A Tour of Travel Insurance : Travel Insurance Tour

Read all the fine print on travel insurance policies concerning what could happen--accidental death, dismemberment, loss of sight, trip cancellation, bankruptcies, tour company defaults, hijackings, lost baggage, stolen passports, medical evacuation--and it’s a wonder that anyone ever leaves home.

However, you should quickly realize that the insurance companies are getting richer daily because these things seldom happen to the vast majority of policy holders. After this you can begin your trip with peace of mind.

Like all insurance, travel policies take many forms. Simplified, it means a guarantee against loss or damage to life and property by paying a premium in proportion to the risks involved.

When you look at the premium for flight insurance, say just $10 for $300,000 worth of insurance, you’ll begin to get an idea of how safe air travel really is.

High Cost of Searching

On the other hand, should you insure your luggage and personal effects for $500 during a two-week trip, the premium is double that of the $300,000 policy. Why? Lost, delayed and misdirected baggage is a big problem. It costs the airlines about $50 million a year just to search for missing and misdirected bags.

At today’s hectic travel pace, baggage insurance is a must, and not just for airline trips. On a typical three-week tour of Europe, for example, just one bag makes anywhere from 32 to 50 transfers in airports, buses, hotels and points in between.

Next, look at the wisdom of trip cancellation and trip interruption insurance: a good idea or a waste of money? The choice is yours, but remember that in the last six years, 120 airlines have gone out of business through bankruptcy or simply called it quits. Consider, too, that about 10,000 passengers are bumped from flights each summer month. This isn’t even considering the main purpose most people take out such insurance--personal problems such as sudden illness, accident, etc. With those odds, trip cancellation/trip interruption insurance is almost a must these day.

Buying travel insurance is easy. Buying the right policy is not so easy. The problem lies not so much in the legalese of the policies, which is getting better, but simply in the fact that there are so many different coverages, so many variations from so many companies that selecting the right policy at the right price is a challenge.

Check Current Policies

Before looking for more coverage, check those policies you already have: You may be protected through existing homeowners, tenant, life or other personal insurance. Or perhaps you have a group policy that covers some travel aspects that you may have forgotten or overlooked. These could be through a lodge or association, a company or business policy, etc. Probe these carefully before buying more (perhaps unnecessary) insurance for travel.

There are four major types of insurance available for today’s traveler: trip cancellation/interruption, baggage and personal-effects insurance, accident/sickness protection, medical evacuation.

Trip Cancellation and Interruption--A good policy should cover: any loss of deposit if you are forced to cancel your trip prior to departure; any additional expenses if you are required to postpone or miss an initial original flight for a more expensive alternate; reimbursement in case of bankruptcy or default of any airline, cruise line or tour operator; reasonable expenses should your travel be delayed or should you be forced to interrupt your trip. The best policies also cover you for additional expenses required if a travel companion cancels and you must pay higher occupancy rates at hotels, etc.

Baggage Insurance--Your policy should pay for baggage and personal effects if they are lost, stolen or damaged; provide a sum (usually $100) for emergency purchase of essential items if baggage is delayed more than 24 hours. Note: There are many limitations and exclusions among the many different baggage policies offered, so check these carefully.

Accident and Sickness Protection--Insurance should pay a specific maximum amount selected by you for loss of life, limb or sight. Some policies have a double indemnity clause for travel in a public conveyance or common carrier. It should pay medical expenses for injury or illness while traveling. Some even include ski injuries and dental emergency treatment. In others, the language is ambiguous. Note: There are a number of exclusions and limitations in these policies. The big one is that no company will pay for treatment during your trip for any illness you’ve suffered 90 days prior to departure.

While travelers with Blue Cross/Blue Shield or other medical plans covering foreign destinations may not wish additional travel accident/sickness protection, be aware that Medicare coverage does not include accidents or illness that occur outside of the United States.

Also you should learn what type of coverage is offered by the various travel illness/sickness policies.

Medical Evacuation--In case of serious illness, your insurance should pay for emergency medical care and transfer to the closest medical facility. If required, it should also pay for proper air transport to your home.

All of these types of travel insurance are found, in one form or another, within the four major travel insurance packages offered by the three principal sellers of such policies. These are: Tele-Trip, from Mutual of Omaha; Travel Insurance Pak by the Travelers Corp., and Travel Guard and Travel Guard Plus from Sentry Insurance.

While the basics are found in all the packages, there are sufficient differences in rates, limits of liability, etc., so read the policy carefully.

Choosing Segments

With three of the four package plans (not Travel Guard Plus), you can choose which of the segments you want--baggage, cancellation and interruption, accident and sickness, medical evacuation.

You may, for example, just want the baggage and trip cancellation interruption portions and opt to skip the others, since you may already be covered by Blue Cross/Blue Shield or another health plan.

With the same three packages, you then select the maximum amount of insurance desired for both baggage and travel accident sickness, plus the number of days.

To give you an idea of what a typical rate package might include and cost, let’s take a 14-day trip with complete coverage:

This would include $500 for loss/delay of baggage; $1,000 in pre- and post-departure cancellations and trip interruptions; $25,000 accidental death; $2,500 accident or injury medical expenses, and $10,000 for emergency evacuation.

Average cost for this package would run from $75 to $88 depending on the company and the rate structures. If you do not have medical coverage, you can add the sickness medical expense, which on some packages runs $35 for $2,000 in emergency coverage.

It might sound high, but this is primary coverage, which means that the payment goes directly to you, not the doctor or medical service. In some policies, the sickness benefits are paid only for portions not covered by your Blue Cross/Blue Shield or other health program.

More Innovative Package

Then there is that fourth package, somewhat innovative, both in coverage and in pricing. This is Travel Guard Plus by Sentry. The total premium is a straight 7% of the cost of your trip as purchased through a travel agent. And it includes everything in the package.

This provides up to $10,000 in trip cancellation/interruption, $2,500 baggage and travel document loss, $10,000 medical expenses, up to $25,000 emergency assistance, $100,000 in travelers liability insurance, plus some additional features such as payment of $100 if a confirmed hotel overbooks or $500 if your plane is hijacked outside of the U.S.

Yet another new concept in travel insurance was launched last fall by Citicorp called Travelers Advantage. Some customers who purchase Citicorp Travelers Checks get free baggage insurance which pays up to $1,500 for lost or stolen bags and up to $100 for out-of-pocket expenses if baggage is delayed 24 hours.

Due to state regulations, the Citicorp Travelers Advantage program is not available in Texas, Oregon, Vermont and South Carolina. In California, Florida, Alabama, Pennsylvania, Georgia, Louisiana, Nevada, New Hampshire, Hawaii and South Dakota the baggage insurance is available for $1.

While this article has concentrated chiefly on the comprehensive travel insurance programs sold through travel agencies, others are offered through senior associations and groups, some independently. One is Carefree, provided through ARM Coverage Inc., 9 East 37th St., New York, N.Y. 10016.

Addresses for the headquarters of the other programs are:

Travel Insurance Pak, Ticket & Travel Service, The Travelers Corp., 3600 Wilshire Blvd., Room 864, Los Angeles 90010.

Tele-Trip, Mutual of Omaha, West Dodge Station, P.O. Box 31685, Omaha, Neb. 68131.

Travel Guard, Sentry Insurance, 1800 North Point Drive, Stevens Point, Wis. 54481.

In addition to these companies providing comprehensive travel insurance packages, there are almost a score more specializing in major medical emergency aid and insurance for international travel.