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 won’t 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.

Let’s say employees of a cruise line go on strike, you should be protected. If an airline, tour operator or hotel should collapse you’re 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 there’s a disaster at your destination such as a hurricane or contagious disease outbreak you’re covered.

Here’s a glaring omission of most TCI policies that didn’t 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, you’re 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 Administration’s 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 weren’t 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 here’s 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 can’t recoup from the tour operator.

There’s 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.