Craig A. Van Doren, CTC
Introduction
An important question every travel planning professional should ask a client is “Do you want to secure the travel insurance coverage that I quoted to you?” In this paper I will discuss many of the important attributes of travel insurance coverage and offer reasons why it is important that a travel agent provide an insurance quotation and explanation of exposures to a client. And why travel agents should think it is important that our clients purchase coverage.
Travelers are always excited during the trip planning process as they anticipate satisfying their travel dreams and creating lifetime memories. They are quick to finalize plans, provide personal information and credit card details, and pay deposits. But why the hesitation when a quotation for travel insurance is sent? Supplier payment terms and conditions should have been explained to clients and their acknowledgement received when reservations are non-cancellable and non-refundable. And why the hesitation to purchase basic coverage to guard against many exposures that would necessitate canceling or postponing a trip? Some clients risk losing their vacation investment if unforeseen circumstances occur. What about having to cut a trip short due to an emergency? Does the travelers’ health insurance provide coverage out of their country; if not, what will happen if they become ill or are injured while traveling? What about luggage being delayed, lost or stolen? Unfortunately, some travelers encounter the unexpected, and frequently these unexpected developments have financial consequences. During follow-up phone calls and emails about travel insurance, some clients respond with a variety of reasons to decline it: “We are both healthy,” “coverage is too expensive,” “those policies really do not cover anything,” “I see no reason why we will need to cancel this trip,” “what could possibly happen,” “everything we take is carry-on and nothing is of great value if it is lost or stolen,” “our medical insurance provides worldwide coverage and if it is not covered, medical costs are cheap where we are going” and “the credit card I use provides insurance.”
Such responses are examples of why many travelers are quick to dismiss travel insurance as an unnecessary expense. Even with a quotation in their inbox, an explanation of coverage and a few “what if’s” some just do not see the need to spend money to obtain coverage because they think it is either too expensive or will not take care of what they might need. But the cost is actually rather insignificant compared to the overall cost of the trip. Travel insurance generally costs from 4% to 8% of the total trip. Cost is based on the length of trip, destination, and age of policy holder.
Many times, of course, travel is completed without any issues arising that would trigger the need for travel insurance — thankfully, as many travelers do not obtain even the minimum coverage available. I am sure that many in the travel industry have had clients who have had situations occur before or during travel that may have been taken care of by a credit card’s coverage or were not terribly significant. But sometimes those in the travel industry work hours trying to minimize the financial loss that results from not having coverage, while other times both clients and agents are thankful that travel insurance was purchased.
Travel insurance is so important because the majority of trip costs paid to tour suppliers and cruise lines are non-refundable. The majority of travel insurance policies have two primary coverage components: trip cancellation insurance and travel health insurance. The bottom line is that travel insurance provides financial protection to travelers if something happens either before a trip or during a trip. If a covered situation arises before or during travel, the policy will reimburse the policyholder for prepaid trip costs, payment of additional costs incurred or payment of medical expenses. Without travel insurance the financial investment made by travelers is at risk should the travelers’ plans be altered.
Trip cancellation insurance provides protection for non-refundable trip costs that have already been paid because a trip is canceled or delayed prior to departure or if interrupted during travel. Those insured are covered, as are their family members, in the event of a serious illness or injury in an accident. Natural disasters and worker strikes at a trip’s destinations, the need to travel home because of a family member’s medical emergency and disruptions in travel arrangements are also covered. It is not uncommon for travel delays to result in missed connections that could require an unplanned hotel stay, which would be covered.
Travel health insurance responds to illness or an emergency medical situation for a traveler anywhere in the world, protecting those traveling for the cost of securing medical treatment on the trip. Travelers will not need to know if their U.S. medical insurance will respond overseas because the medical coverage included in the policy will pay for the best quality care from local doctors and hospitals and provide emergency medical evacuation to obtain adequate medical treatment should that be deemed necessary.
Clients have suffered losses that would have been covered by a travel insurance policy had they been advised by their travel agent to purchase it. Failure to advise clients of the benefits and need for travel insurance may subject a travel agent to potential liability depending on the size of a loss and ultimately the need to file a professional liability claim. Holding oneself out to the public as a “professional travel agent” comes with a duty beyond just planning and reserving trips for clients. Providing a travel insurance quotation to clients with an explanation of the potential loss of trip payments and policy benefits along with acknowledgment by the clients that their right to obtain coverage was explained to them will go a long way in providing litigation protection should a loss occur and the clients have not obtained travel insurance. No travel agent wants to advise his professional liability insurer of a potential claim against his policy.
