Devoted to the Insurance industry and all thing related

In the trip cancellation insurance series part 1 I discussed the importance of checking with your credit card companies to see if they offer some type of travel or trip cancellation insurance.  Today I’ll be writing about some of the risks covered by trip cancellation insurance.

There are four main risks covered, which include Illness/injury/death, Operator Failure, Home misfortunes and Destination disasters.  The following detailed explanation of each potential risk is from the Filipino Pavilion & Travel Emporium website.

Illness/injury/death. Coverage here protects you (the insured traveler) and one or more traveling companions. All also cover cancellation or interruption of your trip because of illness, injury, or death of a close family member who remained at home. Several policies extend to a business partner at home or to a member of a traveling companion's family. The policies may not reimburse you if your trip is canceled due to a preexisting condition, a medical problem that existed within a specified time before you bought the policy. A preexisting condition is typically defined as one for which an insured person was treated by a physician or took prescribed medication. The exclusionary period can vary from 30 to 180 days.

 

Operator failure. If a travel agency, tour operator or airline collapses, TCI will reimburse you for the cost of worthless airline tickets or prepaid hotel vouchers. The operator-failure provision of TCI protects you against those contingencies, but only up to a certain point. While most policies say they'll pay off in case of "failure" or "default," a few say they just protect against "bankruptcy." That's an important distinction: An operator can fail without ever filing for bankruptcy. Many TCI policies exclude failure of either the company that sold the travel service or the company that sold the insurance; a few exclude both. So if you buy TCI from a travel agency, you won't be covered if the agency fails, but you are protected against failure of a tour operator, charter operator, or airline. However, if you bypass an agency and buy your tour (plus insurance) from a tour operator, you won't be covered if that operator fails.

Home misfortunes. Many TCI policies cover you against a wide range of unavoidable and unexpected mishaps at home that might require you to cancel or interrupt a trip. Among them: Your house is "made uninhabitable" by fire, flood, or other disaster; you're called to jury duty or a court appearance; or you miss a flight through some accident on the way to the airport.

Destination disasters. TCI can also cover you against a long list of unexpected problems at your destination (or in any area through which you plan to pass). Among those: Your plane is hijacked; your intended destination is hit by a natural disaster such as earthquake, fire, or flood; your destination is quarantined because of a contagious disease; an unannounced strike halts air travel; or there's an outbreak of terrorism at your destination.

White these explanations are hopefully helpful and fairly comprehensive you should always check with the specific insurance company to be sure of what is covered.  

One important conversation about trip cancellation insurance is whether purchasing the policy is worth the money.  Like any insurance policy if one of the aforementioned risks happens to you or a loved one then the policy was more than worth the money.  But chances are you’re not going to cancel your trip and the money spent on the policy was really for peace of mind.  

Another aspect of this conversation is what demographic of people actually purchase trip cancellation insurance?  In our next installment I’ll talk about the cost of trip cancellation insurance and the amount of coverage you can buy.  

I would love to hear from some people who’ve bought this insurance and what their thoughts are about whether they’re glad to have bought the coverage.

Should I Buy Trip Cancellation Insurance? Part 1