Rachel Gibson needs travel insurance. But her circumstances are special.
“We’re waiting to adopt a newborn baby,” she says. “The timing is uncertain.”
Every day, travelers try to match their itineraries and needs to an insurance policy. Often, it’s an easy fit. But not always.
After receiving a few thousand emails from curious readers, it got me thinking: Why isn’t there an impartial, authoritative buyer’s guide for travel insurance ― something that would offer readers like Gibson the answers they need?
Specifically, what are the most common special circumstances for travel insurance? How does insurance handle them? What does insurance cover? What happens when your travel circumstances change? And how do you handle a travel insurance claim?
But let’s start with Gibson.
“Do you know any travel insurance companies that provide insurance for this?” Gibson asked me. “We have found it hard to make travel plans ― beyond Southwest, thank God for them ― and people keep telling me to look at travel insurance but from what I can see this doesn’t qualify for coverage.”
As is so often the case with travel insurance, there’s a short answer, and a long answer.
Short answer: The only kind of travel insurance that would cover someone with the need for flexibility in every case would be a “cancel for any reason” policy. It’s a subset of trip cancellation, usually available for a slightly higher premium, that provides for cancellations that aren’t covered by the basic coverage. You may be reimbursed up to 80 percent of your nonrefundable trip payments and deposits if a trip is canceled for a reason other than a covered reason.
In other words, you’ll have to pay more, and if you file a claim, you’ll get a little less. But will be covered.
And the long answer? More traditional “named perils” policies may cover special circumstances. The operative word being “may.”
For example, some insurance policies cover unforeseen pregnancy complications, including pre-eclampsia or preterm labor. If you interrupt a trip because of a covered pregnancy complication, you could be reimbursed for nonrefundable trip costs. Some insurance policies also reimburse you for emergency medical care you received while you’re traveling.
But what if you’re pregnant and have to cancel your trip because of a normal pregnancy? The only way you’d be covered is if normal pregnancy is named as a “covered” reason ― specifically names pregnancy as something it covers ― and the pregnancy occurred after the effective date of coverage. Travel insurance usually doesn’t cover the costs of normal childbirth while traveling.
So what other special circumstances may not be covered by insurance?
- Any previously existing medical conditions, unless specifically stated otherwise.
- High-risk activities such as mountain climbing, scuba diving, and skydiving.
- A psychiatric emergency, like a nervous breakdown or panic attack.
- Injuries related to terrorist attacks or acts of war.
Back to Gibson’s question, though. Why wouldn’t a travel insurance company write a policy that covers adoption? It’s because, as Gibson herself notes, there’s a lot of uncertainty surrounding an adoption, particularly an intercountry adoption. The failure rates are a concern, and something most insurance underwriters would not want to assume as a risk.
But her question illuminates a bigger issue in the travel insurance industry. There is no “one-size-fits-all” trip, just as there’s no “one-size-fits-all” policy. Everyone has some kind of special circumstances ― a pre-existing medical condition or a predilection for go-kart racing ― that may or may not be covered by insurance.
Never assume that you are covered for a specific situation and that’s particularly true if you have a special circumstance that you’re concerned about. You can always hedge your bets by buying a “cancel for any reason” policy, but if that’s not in your budget, read the policy very carefully and only assume you’re covered if it’s actually in the policy. Your insurance company will.
Deanna Cotton is planning a trip to Israel soon. She wants to hedge her bets, and hopes travel insurance will help.
“I want to pick the best travel insurance,” she says. “I’m concerned about weather, illness and who knows what else?”
Ah, the old “who knows what else?”
We’ve already noted that no two trips are exactly alike, an obvious but often underappreciated fact. Now let’s explore the “what else” ― the unique circumstances that you might be surprised to learn your travel insurance covers.
But before we go there, let’s talk safety. Travel to the Middle East is inherently risky (as, indeed, is all travel). If you have any doubts, check out the State Department’s travel warning for Israel.
Specifically, let’s talk terrorism. Most standard “named perils” policies consider terrorism to be a covered reason for canceling a trip. But certain conditions must be met. The event has to happen at your destination within 30 days of the day you’re scheduled to arrive. Also, you wouldn’t be covered if there’s been a terrorist event at your destination within a month of your plan’s effective date.
