple who has worked so hard.” Everyone works hard for their money. Well, except maybe the idiots on reality TV shows, but gimme a break.

    Just for the record: I’m always skeptical of letters written by ‘friends.’

    1. I haven’t read the ToC with the company, but the full cost of the non refundable trip could be made to include a lot of foolish stuff. When I travel to Vegas I normallyy call ahead and pay for the limo from the airport. It’s only $20 or so for the ride as there are a ton of them, but if I ddn’t incude that then the policy would be invalid? Clauses like this make it nearly impossible to have faith in a dealing and it makes it so vague as to wonder why or how this could ever be enforced.

    2. I am too. In this case, of course, I verified that it came from a real person. (Sometimes, people who ask for my help don’t have access to email or are visually impaired … but I do share your skepticism.)

    3. “didn’t read all of the fine print in the terms and conditions ”
      is not the same as 
      “didn’t read the policy. PERIOD.” 

      Did you read the article word-for-word? 😉

      1. [But it is] Hard to read the fine print of Elliott’s articles? 🙂
        Proof of the problem or issue at hand.

  9. I’m not sure I like how the question is worded.  Is it “fair”? Hmmmm well we all have a tendency to think “fair” = “in MY best interests,” but in reality it means following the rules equally for everyone.  I felt sorry for the travelers but also exasperated by the admission that they didn’t read the contract fully( and ability to read is irrespective of computer savvy-ness, so that wasn’t a legitimate excuse on the part of the LW).  I’m glad they got their refund, but really, they’re just plain lucky that you got involved because otherwise they’d be stuck like everyone else who didn’t follow the rules.

  10. This is a very common story and illustrates the importance of reading your policy. With anything like this, the company expects you to read every single word in the policy, and the consumer wanted to just buy it and be done. There needs to be a middle point where the consumer scans the policy to make sure they understand what they are buying. 

    I’m glad Access America (Allianz) made an exception here and honored the claim since it is obvious they were not trying to cheat the system.

    1. I disagree – scanning gibberish is still gibberish to these people.
      The case here is allowing and protecting people to insure a partial value of their trip. It does not harm the insurance company to pay less than the total amount of the trip.

      Furthermore, what you want the traveler to do might not be as easy as you think it is.

      Per Allianz (Acess America):
      you must purchase trip cancellation coverage that covers the full cost of all your non-refundable trip arrangements.
      Since the traveler may have purchased multiple services – air, hotel, rental car, cruise, tours, etc.; then not all of what he paid might be non-refundable. So, the traveler tends to OVER-INSURE to the extent of the costs that are refundable.  But if the traveler under-insures for just a penny, he’s SOL. This definitely is a GOTCHA.

      1. A commenter above brought up a really good point: what about charges that are in a bit of a grey area regarding refundability? Like port fees, airport taxes. Stuff that is included in the final price of the ticket, but is probably refundable. 

        90+% of the public wouldn’t realize these could be refundable.

        1. It sounds like it is purposely vague. 🙂
          The kind of speak coming from of a high priced lawyer or politician.

    2. I disagree. 🙂 If you are entering into a contract, no matter how often, then you should read every word of it so there is no misunderstanding or “surprise”. Car rental company personnel get very upset when I rent cars from them, because before I sign that rental agreement I read every word and that incldes the small print with my magnifying glass. Access America has now made a mistake by making this exception because there is now precedent to making exceptions to their policy and it is no longer a enforceable policy.

      1. I assume by your posts that you don’t deal in contracts very often.  Its a nice sentiment to say that you should reach ever word.  And that works for piddling little  contracts like car rental agreements.  But most contracts, even small ones are too long, full of legalese, small print, and gibberish.  That’s why we have consumer protection laws requiring certain terms to be in large font, bold, or otherwise set aside

        As far as your last statement about setting precedent, that is simply wrong. Access America is perfectly free to make an exception to its policies for me, yet hold your feet to the fire.

        1. Actually, I spend a great deal of my time mediating contract disputes between parties who either failed to read them or did not understand them before signing. You are absolutely correct about the “legalese” and “gibberish” in contracts and we both know who is to blame for that. 🙂
          While I do not disagree with you that Access America has the right to make an exception for one party and not the other what I was trying to convey, and evidently did so poorly, was that their decision to make the exception provided the claimant a foundation for arguing their right to one as well. Whereas, if they had held to their original policy than there is no further argument. No would be No rather than maybe.

    3. Reading, yes, but understanding?  I wonder.  Reading and comprehension are two separate and distinct skills.  There is absolutely no guarantee that a person having read the insurance contract will understand the import of all the terms and conditions.  Adults who know their limitations should not be ashamed to seek help.

