Industry Tips
Travel Insurance and Travel Packages
Travel Insurance
Travel insurance can provide protection in the event of an accident, an illness, lost luggage, or a canceled or interrupted trip, among other things. Because there are several kinds of travel insurance, with different protections and benefits, terms and conditions, this report is designed to clarify how travel insurance works, and to explain the options available to consumers.
What does travel insurance do for you?
Since travel arrangements are usually made well in advance, it can be hard to anticipate problems that might arise. A well-designed policy can help protect you against the unforeseen. For example, a death in the family, an injury, or the default of your travel agency may prevent you from traveling. While on your trip, an accident or sickness may require medical treatment or interrupt your plans. Or, your baggage may be lost, damaged, or delayed. However, when deciding whether or not to buy trip insurance you should keep in mind both your actual needs and the extent to which you may already be covered.
Types of coverage
The following types of coverage are available:
Medical/Sickness/Accident Insurance -- This type of policy usually covers travel and non-travel related accidents and sickness including in some cases, emergency dental care. For accidental loss of life, dismemberment, or loss of sight, the coverage usually provides payment, up to a stated number of days after the accident.
Regarding medical expenses due to an accident, the coverage may provide payment up to the principal sum selected for medical treatment, including, in some cases, prescribed drugs, services from a hospital, and services from a nurse. This usually covers expenses incurred up to a certain amount of time from the date of the accident.
Sickness benefits may provide a set amount of money per day for hospital or non-hospital confinement. These benefits are not payable for any sickness for which you have been treated or have taken prescribed medicine within a certain number of days prior to the effective date of your coverage.
A company may provide on-the-spot payment, as opposed to the more typical reimbursement policies offered by most insurance companies.
Baggage and Personal Possessions -- If your baggage or other personal effects are lost, damaged, or stolen, benefits are payable up to the maximum of the benefit limit selected. In some cases, this would include baggage that is rented or borrowed. Companies may set a benefit limit for loss of or damage to such items as jewelry, furs, cameras, and camera equipment.
Some companies also offer coverage for delayed or misdirected baggage. If your baggage is delayed for a stated number of hours (typically from 12 to 24) from the time of your arrival at your destination, the company may reimburse you up to a certain amount for emergency purchases of essential items. The benefits paid under baggage delay coverage may reduce the amount payable under coverage for loss or damage.
Insurance companies will usually require that you notify the appropriate local authorities at the place the loss occurs within a stated number of hours after the loss. Some companies may assist you in locating your lost baggage.
Trip Cancellation/Trip Interruption -- This coverage will pay up to the amount you select to help cover non-refundable fees for missed travel arrangements. It also may pay for transportation expenses incurred to reach your final itinerary point or to rejoin your trip when you must cancel or interrupt travel for the reasons stated in your policy.
Policies generally cover trip cancellation or interruptions for reasons of your own injury, sickness, or death or that of a family member, traveling companion, traveling companion's family member or, in some cases, a business partner. Covered reasons may also include a demand to serve on jury duty, quarantine, hijacking, subpoena to serve as a witness, principal place of residence made uninhabitable by unforeseen circumstances, or missing a common carrier departure due to an accident while en route to a departure.
Some companies cover you if you cannot participate in all or part of your trip due to the default of an airline, tour operator, or cruise line. In some cases, default by the person, agency, or tour operator from which you bought the coverage is excluded. One company covers you in the event of a terrorist incident in a foreign city to which you are scheduled to arrive within 30 days following the incident.
Flight Insurance -- In addition to the insurance mentioned, you may purchase flight insurance, which pays the amount you select for accidental death, dismemberment, or loss of sight sustained while traveling as a passenger on a flight or on airport premises.
Deciding on how much coverage to purchase
There are several questions you must keep in mind when deciding the amount of travel insurance to purchase:
How much do you stand to lose?
Evaluate the worth of your baggage in the terms set forth by the policy, such as replacement value or actual cash value. For trip cancellation insurance, be sure you know the amounts of all non-refundable fees, so that you can assess accurately the amount of coverage you may need.
Will any insurance you already own cover you for your trip?
Health or accident insurance that covers you at home may also cover you when you travel, especially in the United States. Similarly, your personal possessions may be covered under homeowner's insurance, even if those items accompany you on your trip. Travel insurance companies generally do not cover anything for which you are already insured. You should check any policies you own to ensure against duplication
If you are already covered, some companies may require you to file a claim with your other insurer(s) before you collect under your travel insurance policy. Other companies may pay you and then recover from the other insurer(s). In cases where an airline is liable for baggage loss or damage, you are entitled to compensation from the airline up to a certain limit, and your travel insurance will pay the remainder of the value up to the limit under your policy.
What your policy does not cover -- The exclusions, which set forth situations in which you will not be covered, may be divided into general exclusions and specific exclusions. For example, companies may not cover loss resulting from suicide or intentional self-harm, war, criminal acts, participation in professional athletics, radioactive contamination, and many other circumstances. In addition, many specific items such as money, tickets, credit cards, documents, vehicles, eye glasses, contact lenses, and animals may be excluded from coverage under baggage insurance. Sickness insurance will not cover you for any medical condition for which you have been treated within a specified time before the beginning of the coverage period.
