Travel insurance inquiry

Because my husband and I travel extensively, we are paying out exorbitant amounts of money on comprehensive travel insurance when we only require to be covered for certain risks.

As an example, we have medical insurance that covers us anywhere in the world; medical evacuation insurance for Mexico and Canada through FMC, and homeowners’ insurance that covers us for lost property, plus the airlines cover most of the costs of lost baggage.

However, whenever we wish to buy insurance just for trip cancellation or trip interruption, we are told that this is not possible, so we end up paying for coverage we don’t need.

Surely, one of the many insurers in the U.S. could come up with a cafeteria-type of policy which would let travelers pick and choose what coverage they actually need. I was wondering whether other frequent travelers experience the same frustration as we do over the high cost of travel insurance and whether anyone has any solutions.

DOREEN KENNARD
Diamond Bar, CA

ITN’s expert on travel insurance answered Doreen’s letter as follows.

I just confirmed with a knowledgeable travel insurance broker that there is no available “stand alone” trip cancellation/interruption insurance available through an American company. The last one to offer this coverage was Travel Guard, and they dropped that coverage back in 2002.

I have been researching and writing travel insurance articles and helping ITN readers with their travel-insurance-related problems for close to 20 years now. My solution to your concern at the high cost of available travel insurance is to discontinue buying it.

A. You already have adequate coverage for most hazards, as described in your letter.

B. If you travel outside of Mexico or Canada, I recommend that you get overseas medical evacuation coverage from Divers Alert Network (call 800/446-2671). Their coverage is excellent, and the cost is $44 for a family for one year.

C. It is my opinion that trip cancellation/interruption is overpriced and has too many claim exclusions. (More specifically, they pay only for a narrow and well-defined list of circumstances.)

Additionally, you are not likely to receive a full refund of your trip cost unless you cancel very near the date of travel.

And they will not pay if there is a preexisting medical condition involved in the reason for your cancellation, unless you are sure to get them to waive the preexisting-condition clause.

Let me quote from my August 1994 article, “Consider the Odds When Buying Travel Insurance”: “In my research. . . I was told by a representative of Travel Guard International that approximately 3% of purchasers of their trip-cancellation insurance actually cancel a trip (that is, it happens about once out of every 33 trips).

“In many instances, depending on how close the trip is to leaving, the loss (and the insurance payout) due to cancellation may be only the amount of the deposit or cancellation fee, rather than the full cost of the trip.”

With travel insurance costs at 10% or more of a trip’s cost, it is my opinion that one is money ahead by not purchasing this coverage and instead taking the chance that you will be in the 97% of purchasers who will not have the occasion for a claim.

The only other risk that you will be taking is the possibility of cancellation due to some terrorist-related claim. Some policies will provide this protection, but the “fine print” of allowable conditions varies by company.

To reiterate, my advice to you is to discontinue purchase of travel insurance, seeing that you already have the coverage that you describe. The only exception is the purchase of evacuation coverage for overseas trips; this coverage I recommend purchasing.

If you have any further questions, feel free to give me a call at my home phone number, 530/644-1084.

WAYNE WIRTANEN
Contributing Editor, ITN