Travel insurance is a game changer. It can prevent a physically and mentally stressful trip from going awry and turning into a financial disaster – but only if you have the coverage you need.
As I mentioned last week, my wife and I recently had our 30th wedding anniversary trip ruined by mechanical delays, with our travel insurance company denying our claim after two weeks. We ended up paying a lot of money for an experience that never happened.
Had I understood more about cancellation and trip interruption coverage, I may have been able to avoid financial losses. What I thought was covered didn’t match the insurance company’s definition. Not reading the fine print cost me a lot of money.
Here’s how to avoid making the same mistake:
Shopping through companies like InsureMyTrip.com or SquareMouth.com can help you compare policies and choose the coverage that matters most to you at the best price.
When entering the amount of insurance you want to buy, you can enter the cost per person or the cost for the entire trip. I once entered the cost per person and accidentally selected “total cost” and found out the difference painfully when it came time to make a claim.
The total trip coverage is usually listed as a percentage or dollar amount under “trip cancellation” or “trip interruption”. For most policies, payouts for cancellation before the trip has begun are usually 100% of the insured amount. Trip interruption coverage is usually higher, most often 150% of the insured amount. Usually only the total amount is listed. By scrolling down the comparison, you can see the different coverage amounts for lost baggage, baggage delay, trip delay, etc., and the amount of time that must pass before coverage applies.
To find out what is actually covered, you have to search for the details. In Squaremouth, you can click on “details.” InsureMyTrip, which I used, you have to click on the amount of insurance to find a detailed 1,365-word description of what is and isn’t covered. If I had done this with the Travel Insured International FlexiPLEX insurance I purchased, I would have known that trip cancellation or trip interruption mechanical delays required more than 48 hours.
If I had clicked on the “trip interruption for any reason” option I purchased at the same time, the 262-word fine print would have said that coverage only applies after the first 72 hours of the trip, but that’s meaningless if I have to get on the ship within three days of leaving home.
Insurance companies to avoid in the future are C&F Travel Insured International, Tin Leg, Nationwide, Trawick, and Seven Corners. Coverage ranges from no coverage at all to a waiting period of 48+ hours for mechanical delays, and from 12+ hours to 48+ hours for weather delays. Most delays are shorter than that range and can disrupt travel plans and result in the loss of a non-refundable deposit. We also won’t use InsureMyTrip.com because their website is vague.
The insurance companies I would use going forward are AEGIS, Berkshire Hathaway, Generali, IMG, Travelex, WorldTrip, etc. But you still need to read the fine print. For example, Generali does not have a minimum delay required for trip interruption, but they will not pay if the delay occurs on the outbound flight. What’s the point if you’re taking a cruise ship? I also use SquareMouth.com to compare and purchase insurance.
Travel insurance can give you much-needed peace of mind, but it’s important to understand the details of your policy thoroughly. Take the time to read and understand the details before you purchase. Once you’re confident that you’re adequately protected against financial loss due to unplanned trip issues, you can enjoy your trip with peace of mind.
Rick Koehler is president and owner of Koehler Financial in Rapid City.