  11. This thread poses more questions than answers, all of them valid concerns. Is it pertinent that the OP didn’t read the policy, insofar as coverage is provided whether the policy is read or not? Why doesn’t travel insurance work more like car or home insurance, in that you are only reimbursed for a claim up to the policy limits (assuming other criteria are met)? How can a policy be sold in good faith if the policy conditions are not met? I believe Allianz did the right thing by “caving”, but insurance law seems to have little continuity.

  12. It’s a scam, plain and simple. The most common peril that travel insurance buyers, especially the older folks, have in mind when insuring a trip is having a medical flare-up. That ‘preexisting condition’ clause can be invoked  for virtually any disease. That ‘whole cost of the trip’ clause has no economic basis whatever: since the odds of a given insurable peril occurring have nothing to do with the percentage of the trip being insured, the company os invoking this purely Because We Can. Do baggage fees count toward total cost? Cab tips in Naples?

  13. “However, they didn’t read all of the fine print in the terms and conditions and didn’t realize…”

    Clearly we need a law that says you can’t be held to a contract you didn’t read.

    Why all the “stupid consumer tricks” stories lately?  How about someone with a real problem.

    1. Ouch. Losing ~$11K is a real big problem especially after hip replacement surgery. What I view as a bigger problem is the UNFAIRNESS of these travel insurance policies. Even people who don’t or can’t read the fine print SHOULD BE ABLE TO TRAVEL and insure it. 🙂

    2. “clearly we need a law that says you can’t be held to a contract you didn’t read”


      Are you trying to put Chris in the unemployment line? 🙂

  14. One can read all the fine print, jump through all the hoops, and do all this themselves OR they can consult a travel professional that knows this sort of thing and deals with it every day.  To those who will flame that they can do this all themselves and they don’t need no steenking travel agent, good on you, but there seems to be a LOT of situations such as this popping up lately that either would have been avoided or at least the traveler would have had someone to at least be their advocate or make them whole financially had a travel professional been involved.  For purposes of disclosure, I am CEO of a travel planning company, a writer for Travel Weekly (a travel industry newspaper), and member or past member of several travel supplier advisory boards.

    1. I am also a CEO of a travel company and we sell travel insurance. But unlike you, I am not a writer or represent any SUPPLIER. I only represent my [poor] clients. I have another take on this issue. The way travel insurance policies are worded today make them very difficult to understand. If we are to promote travel to and for ALL Americans then I propose the U.S. States get together, form a compact, and make a standard travel insurance policy that even a grade schooler can understand. Travel must NOT BE COMPLICATED. If people pay extra money thinking they are PROTECTING their travel “investment” and then later learn they are not, then they have been ripped-off, period.

      1. He doesn’t represent the suppliers – he actually writes fairly and honestly about them.  And please, Tony – the clause of insuring the full amount of the nonrefundable items in the trip is pretty clear.  NOT reading a policy was this couple’s problem.  We see this happening more and more today – someone else should always be responsiblbe because heaven forbid we take a moment and take resposnibility.  Instant access doesn’t mean don’t take a moment to consider the options.

        1. I complete understand where you are coming from since I am faced with similar issues when I sell these things. I have to translate the policy in terms that my customer will understand (some of them, in a different language).

          Most customers only ask for, dig up, and read the policy after having run into a problem. And, since these insurance companies have websites that sell directly to the public, then there really is no person to guide customers unless they call. Of course, the expectation would be different if the customer bought it from a HUMAN travel agent. But nowadays travel insurance is sold from a vending machine and expecting people to read (much less understand) the fine print, well is, expecting “too much” for these click and pay people.

          The point I want to bring up is one of DISTRIBUTION. If these travel products are sold ONLINE (without the benefit of a human answering questions or providing some guidance or advise) then the products MUST BE SIMPLIFIED. Not everybody is going to use Travel Agents and if they buy online, then they must be protected by some friendlier consumer laws. Consumer protection laws have not kept up with the demands of online distribution, IMO.

          1. True, but to read the policy provisions/exclusions is a simple click – I just wonder if how this was actually booked – very curious, indeed.  (And yes, our jobs are multi-pronged, and don’t know what its like in NY, but now in MI its gotten tougher with the licensing rules)

          2. In NY selling insurance is probably even tougher. I register each year with the NY State Insurance Com. If you notice most travel policies sold in NY is different or handled by a different firm. One reason we have to offer insurance (and it’s in every booking we do) is to limit liability (according to our lawyers) because some people can claim we did not offer them insurance.

