March 27, 2003: Consumer Affairs Office Urges Careful Consideration In The Purchase Of Travel Insurance

With the prevailing uncertainty accompanying war in the Middle East and ongoing cautions over domestic terrorism, the Massachusetts Office of Consumer Affairs and Business Regulation recognizes that consumers planning trips abroad or domestically may be fielding more offers for travel insurance to minimize the likelihood of lost investments due to trip or tour cancellations.

Consumer Affairs Director Beth Lindstrom strongly advises consumers to look before they leap into a travel or trip insurance contract. "These products can vary widely in terms of coverage and cost. Make sure the type of coverage you're considering fits with your travel needs. Review the fine print carefully for exclusions or coverage limitations and ask questions before you buy," said Lindstrom.

Insurance Commissioner Julie Bowler urges consumers to take a closer look at their existing insurance policies to better understand their coverages. "Some of the coverages one might buy in a travel insurance package may already be provided for in insurance policies a consumer already holds, such as reimbursement for personal belongings under a homeowner's policy," Bowler said.

Buying travel insurance can be confusing as there are many packages and a wide range of prices. Common types of travel insurance include trip cancellation/interruption insurance, emergency medical/evacuation insurance, and baggage insurance.

Since purchasing this type of insurance can be perplexing, the Office of Consumer Affairs recommends consumers do their homework and ask the following questions before making a purchase:

• What is the airline, cruise line or tour policy? Understand the cancellation and refunding terms of the air, cruise line or tour contract you are buying. Some U.S. airlines now offer greater flexibility in flight re-scheduling and it's important to understand their rules.
• What is the trip costing you? Assess the total loss you might incur. You may find that the travel insurance coverage is not worth the cost.
• What do your current insurance policies cover? Know how your existing insurance policies cover you. For instance, lost luggage and personal property could be covered by an endorsement you may already have on your homeowner's policy. Know whether and how your health insurance covers you should you need treatment outside the United States.
• Are you a member of an auto or travel club? Do you already have certain protections as a credit card holder? These protections may be sufficient depending on the circumstances of your travels.
• What are the exclusions in the insurance policy you are looking to purchase? Reading the fine print is very important. For example, some travel medical coverage may require you to pay medical bills first, and then be reimbursed. On some policies, pre-existing medical conditions may make it impossible to collect on a claim. Some fine print may state that reimbursement for lost luggage and personal property may only be payable after the consumer files a claim with their property insurer or the public conveyance that last had provable possession of the property.
• Is there an insurance company underwriting the policy you wish to purchase? Before you purchase travel insurance from your tour or cruise provider, know whether they "self-insure" the coverage (i.e. the company pays the claims themselves). If the tour or cruise provider goes out-of-business suddenly, there may be no funds available to pay your claim.

Consumers should be aware that travel insurance costs can vary greatly depending on coverages selected, age and the cost/length of a trip. Trip destination is usually not a factor in the cost of these policies. Trip cancellation/interruption insurance generally costs between $5 and $7 dollars per $100 of coverage.

"Just as you would shop around for the best deal on a cruise or airfare, consumers should identify the coverages they need and compare prices," urged Director Lindstrom.