Insuring Against Trip Cancellation

Although today’s insurance covers just about every aspect of travel, consumers should check their current policies before adding new coverage.

One new area, however, is non-refundable air fares. The growth of substantial cancellation penalties for discount fares have led insurers to offer variations on trip cancellation protection. Some plans have fairly stringent requirements for trip cancellation coverage, but a plan by Travel Guard offers coverage that lets you cancel for any reason.

A version of this plan, which costs $19 for 30 days of coverage, will pay you half of the non-refundable fare or cancellation penalty up to $200. Another version, the Super Advance Purchase Plan, hikes the recoverable amount to $400 at a cost of $39 for 45 days’ coverage.

“We introduced the program because of the many non-refundable air fares available that cost more than $200, and because we found that the $200 cutoff didn’t apply well to some cruises and tours that are non-refundable or have heavy cancellation penalties,” says Peggy Mertes, a Travel Guard spokeswoman.

Purchase Time Limit

With either version, you have to buy your ticket within four days of the initial trip payment or ticketing date, whichever comes first.

In addition, the price of these plans provides a supplemental collision damage waiver for eight or 15 days, depending on the plan.

Car-rental companies offer this optional coverage, taking you off the hook for damage to their autos at rates up to $12 a day. This coverage means that renters are only responsible for their deductible. If you obtain an insurance policy with supplemental collision damage waiver coverage, your deductibles are also taken care of.

Penalty waiver and collision damage waiver coverages are part of an overall package that also includes trip cancellation before departure, trip interruption, plus travel and baggage delay.

The Super Advance Purchase Plan also offers coverage for hotel overbooking, and a Comprehensive Plan offers even more, including default/bankruptcy by airlines, tour operators or cruise lines.

Other insurance companies also offer a variety of programs, and it’s always a good idea to learn what aspects of coverage can be bought separately or which must be part of a package.

If you can’t unbundle these kinds of plans, you’ll have to decide if it pays to get the entire package. The higher the cost of tickets and the steeper the cancellation penalties involved, the more reason to consider protection.

As for collision damage waiver coverage, check to see if you’re already covered. Travelers who are already protected may needlessly buy collision damage waivers (which also go under such other names as physical damage waiver and loss damage waiver).

Under the Super plan, you get $25,000 worth of collision damage waiver coverage, compared to $10,000 for the other plan. Supplemental collision damage waiver coverage has been increased because many car rental companies are holding travelers responsible for the full value of the cars, Mertes says.

Seeking protection on discount air fares also calls for a close look. For example, if you bought a non-refundable LAX-New York fare for $200, you could cancel your flight without the need for any explanation or justification and get $100 back from Travel Guard.

Suppose, however, that a family of four is involved. Now the total cost of four non-refundable tickets jumps to $800. At a cost of $76, you can get back $400 if you have to change your flight plans.

Some airlines provide full refunds on non-refundable fares when medical emergencies (and perhaps other situations such as funerals) are involved. Documentation is required and some carriers can be tough to deal with.

If you miss a flight on a non-refundable ticket, many airlines will put you on their next flight on a standby basis if you get to the airport within two hours of your original departure time.

If your discount fare involved a 50% cancellation penalty, you could get half of that amount back. Using the same $200 fare, you would get back $50, half of the $100 cancellation penalty. Subtracting the $19 cost of the insurance, your net would be only $31.

But if you’re going on a more expensive international flight, it may be worth the protection if you think there is a chance you won’t make the flight.

New Plan Implemented

Meanwhile, American Express has implemented a new baggage delay and loss protection plan. It provides reimbursement of up to $200 if your luggage doesn’t show up within six hours of arrival at a destination away from home when you’re flying on a scheduled flight.

If your baggage was delayed, you could call a toll-free American Express number to file a claim. Your call would have to be made at least six hours after your arrival.

You could go out and buy replacements, with American Express reimbursing you up to $200. This reimbursement is provided regardless of what the carrier offers, according to an American Express spokesman.

Airlines should still extend whatever help they can. “Regardless of what American Express or another company might do, we would still process individual bag claims as a separate entity,” Vince Durocher, district director of marketing for Delta Air Lines, said.

This new plan also provides for a maximum payment of $500 for loss, significant damage or theft of checked baggage. Another maximum payment of $500 is offered for loss or theft of carry-on baggage. Reimbursement for checked-through luggage is computed on the original cost or up to $500, whichever is less. With carry-on baggage, reimbursement is strictly on a depreciated value, up to $500.

This protection against lost or damaged baggage is provided only in excess of the coverage you get from the airlines. Domestically, the airlines’ maximum liability for checked baggage is $1,250 per passenger, not per piece of luggage. Internationally, the rate is $9.07 a pound.

As an American Express member, you automatically get $500 worth of coverage in excess of airline payment for lost or damaged checked-through luggage. Therefore, your loss or damage of luggage on domestic flights would have to be more than $1,750 to collect on this portion of the policy.

Maximum of $500

Personal property loss or theft at hotels that accept the American Express card (you don’t have to be using the card) are also covered up to a maximum of $500 for stays immediately following any covered flight.

This coverage is also in excess of whatever the hotel liability might be. If your loss at the hotel was worth $2,000 and the hotel was liable for $1,000, you would get $500 from American Express. But if your loss was $500 or less, you wouldn’t get anything from American Express.

The cost of all the protection is $4.75 per scheduled flight if you enroll in the plan, with this amount automatically billed to your statement per flight charged against your card.

The single charge covers all legs of a flight, one way or round trip. Frequent fliers can get coverage at a flat annual fee of $39.