Practically speaking, if Cotton is visiting Tel Aviv and there’s a terrorist attack 30 days or less before she arrives, she can be reimbursed for her nonrefundable travel costs. But if the terrorist event happened and you then decide you need insurance, and then another event happens ― say, a bus bomb ― then you wouldn’t be covered.
What other special circumstances are covered by travel insurance?
Some airline change fees If you have to change your trip because of a reason covered by your travel insurance policy, your change fees may be covered. Similarly, if you booked your trip using frequent flyer miles, your policy may cover the fee to redeposit these miles back into your account. Change fees will run you $200 per ticket on the legacy carriers and redeposit fees are $150 per ticket.
Certain hotel cancellation fees Again, it has to be for a covered reason, and the amount may be limited (usually the first night’s charge, which is the effective cancellation penalty). Note that most hotels will offer a no-penalty cancellation if you let them know about it within at least a day of your arrival. If you file a claim, expect a question about the refund policy from your adjuster.
Lost luggage If your airline or cruise line misplaces your luggage enroute to your destination, you’re all set when you have travel insurance. Again, check with the cruise line or airline first ― they may be able to reimburse you for incidentals ― but also, save all those receipts. Most travel insurance covers the cost of buying a new wardrobe and toiletries while you’re separated from your belongings.
Medical expenses If you’re traveling internationally, chances are your medical insurance won’t cover you if you fall ill. But travel insurance will. Also covered: medical evacuations, in case you need an airlift to a hospital with Western standards.
A work-related cancellation Many travel insurance policies allow you to cancel your trip for “work” reasons, offering a refund for prepaid, nonrefundable deposits. But the reasons are very specific. They may include being called back to work because of a merger or acquisition, a natural disaster, or having approved time off revoked. Note: You normally must buy your policy within two to three weeks of your initial deposit date.
So who knows “what else”? Well, it turns out there’s a lot, and surprisingly, many potential circumstances are covered by garden-variety insurance. But, of course, not everything is covered. Tomorrow, we’ll take a look at some of the special circumstances that insurance excludes.
What’s not covered?
If I’ve seen Claire Richardson’s question once, I’ve seen it a hundred times. Maybe even a thousand times.
“Before I purchase plane tickets, I need to know which company to buy insurance from,” she says. “Is there any other issue I should pay attention to?”
We’ve already covered special circumstances and which ones are covered. Now, let’s talk about what’s not covered.
Back to Richardson. Where to buy ― that’s an easy question to answer. I list the names of the major travel insurance companies in my frequently asked questions section on travel insurance.
Buy direct. Companies sell insurance policies directly to travelers, usually online. The big players are Allianz Travel Insurance, CSA Travel Protection, and Travel Guard. A full list of other insurance companies worth checking out is on the US Travel Insurance Association’s website.
Buy through your travel company. Many travel companies, including airlines, cruise lines, and tour operators, offer optional insurance directly to consumers. These can be a good deal, but it’s worth shopping around before deciding to buy one of these policies. Also, be careful of tour operators or cruise lines that offer generic protection services. They won’t cover you if the company goes belly-up.
Buy through a travel agent or third party. Your travel agent may offer an insurance policy. (More on buying through an agent in a moment.)
You might also consult an online company that specializes in comparing and evaluating insurance policies, such as Squaremouth, Travel Insurance Review, TravelInsurance.com, Trip Insurance Store, and InsureMyTrip.com. These can be useful ways to quickly find the best travel insurance policy.
(Disclosure: A lot of these companies are current or former supporters of my consumer advocacy practice.)
But when it comes to the other issues to which you should pay attention, the answer isn’t so easy.
Let’s start with the elephant in the room: an existing medical condition, sometimes also referred to as pre-existing medical condition.
If you have a bad back, or chronic migraine headaches, or if you are a cancer survivor, you need to know about this. (Even if you disclose it, you may not be covered.) Unless there’s a specific waiver for your condition for an existing medical condition ― in other words, unless the policy covers existing medical conditions ― it will not. Some policies will cover an existing condition if you purchase the waiver at the same time you buy insurance, but you have to read the fine print.
Don’t take anyone’s word for it. Make sure you have it in writing.
It’s hardly the only special circumstance that travel insurance won’t cover.
Having second thoughts about your trip. We live in an uncertain world, where terrorism and politics can turn a “safe” destination unsafe overnight. Also, people change their minds. It happens. When it does, you should know that most travel insurance will not cover you for changing your travel plans. (Note: You may be able to get a refund or credit from your airline, hotel or cruise line, so the claim isn’t your only hope of recovering your vacation dollars.)
