If you’re like many people (me included before I started working for a travel insurance brokerage), you buy travel insurance and immediately cover yourself in a nice cozy mental security blanket: “If something goes wrong before or during my trip, I’ll be reimbursed.” Well, it’s not quite that simple. Like all types of insurance – homeowners, auto, life, to name a few – there are limits to the coverage offered in travel insurance plans.
As a travel insurance broker offering a variety of plans from many of the top carriers in the industry, we’re proud of the products we offer and we believe in the value and benefit of travel insurance—we’ve seen the benefits for many customers over our 45+ year history. At the same time, our customers satisfaction with their product is our top priority, so we feel an important responsibility to help educate you about travel insurance plans.
Reading Your Plan
When you look at your plan document or policy, the first thing you’ll want to do is review the list of benefits and corresponding limits, probably found on page 1 or 2. The two next most important parts of the plan to read are the “covered reasons” and “plan exclusions.” For a typical trip cancellation plan, the “covered reasons” section will specify exactly what events would be covered by a plan, particularly for the benefits of Trip Cancellation, Trip Interruption, Travel Delay, and Missed Connection. If there’s a scenario that falls outside that list (and there will be because there are probably infinite unexpected events you might encounter), you probably won’t be covered for that scenario.
Covered reasons generally include illness or death of you, a travel companion (as defined in your plan) or an immediate family member, natural disaster or inclement weather preventing your travel from home or to your destination, or mechanical breakdown of a common carrier (like an airplane, train or cruise ship). Other covered reasons that may be included requirement to serve on a jury, certain work reasons, strike, terrorist attack and more. Your plan document will define these covered reasons with specificity.
Next, take a look at the “plan exclusions” or “general exclusions.” This section will detail circumstances for which the plan will not react and provide coverage.
Rules and Guidelines for the Industry
If you start to read and compare a lot of travel insurance plans, you’ll see that many look alike. The list of benefits may be a little longer or shorter on some, and the benefit limits will change. Additionally, some may be more robust in their list of “covered reasons” or “plan exclusions.” But the overall plan structure may look similar. This is because the insurance industry is very highly regulated. Policies must be filed by the carriers with each state Department of Insurance, and there are strict guidelines the carriers must follow when developing plans.
The devil is in the details – nuances found in terms and conditions, varying timeframes applicable to certain benefits, and specific plan definitions can be the differences that make some plans much stronger than others. Take for example our Travel Insurance Select plan. If you enroll in the Elite plan level, your Emergency Medical Evacuation benefit “includes choice of hospital.” This small phrase is a huge benefit if, after stabilized, you want the option of being transported to your choice of hospital after a medical emergency has occurred. Most plan benefits for Emergency Medical Evacuation provide for your transport to the nearest adequate facility, as determined by the carrier. There’s nothing wrong with this benefit, as it may well be life-saving, but some customers would happily pay more for a plan that includes the “choice of hospital” option.
Assessing Risk and Setting Prices
Plan rates and pricing are then determined by the amount of risk taken on by the carrier – what audience is buying the plan, how likely it is that one of the covered events will occur, and what the payout limit is according to the plan.
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The bottom line is: read your insurance plan thoroughly before you buy it. Then read it again before your trip. Understand what you’re signing up for, and know that insurance plans, while they lessen your financial risk, may not fully eliminate this risk. If we can assist you with understanding your plan coverage, we are happy to help! Please visit the New York State Bar Association Insurance Program online here or contact our licensed customer service agents at . Explain your needs and we can help you select the best plan for you!
This content is written by and posted with permission from Travel Insurance Services, partner of the NYSBA Insurance Program.