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World troubles: Would travel insurance help?

Ed Perkins

Ed Perkins on Travel

July 29, 2014

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The current headlines -- the downing of Malaysia flight 17 and the Israeli-Gaza hostilities -- focus a spotlight on today's travel uncertainties. And that, in turn, raises the question of how travel insurance would help you in coping with the fallout from these problems. The short answer is that trip-interruption/trip cancellation (TCI) might not help as much as you might hope, or think.

The most serious threat to tourism at the moment is Israel, and even though not many of you are considering a visit to Gaza, the situation on the ground is that rockets from Gaza can reach some of the primary tourist areas. Unfortunately, however, TCI is not likely to cover cancellation expenses. TCI is "named peril" insurance, meaning it pays off only in circumstances specifically included in the contract. But virtually all policies specifically exclude "war, declared or undeclared, or any act thereof" as a named peril, and insurers are likely to see the current situation as an undeclared war.

Similarly, if you recently made plans to visit Israel later in the year, TCI would also probably not cover you. Almost all policies preface their lists of named perils with language such as this: "The Insurer will reimburse the Insured, as described below, if a Trip is canceled or interrupted for the Insured due to any of the following Unforeseen circumstances." Note that "unforeseen" term: Currently, ongoing hostilities in Israel would not be unforeseen. Similarly, if you plan a trip to any country currently on the U.S. State Department's warning list, future problems there would not qualify as "unforeseen."

The value of travel insurance has always been a bit controversial. As a way to find more detail, you might want to check the website of the big online travel insurance agency, insuremytrip.com, which posts policy reviews by individual travelers much as TripAdvisor posts hotel and restaurant reviews. In some ways, the bad reviews are more interesting than the good: They provide some important clues about when, how and why insurance fails to deliver on its promises -- or how travelers misread those promises.

-- Traveler misunderstanding seems to be at the root of many problems. A common theme among the unfavorable reviews is that the travelers who bought some form of travel insurance, then filed claims for circumstances the policies did not cover. One traveler found out that a comprehensive plan didn't cover dental expenses, another found that a medical plan didn't cover costs of canceling a flight, yet another found that trip cancellation didn't cover trips canceled the day of departure. All these qualifications are clearly specified in the contracts.

-- Another major point of annoyance is the insurance issuer's requirements for documents that may be difficult or impossible to obtain. Travelers who missed a flight because their cab was caught in a traffic jam were denied compensation because they lacked documentation.

-- Several bad reviews relate stories of endless delays and repetitive requests for information and the filing of various forms. Others tell of long waits to reach representatives by phone.

-- Unfortunately, some reviewers posted low scores because "we didn't use the policy" or "it was expensive," which may be true but don't reflect on supplier performance.

All in all, a reading of dozens of poor reviews shows that travelers and insurance companies are partially to blame for problems: travelers, for not reading policy limitations carefully enough, insurance companies for demanding excess paperwork, providing bad customer support and general foot-dragging.

These readings also show that Insuremytrip and other online agencies can and do jump in to assist travelers who are having trouble making claims. And the ultimate conclusions, as I have been urging for some time, is that if the price is at all reasonable, buy a "cancel for any reason" policy. That way, you're in control of the decision. And if you have insurance, make sure to collect all the documentation you can find -- you're likely to need it if you have to file a claim.

(Send e-mail to Ed Perkins at eperkins@mind.net. Perkins' new book for small business and independent professionals, "Business Travel When It's Your Money," is now available through http://www.mybusinesstravel.com or http://www.amazon.com)

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