Bad weather. If you’re visiting the Caribbean for a little sun and fun or hitting the slopes in the hopes of finding great powder, you should know that insurance will not cover inclement weather. Of course, there’s an assumption made by many travelers that travel insurance protects your entire vacation and anything that might happen that “ruins” it for you. Not so. That doesn’t mean all weather events are not covered. Some policies will cover a flood, fire, hurricane, tornado, earthquake, volcanic eruption, blizzard, or avalanche “due to natural causes.” It’s buried in the small print. Read it before you leave.
Had a good time ― too good of a time. Not that this would happen to you, but it’s worth noting that travel insurance won’t cover you if you hit the bars hard, get wasted, catch a sexually transmitted disease or get robbed (not necessarily in that order). Travel insurance doesn’t cover any kind of risky or reckless behavior, so any medical expenses associated with recovering from a night of debauchery are on you. Also not covered: Enjoying one or two cocktails and making a foolish timeshare purchase. No travel insurance on earth covers that. If it did, the insurance company would quickly go out of business.
Richardson is right to consider travel insurance before booking her vacation purchase. It’s good to shop around for the right policy, too. But asking about the “other” issues ― well, that’s brilliant. If more travelers did that, then travel insurance would be virtually problem-free, both for the companies and their customers.
Circumstances can change
I’m a scuba diver. An avid scuba diver.
So when I’m anywhere tropical and I see that striped red dive flag flapping on the dock, I just can’t help myself. I need to know when the next dive boat leaves and if there’s room for me.
Actually, I’m more than an avid diver, I’m also an instructor. In a past life, I trained diving instructors on how to become instructors. Yeah, that serious.
But does my passion for being underwater line up with my travel insurance policy? Kind of. I have an annual policy through Allianz Travel Insurance. It covers scuba diving but it excludes “all extreme, high risk sports.”
Among the activities not covered:
- Bodily contact sports
- Hang gliding
- Bungee jumping
- Mountain climbing or any other high altitude activities
- Heli-skiing, extreme skiing, or any skiing outside marked trails
Phew. Just thinking about all that adventure makes my pulse race.
We’ve already examined the many types of trips ― and whether they are covered by insurance ― as well as the most common type of special circumstances. We also looked at what travel insurance doesn’t cover.
Let’s focus on the circumstances that can change while you’re on your trip. And let’s stay underwater for a few minutes.
Diving is an interesting topic, one of the most common special circumstances you could face when you’re traveling. It is an inherently risky activity that some insurance policies cover, and some don’t. And coverage varies. One policy might cover all diving, while others would only cover you if you’re diving with a certified guide or instructor.
But there are other circumstances that you could face on your trip that may make you wonder if you’re covered under your policy. Here are a few circumstances that generally are not covered by a standard travel insurance policy, even if your personal circumstances change while you’re away:
Mental health If you have a nervous breakdown while you’re on the road, don’t try to file a claim. On a standard policy, mental health issues are excluded from coverage. And that’s true even if you had no mental health problem before your trip. Conditions such as anxiety, depression, neurosis or psychosis are simply not covered.
Military orders If you’re active-duty or in the reserves, and your orders change, insurance normally won’t cover you. However, you may be able to secure a refund or a no-fee change from your airline if you can show your military orders.
Allianz may cover you for cancellation if you or a traveling companion serving in the U.S. Armed Forces are reassigned or have your personal leave revoked. There are exceptions, so read the fine print.
Nuclear reaction, radiation or radioactive contamination If you’re planning a vacation in Fukushima or Chernobyl, this is good to know. Radiation isn’t covered.
An Ebola or avian flu outbreak In fact, any epidemic or pandemic is off the menu, when it comes to most travel insurance policies ― even if the outbreaks begin after your trip has commenced. It’s better to avoid places that are at risk for such outbreaks.
Bankruptcy of an airline, cruise line or tour operator Some travel insurance doesn’t cover the financial default of a travel supplier (read the fine print). This is particularly true if they self-insure ― in other words, if you buy cruise “protection” directly through your cruise line. If that same cruise line goes under, your money goes down with it, too.
Allianz will cover you for trip cancellation if your tour operator, airline or cruise line ceases operations due to financial default. Specific requirements apply, so read the fine print.
