Trip cancellation insurance
By now many of you have made plans for the Thanksgiving or
Christmas holidays. Some of you will spend time with family
and friends. Others will jaunt off to some foreign land or
board some swanky cruise ship to a warm weather climate.
No matter your destination, it is my sincere hope that you
forget about news for a few days and enjoy the time off you
so richly deserve. The travel industry has suffered irreparable
harm since the atrocities of September 11.
Tour operators canceled trips, itineraries were changed, and
at least one airline and two cruise lines have gone out of
business. No doubt many of you have at least read or heard
of the disaster known as United Airlines. Collectively, the
travel industry is drowning in red ink. No one can guarantee
that some future, equally horrendous event wonít force the
cancellation of your holiday travel plans. So when it comes
to travel, you should always plan for the unexpected by having
some form of Trip-Cancellation Insurance (TCI) to protect
you from financial loss.
TCI is designed to reimburse you for financial loss in the
event a trip is cancelled or interrupted by a series of unforeseen
events. Those events include illness, injury or death of a
traveler prior to departure or while on the trip. It also
covers the interruption or cancellation of a trip due to illness
injury or death of a close family member who is staying or
stayed at home. TCI will also protect you from operator failure.
Letís say employees of a cruise line go on strike, you should
be protected. If an airline, tour operator or hotel should
collapse youíre covered. But be careful here. Some polices
will pay only if the tour operator declares bankruptcy. A
tour operator can go out of business without declaring bankruptcy,
in which case could be out thousands of dollars.
Here are a few additional provisions you should be aware of.
Most TCI protects you against mishaps at home, such as your
house burning down. Also on the list of protections is jury
duty, court appearances and missed flights due to accidents
on the way to the airport. If thereís a disaster at your destination
such as a hurricane or contagious disease outbreak youíre
Hereís a glaring omission of most TCI policies that didnít
rear its ugly head until our innocence was ripped away from
us on September 11. If a terrorist attack occurs on U.S. soil
you are NOT protected. The terrorist attack provision of most
policies only applies to attacks on foreign soil. In other
words, if a terrorist attack happens in the Middle East and
that is your destination, youíre covered.
But since the attacks occurred in the United States, travelers
with domestic itineraries were unable to collect on claims,
even those who lost their trip as a direct result of the Federal
Aviation Administrationís order to halt air travel in the
immediate aftermath of 9/11. Some policies specifically mention
which countries fall under the terrorist provision coverage.
To be fair, several insurers paid claims based on the terror
provision even though they werenít obligated to do so, but
many more did not.
Having said that, it is still important to protect your assets
when making travel plans, and in this case, the asset is the
money you invested in the trip. You should expect to pay between
$5 and $7 for every $100 dollars worth of protection. Be careful
how much insurance you buy and hereís why. Lets say you paid
$6,000 for a trip. At the last second, you had to cancel for
one of the many reasons mentioned above. Most tour operators
charge a 25 percent cancellation fee. You, would be obligated
to pay the tour operator $1,500 or 25 percent of the $6,000.
So all you need TCI for is $1,500. TCI is only designed to
recover costs that you canít recoup from the tour operator.
Thereís another form of travel insurance many Americans already
have in their possession, a major credit card. American Express
automatically gives card members $100,000 worth of travel-accident
insurance. Visa Gold cardholders automatically receive $150,000
worth of coverage.
Check with your credit card company before purchasing any
travel insurance and Always----Always----Always book trips
with a major credit card, even if your card has no TCI protection.
The reasons are too numerous to mention here, but at the very
least you will have an established a paper trail should you
need to demand your money back. There is no uniformity in
the travel insurance industry. What one insurer may or may
not provide, the next will and vice versa. Go over the details
with your travel agent, tour operator and most importantly
your credit card company when you make travel plans. Find
out what the credit card covers and more importantly, what
it does not cover. Read the fine print.