It’s true, travel insurance is a popular option for cruises and tours, because it insures the traveler if, due to a delayed or canceled flight, he or she misses the departure and loses the entire booking. It’s important to note, however, that travel insurance is equally important for other types of travel, especially if you’re booking travel abroad.
Take the following real-life example from Richmond, Va.: With Spring Break beckoning just weeks away, Diane Kaufman, her daughter Charlsey and a few friends were thinking warm...actually, hot. A few photos of sunny Puerto Rico were enough to get them to book a week in San Juan.
They opted for The Ritz-Carlton. And because they were making their reservations less than a month out, they passed on travel insurance, figuring nothing would come up that would cause them to alter or cancel their plans. After all, what could go wrong? Well, as we found out, plenty. Diane’s travel travails make for a basic primer on the benefits of travel insurance.
On the Saturday her group was planning on returning home to Richmond, Diane called the airline to confirm their reservations only to find that a massive snowstorm was wreaking havoc on her travel plans.
Their flight into Philadelphia was canceled. Worse, the earliest departure was Tuesday. Worse yet, their rate at The Ritz was gone, and they would have to pay the full rate, if The Ritz wasn’t completely booked.
“Don’t get me wrong, there are worse places to be stranded,” said Diane, who laughed about the ordeal weeks later. “We didn’t get much sympathy back home for being stuck at The Ritz.”
The result was that Diane shelled out an extra $1,100 for her unplanned layover in San Juan just for the extra hotel stay: $600 at the full rate for one night at The Ritz and then several hundred more at two additional hotels after The Ritz was unable to accommodate them without a reservation. Other expenses were an additional $300 or so.
Was she was aware that travel insurance might have covered these expenses? Several friends had told Diane that travel insurance doesn’t cover “acts of God,” such as weather. She and many travel agents aren’t sure either. In fact, weather-related delay coverage is common on most travel insurance. Though airlines aren’t required to compensate travelers if weather cancels a flight, travel insurance may pick up where the airline leaves off.
A basic package from Access America, for instance, would have offered Diane, and anyone else in her group who had purchased the insurance, a daily stipend (up to $150) that could be used for hotel, food, local transportation and other costs. Additionally, Access America insurance includes a hotline where Diane could obtain assistance with tracking her flight and rebooking her hotel. “If I was doing it again, I would buy insurance in a heartbeat,” Diane says now.
A recent survey by Access America revealed that among consumers planning a vacation in the next six months, only 14 percent had purchased travel insurance. The United States Travel Insurance Association (USTIA) estimates that only 35 percent of travelers throughout the year purchase travel insurance. Perhaps part of the reason for this relatively low market penetration is that few travelers know exactly what travel insurance covers or how it works, much like Diane and her group.
Travelers don’t like to think about what might happen to interrupt their plans. But a lost bag can cost them hundreds of dollars, while a medical emergency can run thousands of dollars.
Take this example: A couple flying round-trip from Richmond, Va., to Miami, Fla., for the weekend pays approximately $900 per person for their airfare and one hotel room. Travel insurance typically costs between 4 and 10 percent of the booking. So for just $29, the couple could be individually covered for cancellation, travel delay, emergency medical and dental care, medical evacuation and transportation and baggage loss, damage and delay.
Is that a small price to pay? Diane Kaufman no doubt thinks so.
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