Not a total disaster? Now, trip insurance may still cover you

THE last few months have brought a sea change in disaster coverage for travelers who buy trip insurance. Old assumptions are being blown away -- but in a good way.

Some policies used to pay for trip cancellation only in the most dire straits, such as when a hurricane or its effects blocked air traffic or road access to your hotel. Now, more of those policies will let you cancel because a hurricane warning is in effect or a storm causes problems such as flooding or power outages in the hotel or even the town you’re planning to visit.

And now change fees for nonrefundable plane tickets may also be covered if weather forces your cruise or tour operator to switch dates.

Insurers said they revised their policies because of customer requests.

“A lot of this comes out of events such as Hurricane Katrina, Hurricane Rita and the [South Asia] tsunami,” said Mark Cipolletti, spokesman for Access America, based in Richmond, Va. “It’s a topic a lot of our clients want to know about.”

Recent additions mean you need to read your policy more carefully. You may be pleasantly surprised -- although, as always, policies are open to interpretation. You and your insurer might not see eye to eye.

A look at some new coverage:

Hurricane warnings: Several insurers in August began covering hurricane warnings under trip cancellation.

These new provisions typically pay for costs such as nonrefundable deposits for plane tickets and hotels if you cancel your trip because your destination is under a hurricane warning within 24 hours of your scheduled departure. The warning must be issued by the NOAA National Hurricane Center.

Typically, you must have bought your policy at least 15 days before such an event.

The storm doesn’t need to hit your destination for you to collect. But if your airline or hotel gives you a refund or lets you rebook without penalty -- as many may -- don’t expect to get paid under your insurance policy too. In such a situation, insurers figure that the supplier has, as they term it, “made you whole.”

Among insurers with hurricane-warning coverage in one or more policies are TravelSafe Insurance (www.travelsafe.com), which is sold through Chester Perfetto Agency in Wyomissing, Pa.; M.H. Ross Travel Insurance Services (www.tripinsurance.com) in Northridge; and Travel Insurance Services (www.travelinsure.com) in Walnut Creek, Calif.

Uninhabitable locales: What if it’s possible to get to your destination after a natural disaster, but the hotel or town is heavily damaged or without utilities? Can you cancel your trip in advance and collect on insurance?

Some travelers encountered this situation after recent hurricanes or, on a broad scale, after the South Asia tsunami in December 2004 devastated coastal resorts but left airports and many roads intact.

Under some insurers’ trip-cancellation provisions, hotel guests could not collect for nonrefundable deposits and other costs. (You might have been able to collect, however, if you went on your trip and lost part or all of your vacation because your hotel was uninhabitable.)

“If you were able to fly there or get there, you probably weren’t covered,” Cipolletti said of policies by Access America and some others.

But this summer, Access America, www.accessamerica.com, changed its rules to cover policyholders if a storm causes a destination to become uninhabitable, which might happen if the hotel or town loses utilities or suffers major damage.

“Uninhabitable” is open to some interpretation, Cipolletti said. It wouldn’t cover an inconvenience, he explained, such as losing a chance to jet ski because equipment washed out to sea.

The test, he said, is this: “Would a reasonable person go there?”

Among other companies with “uninhabitable” provisions in one or more policies are Travel Guard International, www.travelguard.com, in Stevens Point, Wis; M.H. Ross Travel Insurance Services; CSA Travel Protection, www.csatravelprotection.com, in San Diego; TravelSafe Insurance; and Travel Insurance Services.

Change fees: After Katrina hit New Orleans last year, cruise lines shifted departures to other ports and reshuffled dates. That left some customers with change fees, typically $100, on nonrefundable air tickets; some others, who had booked airfare through the cruise lines, were able to avoid this charge.

Now some travel-insurance polices cover such fees in this and other situations. They may even pay the cost of rebanking frequent-flier miles.

Even with these new policies, much comes down to definitions.

Based on a reader’s experience, I asked several insurers whether “uninhabitable” would cover a situation in which a hurricane had caused flooding, damage and power outages; left debris and water contamination between the airport and the town; and prevented hotel staff from getting to work.

Although they couldn’t give a final decision without full details, here’s what they said:

Cipolletti of Access America said his company probably would cover this situation. So did Sheri Machat, senior vice president of M.H. Ross Travel Insurance Services.

David Craychee, spokesman for CSA Travel Protection, said his company probably wouldn’t, unless the hotel itself was uninhabitable.

For travelers frustrated by the ambiguities, there is another option: so-called “cancel-for-any-reason” provisions. You’ll find these in more expensive trip-insurance policies, typically costing up to 50% more than standard policies, or as optional add-ons to policies.

Some of the insurers mentioned in this article offer this coverage on at least one policy. Payouts may be limited to change fees of up to $250 or 75% of nonrefundable deposits.

You can also buy limited coverage as a waiver from some cruise lines and tour companies, which may urge you to take your payout in the form of a voucher.

Either way, in this uncertain season, investing in “cancel-for --any-reason” coverage could improve your mental climate.

jane.engle@latimes.com