By Ed Perkins, Tribune Content Agency
Travel insurance for your summer trip can either be a great idea or a waste of money. It all depends on whether you face big-dollar risks. Typically, two types of travel insurance cover those big-dollar risks:
You have to cancel or interrupt a trip for which you have to make big-dollar deposits and prepayments that are either nonrefundable or carry heavy cancellation penalties.
You face medical costs in the event that you fall sick or suffer an accident during a trip, which your regular health insurance does not fully cover.
If you don’t face either of these risks, insurance is probably a waste of money. But if you face expenses or penalties that are more than you can walk away from, you probably do need insurance. And when you buy insurance, you have to be fully aware of seven potential gotchas.
1. Covered Reasons. Travel insurance is “named peril” insurance. Simply put, that means if something happens that isn’t specifically named as a “covered reason” in a policy, it isn’t covered. To avoid this problem, I recommend “cancel for any reason” insurance.
2. Pre-existing Medical Conditions. Most travel insurance policies exclude pre-existing medical conditions as “covered reasons” for canceling or interrupting a trip and for covering a medical claim. But most insurance companies waive that exclusion provided you buy the insurance within a specified period after you make your first prepayment for the trip — anywhere from a week to a month, depending on the company. A waiver of pre-existing condition limitations does not add any cost; you just have to arrange it early: That’s a no-brainer. Also, with any policy, you must be physically able to travel on the day you buy the insurance.
3. Full Value. Many policies state that you must insure the “full value” of the trip. With some policies, this means the total cost, including even refundable trip components that you can recover or re-use; with others, you must cover only the non-refundables. Many policies don’t allow you to “round down” the trip cost to squeeze in under a lower insurance price bracket. And if you add additional nonrefundable payments later, you must increase the value of coverage, typically within 21 days of the added prepayments.
4. Unforeseen Circumstances. Most policies clearly cover only “unforeseen” circumstances, even those that would normally be considered “covered reasons.”
5. Secondary Coverage. Almost all cancellation/interruption policies and many medical policies provide only secondary coverage. That means cancellation/interruption insurance covers only those prepayments that you can’t first recover from the primary supplier — airline, cruise line, resort, or tour operator. Secondary medical insurance covers only what you can’t first recover from your regular health insurance. And secondary medical insurance generally requires that you pay up front for whatever out-of-pocket medical expenses you encounter and subsequently ask your regular health insurance for reimbursement. If you have to be hospitalized, paying the bill could amount to a big hit on your checking account or credit card.
6. No Improvising. To take advantage of a policy’s coverage, you have to follow the fine print. And that almost always means going through the insurance company’s designated representative before you take on any initiative of your own. If you decide to return home early, for example, don’t just go out and buy a new airline ticket or charter a business jet. Money you spend without authorization may not ever be reimbursed.
7. Don’t Overpay for Small Stuff. Sure, it’s nice to claim a few bucks for a missing bag or a delayed flight, but that’s chump change. If coverage comes with a bundled policy, fine, but don’t pay extra to cover small-time risks.
Because of differences in the fine print, you need to compare policies carefully and don’t blindly take whatever your airline, cruise line, or tour operator suggests. Most of the big online travel insurance agencies, including g1g.com, insuremytrip.com, quotewright.com, squaremouth.com, totaltravelinsurance.com, travelinsurancecenter.com and tripinsurancestore.com, publish elaborate side-by-side comparisons of different policies.
(Send e-mail to Ed Perkins at firstname.lastname@example.org. Also, check out Ed’s new rail travel website.)
Tribune Content Agency — April 12, 2016
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