Travel Insurance
How Much Risk Are You Willing to Accept?
Most people know that travel insurance is good to have should you end up needing to cancel your trip. Did you know, however, that unless you purchase a Cancel For Any Reason policy (better known as CFAR), you will only receive a refund for covered reasons? Covered reasons vary depending on the specific policy and company you select, but almost never will changing your mind about travel be included as a covered reason.
Any insurance is about risk. When you purchase car, home, or life insurance, for example, and you choose a deductible or the amount of coverage you feel you need, you're making a decision regarding the amount of financial risk you're willing to accept. Travel insurance is no different. If you spent $500 on a weekend hotel stay, perhaps that's an amount you're willing to risk. But, if you spent $10,000 on a dream trip to Hawaii, is that money you would be ok with losing should something unplanned happen? Here are some things to keep in mind when it comes to trip insurance:
- Pandemic: Now that COVID-19 is a known pandemic, many tour operators, cruise lines, hotels, resorts, etc. are much less lenient than they once were with their change and cancellation policies. Be sure to read the fine print on their "cancel with confidence" programs. Many of these have stipulations or deadlines. You shouldn't assume that if you need to change your plans due to COVID, that you will automatically receive your money back. Another change is that hotels and resorts are not automatically covering your stay should you need to quarantine.
- Health Coverage: Many healthcare companies do not provide coverage outside of the United States. Should you get sick or injured during your trip, you will still be expected to pay for medical care, and you may be faced with paying thousands out of pocket. A few years ago a client slipped off a curb in Turks & Caicos and ended up shattering his ankle. He had to be flown back to the US in the middle of his trip for emergency surgery. Another client suffered a terrible accident while windsurfing and spent months recovering in a hospital outside of the US because she wasn't stable enough to be flown home. Another client had an emergency appendectomy while vacationing in Mexico. These situations are rare, but they can happen. Are you prepared if they do?
- Flight Delays/Cancellations: You may have seen in the news recently that flights have been delayed or cancelled in high numbers, particularly with certain airlines. Take a look at American Airlines' recent policy change: "If we or our airline partner fails to operate or delays your arrival more than 4 hours, our sole obligation is to refund the remaining ticket value and any optional fees according to our involuntary refunds policy." What does this mean to you? They are under no obligation to help you get to your destination. If no other airline has an available flight, you're stranded. And if your hotel, cruise, tour, etc. is non-refundable, you won't get your money back for the untraveled portion of your trip. And what if it's your flight home that is cancelled? It's pretty unlikely that a hotel will let you stay for free while you try to find a flight home.
- Acts of God: Be sure to check the terms and conditions of your reservation, but vendors typically aren't obligated to provide a refund for "acts of God". This means that if you are unable to travel to a destination or have to evacuate due to a natural disaster, you may not get your money back, and vendors are not obligated to reschedule. Many will try to work with you, but the only guaranteed way to receive a refund is to purchase a travel insurance policy that includes this type of coverage.