            I hope you understand that my point is buying insurance ONLINE without the benefit of a human agent guiding a buyer can be open to a lot of problems. If insurance companies do not change the policy to make them more ONLINE friendly, we are going to continue to see this issues posted here.

          3. Oh, I agree wholeheartedly!  I think the problem is that everyone feels they can be their own travel agent, but don’t want all the resposibility that goes along with it.  When, in effect, when you book it yourself, the buck stops THERE.  (So I guess we have the same headaches with insurance as you do – although I have to honestly say its covered quite a few of my clients’ butts in many ways over the years!)  Have a grat Holiday weekend! 

          4. That brings us to the next point – I believe only fool-proof insurance versions should be sold ONLINE. Call it an insurance policy for dummies if it has to. I can’t believe they are selling the same complex products we TAs have to sit down (classroom or online) and learn to apply and sell, to any DIYer. For me this is the problem and the insurance companies are only asking for trouble (bad press).

            Having a great holiday, too. It’s gonna stop raining here so I’m mowing my lawn 🙂

  15. I find this disturbing. When I book a major trip, I usually do it in stages, perhaps booking a cruise first, then locking down bracketing hotel stays, then side trips, and, much later, airfare.  At the time I put down my first deposit, I don’t always know what the entire nonrefundable trip cost will wind up being, so I give my best estimate for insurance purposes, assuming that I’ll be covered “up to” that amount, and if I go over, I’ll lose the overage.

    The insurance companies I’ve dealt with never ask for a breakdown at application, just a total.

    With this new understanding of how the fine print is applied, I can’t see how anyone can properly insure a trip unless they book every aspect of it simultaneously, and never add anything later. The only option seems to be to grossly overstate the maximum cost, thereby paying a heftier premium than necessary.

    Something about this just doesn’t seem right.

    1. We routinely do the very thing you describe because we have knowledge of hotel rates, airfares, etc. with enough accuracy to estimate the total eventual booking cost and the coverage amount bracket into which the total falls.  Example – client booked a $60,000 cruise and I suggested insuring it for $66,000 because I knew their hotel and tour preferences and used that for making the estimate.  The booking finished up at $65,800.  Those that don’t do this every day indeed face the uncertainty you describe.  And even when a client makes significant additions to a booking that we couldn’t possibly have estimated, we can and often do go back and increase coverage on the policy to be certain everything is protected.  Shameless plug alert – this is another reason to use a travel professional, especially when significant cost, complicated itineraries, and/or multiple types and elements of travel are involved.  Yes, you can do it yourself, but WHY?  The suppliers sincerely thank you for doing it on your own because you’re doing ALL the work, dealing with ALL the potential stress and hassles, and going to pay the same thing that you would pay a travel agent to do all this for you. 

    2. Actually, we see this a lot.  Just every time you add a non-refundable addition to the trip, you can bump up the insurance coverage to match.  As long as you cover each portion within the 14 days, the pre-ex waiver will be maintained as well.  I book a lot of foreign travel and world cruises, so we end up bumping up several times each policy.

      1. There is indeed clear contract language to this effect for TravelGuard.

        But is this in fact true for Access America / Allianz (the insurance product under discussion here)?

        I may be be missing something, but reading their contract strictly, I could not find any passage which supports their customers’ ability to add such coverage later.

        Here is the contract for their North Carolina Classic Plan:

  16. It seems strange to me that an insurance company can make an “exception” often.  To me it indicates that the insurance industry is ripe with large profits.  How those profits are gained should be called into question – whether its home/auto insurance, health insurance or travel insurance.

  17. What a timely article!  I’m in the process of finalizing details for a trip and have been looking over travel insurance recommended by my agent. 

    The Schedule of Benefits says Trip Cancellation covers Up to Insured Trip Cost*

    *Coverage only included for prepaid trip costs identified on the enrollment form and if the required plan cost has been paid.

    Going online, I found that “Trip Cost” means:

    Trip Cost
    Trip Cost refers to the total prepaid and non-refundable expenses already submitted toward the trip regardless of who booked the arrangements. This does not include estimated or anticipated costs that have not yet been paid.Only for residents of state NY:Trip Cost refers to the total prepaid and non-refundable expenses already submitted toward the trip regardless of who booked the arrangements. This does not include estimated or anticipated costs that have not yet been paid.
    In even plainer English: If you’re going to insure your nonrefundable expenses, you’d better identify them and pay premiums for the full amount of those nonrefundable expenses or the policy won’t cover you at all.

    No provisions to state that the insurance company will pay UP to the amount you insured, as it does on my homeowner’s policy.  (For kicks and giggles, read the lovely penalties that your HO policy imposes if you have a partial loss on an underinsured property – you decide to only insure 1/2 your home’s value? then you only get 1/2 the amount of your claim paid!)