So exactly what is covered by most travel insurance policies? Highlights of travel insurance coverage benefits are:
Trip Cancellation and Interruption
If travelers cannot go on their trip for an unforeseen reason that is covered or a trip is interrupted due to a covered reason the policy will respond for the following:
- Sickness, injury or death
- Financial insolvency of a supplier
- Residence uninhabitable
- Traffic accident en route
- Involuntary employment termination or transfer
- Military duty for natural disaster
- Death or/ hospitalization of destination host
- Common carrier cancellations or delays
- Pregnancy (trip cancellation only)
- Inclement weather
- Organized labor strike
- Quarantine
- Hijacking
- Jury duty Subpoena
- Documented passport or visa theft
Trip Cancellation and Trip Interruption claims represent over two-thirds of all travel insurance claims.
Trip Delay
Reimbursement for additional expenses paid for accommodations, transportation and meals if a trip is delayed 5 hours or more for a covered reason.
Missed Cruise Connection
Reimbursement for unused, non-refundable expenses and additional costs such as accommodations, transportation and meals if a connection is missed by 3 hours or more for a covered reason.
Baggage and Baggage Delay
Coverage if baggage is lost, stolen, damaged or delayed 12 hours or more. If clients are traveling to Scotland for a golf vacation and their golf bag is lost or stolen during their flight, for example, they will need to rent golf equipment on their trip. Most travel insurance companies offer an endorsement where specific types of sporting equipment will be covered at higher limits than the standard baggage coverage, see “Adventure Package,” [further down this document.]
Travel Assistance
A wide range of services before and during trips usually through a 24/7 toll-free number. This policy feature includes assistance with medical emergencies, medical evacuation, emergency medical consultation, monitoring and payments, prescription assistance, dependent transportation and family visits, repatriation of remains, 24-hour legal assistance, emergency message services, language interpretation services, emergency cash transfer, pre-trip travel services, travel document and ticket replacement, concierge services and business services.
Travel Health Insurance
Emergency Accident, Sickness and Dental Expenses
This coverage will reimburse those insured travelers for medical expenses resulting from illness or injury including physicians, hospitalization, prescriptions, local ambulance services, as well as other charges incurred that are usual and customary for treatment ordered by an attending physician.
24-Hour Accidental Death and Dismemberment Benefits
There is a schedule of benefits that would be paid if a policyholder were injured in an accident while on a covered trip. The principal sum, listed in the policy benefits schedule, would be paid as follows:
| Loss | Percentage of Principal Sum Payable |
| Both hands, both feet or sight in both eyes | 100% |
| One hand and one foot | 100% |
| One hand and sight in one eye | 100% |
| One foot and sight in one eye | 100% |
| One hand, one foot or sight in one eye | 50% |
Emergency Evacuation and Repatriation
Emergency evacuation occurs when a physician orders that a traveler be evacuated for emergency medical treatment at a hospital that is more suitable to treat a critically ill or injured patient. Repatriation is the process of returning a person to his or her place of origin or citizenship.
Other Important Policy Features
Waiver of Pre-Existing Conditions
The pre-existing conditions exclusion is frequently waived by some policies if coverage is purchased within a predetermined number of days from the date the traveler made the initial trip payment. Additionally, all prepaid trip costs that are subject to cancellation penalties or restrictions must be insured, and all future arrangements added to the trip must also be insured within the predetermined number of days from the date of those payments.
“Cancel for Any Reason” Benefits
This is an optional add-on for a fee that can be purchased with some travel insurance plans. “Cancel for any reason” allows a covered trip to be canceled for any reason, generally two or more days prior to the departure date, and usually does not reimburse the insured for all of his prepaid trip costs; 75% of the prepaid, forfeited, non-refundable payments is a common reimbursement benefit.
Most travelers do not spend much time thinking about the many things that could go wrong during their trip that might result in their needing to change plans. A few situations that have happened to my clients while traveling are:
A.) Destination was made uninhabitable by fire, flood, volcano, earthquake, hurricane or other natural disaster.
B.) Mandatory evacuation ordered by local authorities at the traveler’s destination due to a hurricane or other natural disaster.
C.) A terrorist act that occurred in the departure city or in a city that was a scheduled destination for the covered trip within 30 days of the scheduled departure date of or during the covered trip.
Policy terms and conditions vary, and every policy needs to be reviewed to determine how the policy will respond to trip cancellation and trip interruption as well as other coverages, so it is important to read and understand the description of coverage and exclusions.
10 Reasons to Purchase Travel Insurance
There are hundreds of circumstances that could cause clients to cancel their trip, return home early or be forced to seek emergency medical treatment while traveling. To demonstrate the importance of purchasing travel insurance, and emergency travel services, here are 10 common examples of what could go wrong.
- It’s 10 p.m. and you and your immediate family arrive at the airport for a connecting flight, only to find that it has been canceled. Who can assist you with finding a new flight to get everyone home?