Where are you covered? -- Some companies offer travel insurance that will cover you both in the United States and abroad, whereas others may only cover travel outside the U.S. You should also check to make sure that a company does not exclude coverage in a country to which you may be traveling.
Studying the application brochure -- Often you will not have access to the actual travel insurance policy or insurance certificate before you buy the insurance, so it is important to read the disclosure statement that comes with the application. This brochure or booklet should describe the following:
Coverage -- The booklet should describe in detail the specific circumstances in which you can receive benefits and under which you are protected. A company may offer several types of coverage, sold either as a group or in separate units.
Definitions of persons mentioned under coverage -- This section defines who is covered under the policy. This may include family members, traveling companions, and business partners. Understanding how a company defines such terms helps you to assess the conditions under which a claim will be considered valid.
Coverage Period -- This section sets forth the length of time for which the policy is in effect.
Exclusions -- This section details the cases in which you will not be covered under the policy. They may be divided into general exclusions and exemptions specific to each type of coverage.
Benefits -- The description of benefits should include the amount of money to which you may be entitled under the policy. Often you will be able to choose the benefit level you want, up to a specified maximum.
Premiums -- This section sets forth the amount you have to pay for coverage, determined by the amount of coverage and benefit level you choose. Premiums may also be calculated according to how long you plan to travel.
When does the coverage end? -- It is important to find out the coverage period for the type of insurance you select. Coverage for trip cancellation usually begins on the date that your application is approved or on the date your completed application is postmarked. Other coverage may begin on the day your trip starts and may end on either the day your certificate expires, when you return to your residence, or when your trip is canceled, whichever date is earliest. If your return is delayed for reasons beyond your control, your coverage may be extended for up to a certain amount of time. You should check your insurance certificate for specific coverage periods.
The method of calculating premium rates varies among travel insurance companies and the type of insurance you select. Baggage rates and medical/sickness/accident rates are usually based on the length of your trip and the amount of coverage you choose. Rates for trip cancellation and trip interruption are usually based on the amount of coverage you choose, regardless of the number of days you travel, and most companies currently charge a rate of $5.50 per $100 of coverage. Some companies may charge one set price or a percentage of the total cost of your trip for a travel insurance package, which may include coverage of a number of different types of insurance.
Filing a claim -- Specific information on how to file a claim should appear in the certificate of insurance, which you will receive after applying for coverage. Generally, you will have to supply the company with your name, address, policy number, and details of your loss as soon after the loss or sickness as possible, often within a specified time limit. The company may send claim forms to fill out and will expect specific written documentation of your loss.
To ensure that you will be able to prove your claim, keep all receipts, bills, prescriptions, and other documentation that you may need. In the case of lost luggage, you should make sure to file with the appropriate authorities immediately upon realizing the loss. It may be helpful to take inventory of your baggage before leaving home, and to leave a copy of this list at home with another person.
Where to buy travel insurance -- Travel insurance may be purchased through your travel agency or tour operator, or you may purchase it directly from the travel insurance company. Travel agencies and tour operators, however, tend to offer only one company's insurance so you may want to call other companies yourself.
Other features -- Some companies offer additional services as part of the basic coverage or at additional cost. These extra features may help you to decide which travel insurance to choose. Some of the services available include:
· 24-hour emergency telephone lines
· lost document assistance
· ticket replacement assistance
· legal assistance
· hotel overbooking insurance
· emergency cash transfer
· special medical escort
· collision damage waivers on rented cars
· baggage tracing service
Travel Packages
A travel package is a pre-arranged vacation. Some vacation packages include only basic travel services (transportation, accommodations), while others may include a complete travel plan (meals, sightseeing, transfers). Usually these packages are assembled by an independent tour operator and are sold to you through a travel agent.
Purchasing a travel package has the advantage of convenience and sometimes in value.
Before booking a trip, make every effort to determine if the tour operator is reliable. Contact Better Business Bureau to obtain Business Reviews on the agencies to determine their service history and to request counseling literature on travel guidelines.
When shopping around for travel packages, pay attention to the following:
· Small print or asterisks are commonly used to indicate restrictions such as required length of stay, particular days/times of departure, etc.
· Availability. Make sure that travel services are currently available at advertised prices. If the travel service at the advertised price is not immediately effective, availability should be stated in the advertisement.
· Extra charges. Any extra charges such as port taxes or service charges should be clearly disclosed.
· What features are included in the package price?
-airfare, hotel, transfers, sightseeing, gratuities, meals, etc.
· Conditions. Pay special attention to the "conditions" of the offer.
When booking reservations, find out how much of a deposit is required, how far in advance is the full payment due, and if there are any cancellation penalties. Make sure that you get everything in writing and that you thoroughly read the contract - especially the fine print.
With a little research and a few precautions, you can relax and enjoy your vacation!
