24/08/2023
Travel insurance is important...protect yourself and your trip whenever you travel...
The Wall Street Journal logo
By Ethan M. Steinberg
Aug. 13, 2023
The travel insurance business is booming, as vacationers worry about a bevy of incidents that could stop their trips cold.
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Travel insurance isn’t always the answer when trips go sideways. PHOTO: MARIO TAMA/GETTY IMAGES
The wildfires on Maui, which decimated the town of Lahaina, is one example of why travelers worry more now about less predictable trips.
Airline meltdowns, inflation and Covid sickness have also played a factor.
InteleTravel, a company with a network of more than 70,000 travel advisers, says the number of clients who bought coverage with Allianz, its largest insurance partner, rose 48% through June from a year ago. The company’s insurance-based revenue increased 75% over that period, Executive Vice President Tara Minson says. Customers are also buying costlier, more comprehensive plans.
But while consumers dig deep into their wallets to protect themselves with some form of insurance, they remain confused about exactly what is covered and whether the policy is worth it. Costs for policies can vary widely—from less than $50 to thousands of dollars. And learning every nuance of the fine print is overwhelming.
This lack of clarity can leave consumers uncomfortable even when they have insurance. Here’s when travel advisers and veteran travelers say you need it—and when you definitely don’t.
You’re traveling internationally
Cinneah El-Amin, a 29-year-old personal finance coach in New York, was in Mexico last year when her mother got food poisoning and had to pay $635 for a doctor to visit their villa. While El-Amin was insured, her mother wasn’t.
She says experiences like that led her to invest in an annual travel insurance plan for $249.
The top reason travelers buy insurance is for medical coverage, according to Stan Sandberg, co-founder of TravelInsurance.com. He says the average plan costs 4% to 10% of the trip it is covering. A 24-year-old taking a weeklong trip for $2,000 can get insurance for less than $100, while a 75-year-old on the same trip would have to pay anywhere from $131 to $654, Sandberg says.
Often, it works out. Emily Carson, sales director at adventure-travel agency MT Sobek in the San Francisco Bay Area, tested positive for Covid six days into a 12-day tour of the Alps last July. She scrambled to book a new hotel and postpone her flight—her insurance covered most of those extra costs.
But filing a claim isn’t always easy.
Angela Hughes, founder of Florida-based Trips and Ships Luxury Travel, says she wrangled with Allianz for over six months about $7,157 in claims she filed.
Her husband tested positive for Covid in Ireland last year, just before the couple was set to board a cruise to Greenland. Hughes says that Allianz initially didn’t pay her for the price of the cruise she missed because her husband hadn’t seen a doctor. Their tour’s wellness director had administered the test.
Allianz paid two of Hughes’s three claims after The Wall Street Journal inquired about the case. A company spokeswoman says lacking documentation is the top reason claims are denied. She says the company recommends following up any self-administered diagnoses with a doctor or pharmacy.
A relative of yours is ill
Canceling a vacation before it starts because you’re sick is something many plans cover. So is canceling to care for a sick relative or for the unexpected death of a family member. Knowing that someone in your life is sick, travel agents say, is one reason to invest in coverage no matter how expensive the trip.
When it comes to your own health, pre-existing conditions aren’t covered by default in most plans, says Rachel Kelso, a travel adviser at AAA in Round Rock, Texas. She says most plans will waive that restriction if you buy insurance within two weeks of booking your trip. Travel agents warn: The pre-existing condition exclusion extends to nontraveling family members in some plans. Reading the fine print is crucial here.
You encounter bad weather
Canceling a trip because you’re worried about major storms typically won’t entitle you to a refund, says Shelby Dziwulski, founder of the Denver-based luxury-travel company Authenteco.
“Something bad has to happen in order for you to use the policy,” she says. Sweltering heat in your destination won’t usually get you a refund on your flight or hotel if the plane you booked a seat on is still running.
If your flight is canceled for a reason covered in your plan, most insurance providers will refund you for any prepaid, nonrefundable deposits you made and lost, Dziwulski says, like for a missed cruise or a night’s stay at a resort.
What are the alternatives?
Refundable airfare is one, but it won’t insure the cost of your whole trip. Some travel agents caution against this route, as most airlines offer some flexibility with nonrefundable tickets, such as offering a credit.
The premium on refundable airfare can also be much higher than adding insurance to your trip. Refundable fares on domestic flights cost 49% more than nonrefundable ones over the past three months, on average, according to the booking site Hopper. For international flights, refundable fares cost 66% more than nonrefundable ones over the same period.
Premium credit cards can provide some travel insurance for people who book their travel with the card and must cancel for a reason that is covered. Carmen Balber, executive director of the nonprofit Consumer Watchdog, encourages people to check their credit cards before assuming they’ll need insurance.
She also warns against buying travel coverage for short domestic trips, because the cost of rebooking the ticket with the airline might be cheaper or cost nothing at all.
Travel advisers caution that credit cards often provide insurance up to a certain dollar limit, usually less than what insurance providers will guarantee. Kelso, the AAA agent, says one client turned down insurance because she thought her credit card provided coverage.
When the client had to cancel the trip, she found out that her credit card would only cover $5,000 of the $20,000 down payment she lost.