- Your luggage with your insulin inside was lost. You need help to locate your bag as soon as possible and have your emergency prescription filled. Who do you call?
- It’s your first visit to Europe, and your passport and wallet are stolen. Where do you turn for assistance in obtaining emergency cash, and how will you get your passport replaced?
- You’re involved in an accident and adequate medical treatment is not available. Who will help coordinate a medical evacuation?
- Your sister-in-law becomes seriously ill and you must cancel your trip. What happens to your non-refundable deposits or pre-payment?
- You arrive in Jamaica and your luggage doesn’t. If it’s lost, who will help you find it? If it’s delayed, who will reimburse you for covered necessities? If it’s stolen, who will reimburse you for its contents?
- Your cruise line, airline or tour operator goes bankrupt. Who will pay for your non-refundable expenses? Who is able to assist in getting you to your destination?
- You are walking down a street in Rio de Janeiro and twist your ankle. Who is able to assist you in finding an English-speaking physician?
- Three weeks before your scheduled arrival, a terrorist incident occurs in the city you are planning to visit. Who will reimburse you if you want to cancel your trip?
- You are at a beach resort and are forced to evacuate due to a hurricane that has made your resort uninhabitable. Who can assist you in being evacuated? Who will reimburse you for your lost vacation investment? (1)
Optional Policy Enhancements (additional premium required)
Transportation Package
A transportation package will upgrade policy benefits for rental car damage and flight accidental death and dismemberment benefits.
Optional Active Family Package
An active family package will provide enhanced trip cancellation and trip interruption benefits, which would provide coverage for child caregiver, tuition fees trip interruption and trip delay and emergency pet medical expense benefits.
Adventure Package
The adventure package provides coverage for recreational sporting equipment rental benefits if sporting equipment is lost, stolen, damaged or delayed for 12 hours or more; increased medical expense benefits; and search and rescue benefits should the policyholder become lost, disoriented or reported missing during a recreational activity.
Professional Package
The professional package extends trip cancellation and trip interruption benefits to include a covered person’s work requiring that they be present at work during the travel dates for various reasons.
As with any insurance policy, there are various exclusions and duties and requirements that must be followed for coverage to be valid and benefits payable. Timely notification of a loss is extremely important, as are completion of all claim forms, providing proof of loss, including bills for expenses incurred, and submitting to a physical exam if required. This is no different from making a claim against a homeowner’s policy or automobile policy following a loss.
Travel agents need to make travel insurance an essential item in trip planning. The need for travel insurance must be included, like clients’ need for air, hotel and ground transportation, as the correct travel insurance will provides financial protection for the trip, for a traveler’s possessions and for the traveler’s health. Having a conversation with clients about the need for travel insurance should not be taken lightly. There have been situations where travel insurance was either not recommended or barely discussed and travel agents faced liability for failure as a professional to notify. With travel insurance in place, the travel agent knows that the whole travel package is properly “wrapped up” for the client, that there are other travel professionals who stand ready to assist the travelers should things go wrong and that they have protected their clients from possible financial hardship. Many of my clients do admit that they are now much more comfortable when traveling because they have travel insurance. It gives me great peace of mind knowing I have an insurance company standing behind me to offer both assistance and reimbursement should my clients have issues before or during their trip.
December 2014 poll of 1,005 US adults was conducted by Ipsos on behalf of USTIA
- 23 % of Americans said their travel plans had been impacted from spring 2013 – fall 2014, by either medical conditions, natural disasters, or mechanical or carrier–caused problems
- 36% of those whose plans were impacted had purchased travel insurance
- Of the impacted travelers with insurance, 98% reported satisfaction with their travel insurance.
- Americans were most likely to purchase travel insurance for trips to exotic destinations and for cruises. (2)
Conclusion
Hopefully the reader has become aware of many of the important benefits that a travel insurance policy will provide clients, realize why they should provide every client with a travel insurance quotation and why their clients should purchase coverage. The primary reason travel insurance is important to clients is that a policy offers many coverages for unintended events and situations that could give rise to financial loss during a trip. With trip cancellation and interruption coverage clients are insuring and protecting their financial investment in their trip. With travel health insurance clients are protecting themselves from the costs of medical care that might not be covered by their medical insurance if they are traveling out of the country.
In addition to greatly reducing the litigation potential for travel agents for failure to advise clients of the importance of travel insurance and greatly reducing the financial risk for clients, travel insurance also provides peace of mind for both clients and travel agents.
References
[1] Top 10 Reasons To Purchase Travel Insurance. (n.d.). Retrieved May 18, 2016, from http://www.travelguard.com/whybuy/whytravelguard.asp
[2] Ipsos poll conducted between December 2nd to 4th, 2014 on behalf of US Travel Insurance Association