    An eye opening couple of posts these last two weeks, Chris.  Thank you!

    1. Maybe I’m just not understanding the wording, but I would not have read this to mean that you had to pay to insure the entire trip to be insured.  I read it to be “covered *up to* insured trip cost”.  My interpretation would be that I’d be covered for up to what I paid for.  So, unless your “in even plainer English” definition was included, I would have though I was covered.

      1. Marla, the wording is different if you want the additional Waiver of Pre-Exisiting Conditions and/or Cancel for any Reason. But people STOP reading and don’t bother to continue with the special provisions of the 2 riders, above.
        Hence, the gotcha!

  18. I agree. You always leave out the fine points. Who sold the insurance policy to them? I am under contract to sell travel insurance and if I undersold the insurance, I would be liable for any of “the small print”. If they did indeed buy through a travel agent, then they should tqake care of the loss.

      1. Seriously?  Once you charge their airfare, cruise or tour, hotel stay, etc, you know what the total is – so why would you over insure?  i sell insurance every day, and have never had a problem with over OR under insuring.

        1. why would you over insure?

          1) You overlook a possible refund you *might* be entitled to.

          2) Airfare drops and you become entitled to a partial refund

          3) One of your travel providers makes a substitution that is cheaper.

          4) You are on a wait-list for something (say a deposit is refundable only if you aren’t selected or if your tour operator doesn’t collect a quorum)

  19. While I don’t agree with the outcome, the $74 may have had a different effect as well. The insurance company I use prices in $500 blocks so excluding the $74 may have kept them from the next price increase when purchasing the insurance.

    1. I had the same thought.  I’ve seen more than a few posts on travel boards where people purposefully undervalued their vacation to get a lower price on travel insurance – because “it’s just a few dollars, it won’t matter.” So they don’t read the fine print but pay for $10,000 worth of coverage but expect to be covered for $10,074.

    2. It looks like you are on to something here.

      I just priced a $10,000 Classic Plan policy on Access America (now Allianz) for a 2-week trip for two 60-year olds residing in North Carolina, and the price quote I got was $692.

      If I change the trip cost to $10,001 the price is $760.  If I change the cost to $9,999 the price is right back to $692 (exactly the same as for the $10,000 trip).   For a $10,074 trip, the price is back to $760 (just like for the $10,001 trip). [<– edited to correct prior error]

      I don't understand why any insurer would do it this way.  It would seem much more logical for the insurance price to follow a continuous curve.  It makes no sense to me that insuring a $9,999 trip costs the same as insuring a $10,000 trip, but that a $10,001 trip costs $68 more to insure.

      But this does shed light on why the travelers might have chosen to (just barely) under-insure.

      1. But you still have to get something FAIR for what you paid for. He is not asking to be reimbursed for $10,074; just $10,000. You know our government allows us to buy insurance of debt instruments (securities) we don’t even own or have when you buy Credit Default Swaps. You can buy and sell futures and options at different different strike prices. This is just so hypocritical of travel insurance companies to accept your money to buy riders that are useless because you did not insure the FULL COST OF NON-REFUNDABLE prepaid purchases.

        1. I completely agree.  

          I just wanted to be fair and share what I found.  

          I don’t see any logical or actuarial basis for AccessAmerica/Allianz’s position here.  I don’t see any adverse selection problem (why would a traveler who expects to get sick be more likely to under-insure by <1%? Or by any amount for that matter?)

          And if AccessAmerica/Allianz wants to be such a stickler, they should just require their customers to submit invoices or receipts and then calculate the  nonrefundable trip cost themselves (using whatever criteria they use) before issuing a policy.

          1. I agree.  I see no reason to require an intangible product such as insurance to be purchased in lots except as a money grab by the insurance companies.  Perhaps someone can shed some light on that.

      2. Michael, another thought — you see why it is sometimes easier [or better] to buy everything from a cruise line including their so-called lousy trip protection if it waives pre-existing conditions. At least you can get to retake the cruise. To put it another way, you don’t get to blame yourself for under insuring and losing everything after a hip replacement surgery and a missed trip. 🙂

    3. I tried to the same computation in TravelGuard Silver.
      2 pax $5000 each, 2 week Italy trip (pax age 55-59).
      Each Pax premium $217.

      But if increase the cost of trip to $5,037, the premium goes up to $253.
      In other words they will pay $36 more each for an insured amount increase of $37. That’s almost a 1-to-1 premium to insured amount tradeoff.

