Consumer Report : Concerned Travelers Insure Against Mishaps

Whether to buy travel insurance is becoming less of a question than it once was.

The reason is relatively simple. A rash of bankruptcies in recent years, encompassing airlines as well as tour operators and cruise lines, has taught an increasingly aware public to be wary.

Travelers are concerned over such subjects as the financial status of suppliers, incidents of terrorism and nonrefundable air fares. Some travelers even want to protect themselves from inclement weather.

Different insurance programs, of course, cover different problems. Some plans are comprehensive, and the whole package must be bought. Or one can buy only a specific type of coverage.

Deciding what insurance to buy, and for how much, can be a daunting process. Here’s what to consider.

Insurance Elements

Primary elements of travel insurance include trip cancellation, trip interruption, accidental death or dismemberment, medical/dental coverage, transportation to adequate medical facilities and loss of luggage and personal possessions.

Other costs that can be insured are expenses incurred due to change of return time or travel delay, loss of travel documents and credit cards, personal liability for damages, legal defense, investigation, settlement costs and repatriation of remains.

Collision damage to rental cars is also part of the insurance sold by some companies, as is protection against default or bankruptcy of carriers and tour operators.

Shopping around is worthwhile because conditions, limits, exclusions and costs vary. Before you buy travel insurance, determine what insurance you already have. Homeowner policies, for example, include limited coverage for losses away from home in some circumstances. Medical and auto insurance may also provide some coverage. Some credit card issuers offer life insurance on flights.

Remember that double coverage doesn’t bring double protection. Insurers, who usually have some provision in their policies to prevent payment of the same coverage, check with each other to pinpoint the extent of their individual obligation to you.

Be clear about what deductibles your policies have, especially with medical and home insurance. Adding travel insurance can cover the amount of such deductibles, if you wish. Also determine what geographical limits, if any, there may be in your existing policies. For example, Medicare doesn’t protect you overseas.

On-the-Spot Help

But you can buy programs that specialize in providing on-the-spot assistance, including both medical and financial aid.

Increasingly, cruise lines and tour operators are offering optional programs covering such items as trip cancellation/interruption and baggage loss. These plans may have nothing to do with an insurance company but they still offer you some protection.

Some tour operators/cruise lines offer trip-cancellation coverage through a program with an insurance company.

Consumers should read all the fine print and ask a lot of questions. Travel agents (who receive commissions for selling travel insurance) may not have a ready answer. Either ask your travel agent to clarify coverage or call the insurance company yourself. Toll-free phone numbers are usually available.

One of the most confusing parts of travel insurance is what pre-existing conditions can void your coverage for trip cancellation. Some coverage may allow you to cancel for any reason. Others may require that the reason be medical, supplier default, jury duty or unforeseen emergency.

“Travelers should realize that a basic premise of trip cancellation and insurance generally is to exclude foreseeable claims,” said Steve Volz, Los Angeles-area manager of Travelers Insurance.

Fine Print

“Consumers should fully understand the fine print before they buy a policy. Unfortunately, many travelers wait until they have a problem, and then it may be too late.”

Furthermore, some insurance companies may have more stringent existing condition clauses than others. Whether or not the health-related condition was under control or manifests itself during the pertinent time period is generally the heart of the matter. The pre-existing period usually begins from the day you bought the policy and ranges from 60 days to a year before policy purchase, according to Volz.

Insurance companies are likely to check with a traveler’s doctor about any medical aspects of a claim involving cancellation of a trip.

“If you’ve ever received treatment for a condition it’s possible that you might not be eligible to collect on a claim based on that condition,” Volz said. “And taking medication for a specific condition could also be considered reason for exclusion from coverage.”

Chronic Ailments

Accordingly, not everyone is necessarily a good bet for trip cancellation/interruption coverage. “If you suffer from a chronic condition, this type of coverage might not help you,” Volz said. “Under the pre-existing clause section of our policy, any degenerative disease would generally not be covered.”

But less than perfect health may be a good reason to get coverage for on-the-spot medical help or evacuation.

Make sure that you know when coverage begins and ends. Does it start on the date you bought the policy or when you begin your trip? Does coverage end on a policy date or when your trip is over? And does coverage include transportation to and from the airport/dock/terminal? Similarly, can your coverage be extended if you have to extend your trip for some reason?

With trip interruption, does your coverage refer only to you or does it include any traveling companions? Suppose a family member back home needs you in an emergency; what sort of emergencies would be accepted?

With baggage and personal items, does a policy cover all risks or just a limited number of possible misfortunes? Does it cover your use of rented or borrowed equipment?

Don’t buy more insurance than you really need. Keep in mind that cancellation rules tend to become more stringent the closer you get to your departure date, and that non-refundable air tickets have no cancellation period at all.

Trip Cancellation

Trip cancellation can be particularly relevant if you plan to travel on discount fares that involve prepaid tickets with minimum/maximum stays (or charters with fixed dates), where you can’t change flights without paying a penalty.

If deposits are involved, consider taking out travel insurance as soon as you commit yourself. Depending on your deposit and individual situation, you may not want to wait until departure is near.

Similarly, don’t get more coverage than you need.

“Travelers should determine what the air fare would be for a one-way return from the farthest point on their itineraries and not buy more insurance than for the cost of that flight,” Peggy Mertes, marketing supervisor for Travel Guard International, said.

Several questions are worth considering regarding the emergency assistance programs: Do you have to go to a doctor/hospital abroad that is designated by the insurer? Does the policy guarantee payment to a foreign hospital and doctor? Must some medical procedures be approved by the insurer’s medical staff before they can be done? Who decides when and where to move you--the local doctor or the insurer’s doctor?

What about payment of the air fare for a travel companion or family member going with you, either to another hospital or home? And is there an around-the-clock number that you can phone in an emergency from anywhere?

The more questions you ask about any type of insurance, the better. “There is a lot of gray area, and we encourage both travel agents as well as consumers to call us,” Mertes said.

That’s good advice.

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A reminder: Passengers have until March 31 to claim awards under the old PSA schedule for accumulated flight credit. After that date, the credit will be applied to the USAir award schedule, which is less generous.