Picture this: You've finally racked up enough vacation days for a momentous vacation and after months of deliberation, you've gone ahead and dropped a significant sum on plane tickets, hotel rooms or cruise fees. Flash forward to a few days prior to your departure and, for one reason or another, you can't go. Now, not only must you cope with the stress of whatever prompted the cancellation of your trip, but you must also bear the burden of paying for a dream getaway you don't actually get to take.
According to Christopher Elliott, consumer advocate, journalist and author of How to Be the World's Smartest Traveler, this type of situation happens all too often. His consumer advocacy blog is riddled with stories about airlines refusing to refund passengers who missed flights for funerals and cruise lines playing hard ball with travelers whose itineraries were canceled due to ship malfunctions. Scroll through the blog's comments and you're bound to find someone saying, "You should have bought travel insurance."
"I think travel insurance comes up every day at least once -- sometimes more," Elliott told U.S. News.
But the nuances of coverage can make travel insurance seem unreliable. Travelers may file a claim only to find that the reason for canceling or interrupting their travel plans isn't protected by insurance. "There are a lot of questions about travel insurance and there are people who do believe it's a scam," Elliott said. "And I can definitely understand where they're coming from."
Does that mean you should forgo the added protection and take your chances? Not necessarily.
Should you buy travel insurance for your next trip?
That depends: How much money are you willing to lose?
When it comes to determining if a trip is worth insuring, "Some people say 'if it's a trip you can't afford to lose,' but I would say that if it's less than $5,000, insurance probably isn't necessary," Elliott explained.
Of course, the $5,000 rule doesn't apply to everyone: Someone who has no trouble dropping $10,000 at the blackjack table in Las Vegas will have a different take on insurance than someone who can only afford one vacation every few years. When planning your trip, Elliott suggests running a cost-benefit analysis. "If it makes sense, then get it."
Also consider the peace of mind insurance offers. You may want to invest in coverage for more complicated itineraries (like multiple-destination trips), cruises or package tours where one misstep could throw the entire vacation into a tailspin. Though the cost of the trip may not exceed the $5,000 mark, you'll be traveling with ease knowing that "you'll have another way of getting a refund if something goes wrong," Elliott explained.
Should you decide to purchase travel insurance, you can do so up until 24 hours prior to your departure date. But Elliott warns against buying a plan as an afterthought. He recommends thoroughly researching different providers and types of coverage to determine if a plan is right for you. Websites like SquareMouth.com and InsureMyTrip.com, which allow you to compare policies, are good places to start. Elliott also notes that some insurance companies offer a 30-day post-purchase grace period, allowing you to change your mind for a full refund.
What kind of coverage should you get?
Again, that depends.
There are two general types of travel insurance: "Perils" policies and "cancel for any reason" policies. "Perils" will cover a canceled or interrupted trip as long as the specific reason is covered by the policy. "Cancel for any reason" policies will pay you a percentage of any nonrefundable travel expenses regardless of why you cancel your trip. No matter which type of insurance you choose, your coverage should help alleviate any losses accrued due to unforeseen circumstances. Some policies also include additional coverage, such as medical emergencies and lost baggage.
But you need to read the fine print. "The mistake people make is they go for the first policy their travel agent offers them," Elliott explained, noting that travelers sometimes feel compelled to buy a policy they don't fully understand. He points to JetBlue -- which asks customers if they'd like to insure their newly purchased plane tickets -- as an example of a travel provider that rushes travelers into purchasing a policy without reviewing it first.
"At the end of the [booking] process, they say 'Do you want to protect your purchase?' And you have to click 'Yes' or 'No,' " Elliott explained. "The way that it's worded, it's almost fear-mongering." Elliott also cautioned that travelers might not have a chance to review all of the fine print in order to fully understand the extent of the coverage.
Will insurance cover my frequent flier miles?
Probably not.
"The person who's going to deal with your claim is going to read the policy in a way that is going to be the most favorable to the travel insurance company," said Elliott, adding that frequent flier miles are tough to insure because they're constantly being devalued. "What is reimbursement for a flight -- does that include frequent flier miles? And what's the value of a frequent flier mile? The devil is in the details."
Elliott did recall several instances where miles were credited back to consumers, but it's not common.
Do you really need to read all that fine print?
Yes, you do.
When you purchase insurance, "You're given all these documents that are filled with fine print, and no one has the time to read all that before their trip," Elliott explained. "As a result, you don't really look into what you have until you have a problem."
This issue most often arises when it comes to primary exclusions, such as terrorism. "The basics are always going to be the same. There will be coverage for trip interruption, trip cancellation, death of a loved one, that kind of thing," Elliott explained.
Travelers often get tripped up in the details of their policies -- especially those that outline exclusions. For example, some insurance policies cover terrorism, which would appeal to travelers visiting the Middle East or northern Africa. However, the instances for which you can file a claim are very specific. Elliott explained that most policies require an act of terrorism to occur within a certain radius of your destination in order for your claim to be approved: "It can't just be that the country is on the State Department warning list because there's been an incident. That's not good enough."
Pre-existing medical conditions can also cause major headaches for policyholders. Elliott says that restrictions on pre-existing medical conditions ensnare many travelers who purchase insurance just in case they need to cancel their trip to attend a loved one's funeral. But if the death was the result of a pre-existing medical condition, such as a long-term illness, insurance likely won't cover the cost of the canceled vacation.
Will having insurance make settling claims with travel providers (like airlines and cruise lines) any easier?
"No, not at all. They're still going to be as intransigent as ever," Elliott said. But your travel insurance provider may be able to offer advice on how to settle your claim quickly. If worst comes to worst, you can always call a consumer advocate.
-- Miriam B. Weiner