      Note my assumption is their total trip costs were divided between 2 passengers. So they really saved about $74 [in premium payments] but they lost more than $10,000.

  20. I’m very happy things worked out for these people.  They should have done their homework better, but I’m shocked that their insuring $10,000 of a $10,074 trip could somehow be inadequate–they should have gotten their $10,000 back and just had to eat the $74. 

  21. I would like to see Chris do a column interviewing some travel insurance compnies, sort of an FYI piece.  I wonder if any of the bigger companies would do it?

  22. “Not all consumers are as computer savvy as others”.

    This has NOTHING to do with being computer-savvy.

    It sounds like they’re making up excuses for why they didn’t read their policy (“we don’t know how computers work!”), instead of acknowledging that they didn’t read their policy!

  23. I am the biggest whiner about trip UN-insurance – is there one out there that does not have miniscule fine print and does in fact, insure travelers?

    It seems that there is always a loophole for them, but never for the traveler.

    It appears you have knowledge of how to interpret the wording, which is key to the whole thing – can we understand it to protect ourselves?

  24. I’m glad Access America did the right thing, but it seems so wrong that there was an issue in the first place. What does AA care how much of my trip I choose to insure?  Unfortunately, this strikes me as a matter that is only going to be cleaned up by legislation. I’d suggest that in future anyone to whom this happens file a complaint with their Congressperson, State Insurance Commissioner, and any other appropriate government agency they can think of. Squeaky wheel….  

  25. This story echoes a recent piece about the traveler whose claim was denied because of a slight discrepancy between the claimed amount and what the insured amount had been. Frankly I am mystified as to why if you pay for $X worth of coverage, you are not able to recover that amount regardless of what the entire value of the trip might be. Full-replacement insurance premiums for home insurance policies are higher than stated-value premiums but when you make a claim, you are assured of receiving the stated-value amount. Presuming there is some rational actuary determining what the insurance rates are at Access America and that the premiums are based on those projections, the fine print justification for denying a claim such as this seems to be nonsense. Can Chris ask AA to explain its thinking and justification for this condition other than “because”?

    1. Sorry, your analogy to full replacement cost insurance coverage/premiums  on home insurance isn’t quite correct.  You have to insure to full value in order for replacement cost to work properly.  There should be a section in your policy on “How we settle a property loss” or similar wording.  Claims are paid at Actual Cash Value (read the definition of ACV early on in the policy) unless actually repaired or replaced (in one paragraph) AND you have insured “your dwelling to 100% of its replacement cost based on the accuracy of the information you furnished in the completion of our home replacement cost estimator” (in another paragraph).  Wording is from my policy, but is very similar on all standard home insurance policies.  On standard policies, the amount paid will be a % of what you insured your home for compared to the amount you should have insured your home.  High end policies often waive that penalty, but limit your recovery to ACV, not replacement cost.

      In Nebraska and some other states, if you have a total loss by fire, wind, tornado, hailstorm or lightning, you get the face value of the policy, no ifs, ands nor buts.  Of course, what you consider a total loss and what the insurance company considers a total loss are two different things . . .

      I used to sell and service property and casualty insurance for 20 years and received industry accreditation, so I’m pretty knowlegeable on this topic.  The weird wording in travel insurance isn’t my forte.  That’s why these articles by Chris have caught my attention. 

  26. It seems that the travel insurance industry operates like Houdini with lots of smoke and mirrors. This case is utterly ridiculous!

    Why can’t the insurance company simply reimburse for the amount insured? Then everyone’s happy! I’m sure that if this couple had insured the trip for $11,000, the insurance company would have said “Sorry, we can only reimburse you for $10,074. You over-insured the trip, but we can’t reimburse you for the extra insurance premium.” Why can’t this deal work in the reverse direction?

    The more I read about the travel insurance industry, the less I want to even think about insuring a trip. This might be a very good issue for some Congressional intervention.

  27. all of these insurances are scams… all u need is insurance for trip disruption because of illness or death  as the airlines take care of flight mishaps.//lost luggage etc and so coverage is not needed for those other issues but u must buy it alll that sucks

    1. Or you don’t buy it at all.

      Distruption isn’t the same as canceling prior to departure.  Understanding the terminology is important.  I am not a fan of insureance of any kind as it bases the purchase on fear of something happening.  However, it you take out any insurance, do your homework, by reading, calling, researching the company.  Base you decision on more than just price.

  28. Having travel cover is critical. This toughest sometimes happen to help people that fit in this pitfall connected with an excessive amount complacency. Vacation goers are persons connected with fraud, transgression, damages, in addition to professional medical emergencies. Devoid of insurance policies they are often
    somewhat insecure…

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