Government travel prohibitions. If the U.S. Department of State issues a warning before or during your vacation, it doesn’t matter. Chances are, your policy won’t cover it.
There are travel insurance workarounds, of course. You can buy a more expensive “cancel for any reason” policy that will cover any reason for cancellation (but it’s more expensive and you’ll only get a percentage of your nonrefundable deposit and expenses back).
Or you can look for a policy that will cover everything. For example, my fellow divers swear by the Divers Alert Network policies, which cover items unique to divers, such as the loss of sports equipment (like tanks, buoyancy control devices and fins). When it comes to travel insurance and your unique circumstances, it really pays to shop around.
Handling a claim
“I’m at a loss,” Bill Dunn wrote to me recently. “I’m looking for advice on how to appeal a decision against my travel insurance claim.”
The problem: Dunn had bought travel insurance for a recent trip to see his nephew get married. Six weeks before his departure, he lost his job.
“Being unemployed, I can no longer afford to make the wedding, so I canceled my flight and asked for a refund,” he adds. He filed a claim with his travel insurance company, but was denied.
The reason? He hadn’t been employed long enough. He’d been on the job 15 months, but 6 of them were through an employment agency. His insurance required 12 months of full-time employment.
Cases like this come through here every day. So far, we’ve taken a closer look at the most common special circumstances, how insurance handles them, what insurance covers, and what happens when circumstances change on your trip. Let’s wrap this up by taking a look at how how to handle a claim.
Dunn’s case is still in progress, and I’m optimistic. Yet even if he didn’t contact our advocacy team for assistance, he could have reached out to his travel insurance company ― I list the names, numbers and email addresses on my consumer advocacy site ― and filed a formal appeal. The employment clause really seems like hair-splitting, and his insurance company should have been able to cover him. (If you’re still out there, Bill, please let me know ― I’d love to help.)
All of which brings us to the matter of appeals, a part of the insurance mystery that insurance companies understandably are reluctant to talk about. Why? Because if they told us exactly how they decided their appeals then we’d win every one.
Appeals are normally reviewed by a group of adjusters at a senior level. Their goal is to make sure nothing was overlooked by the first adjuster. This process can take as long as the initial claim, so give your company at least a month for a decision.
The adjusters have a surprising amount of flexibility. For example, I’ve seen cases like Dunn’s overturned on appeal, which is to say the insurance company honored the claim. And think about it: Technically, he was on the job more than a year.
The employment agency loophole really seems like an excuse to deny the claim, and honoring Dunn’s claim may not meet the requirements of his insurance down to the letter, but they more than meet the spirit. A senior claims adjuster probably would see that.
And what if the answer is “no”? Well, you only have one shot at an appeal, normally. After that, you have to ask a higher authority for help. (I offer a full examination of the appeals process in my frequently asked questions about travel insurance.)
Call your agent. You can send a brief, polite email to your insurance agent or travel agent ― whichever is appropriate ― notifying them regarding your rejection. Agents often can and do act as intermediaries when something goes wrong with a policy. Remember, they took a commission on your policy, and they have to be licensed to sell the policy, so they have some skin in the game.
Contact the authorities. Contact your state insurance commissioner. Your insurance commissioner may be able to help if your claim was rejected without cause. To find your insurance commissioner, visit the National Association of Insurance Commissioners site. Some travelers have reported that their claims were honored simply by copying their state insurance commissioner on their appeal.
Contact your Better Business Bureau. You’ll want to copy your agent and insurance company. The BBB is known to investigate claims of this nature, but it has little sway over the final outcome of your appeal.
If none of these steps work, you can take the agent or your insurance company to small claims court. You don’t need an attorney to go to small claims court, but there’s a limit on the claim amount. Typically, this is your last resort. If your agent or insurance company prevails in small claims court, you are usually out of options.
When it comes to travel, everyone’s circumstance are special. In a perfect world, you’ll never have to file a claim, not to mention an appeal. But if you do, it’s useful to know what is ― and isn’t ― typically covered.
A close look at your policy might pleasantly surprise you at how much you’re covered. And if the surprise isn’t positive ― well, you know where to find me.
After you’ve left a comment here, let’s continue the discussion on my consumer advocacy site or on Twitter, Facebook and Google. I also have a newsletter and you’ll definitely want to order my new, amazingly helpful and subversive book called How to Be the World’s Smartest Traveler (and Save Time, Money, and Hassle).