On the subject of travel insurance

Below are four letters/inquiries from ITN readers on the subject of travel insurance. Each is immediately followed by my response or recommendations.

 I read the letter “Travel Insurance Inquiry” and Mr. Wirtanen’s reply (July ’04, pg. 34) and agree with what was written. He mentioned Divers Alert Network as a source of medical evacuation coverage, but when I went to the website, it appeared the coverage is strictly for divers only and not the general traveling public. Is that true? — EDWARD SEEBOL, San Diego, CA

Divers Alert Network (DAN) is an equal opportunity travel insurer. They insure anyone, scuba diver or not, regardless of age, gender, race or political/sexual tendencies. This is not obvious on their website. Call them (800/446-2671) and talk to a live person. 

 Divers Alert Network now offers trip-cancellation/medical insurance that does not include medical evacuation (which we members have automatically). It is not age rated. The premium is about 5.8%. A major downside is that the waiver of the preexisting-conditions exclusion is contingent upon taking out the insurance with 24 hours (not seven to 10 days) of the first payment for the trip. — PETER CALINGAERT, Chapel Hill, NC

Those of you who have computer access, look up the details of DAN’s new “all inclusive” coverage on their website (www.diversalertnetwork. org). Go to “terms and conditions” for details. 

The plus for their package is that there is no age limit and there is not the usual kind of length-of-trip cost penalty found in some other insurers’ offerings. Their rates seem to be about 6% of trip costs as compared to other companies’ packages that run up to 10% and above.

(It’s interesting to note that this policy does not include any “terrorist-related” coverage except for those travelers who live in the state of Washington.)

This package does not include emergency medical evacuation coverage. That can be purchased separately (with or without the “all-inclusive” package). There is no “preexisting condition” clause in the med-evac coverage, and the cost for an individual is $29 per year or $44 for a family.

The big negative factor in DAN’s new package is that they will waive the “preexisting condition” clause only if you purchase the package within 24 hours of making your first trip deposit. I continue to recommend not purchasing a travel insurance package if you cannot get a waiver of the “preexisting condition” clause.

The reason for my recommendation is that to collect on a medically related claim, the purchaser has the burden of providing medical records that prove compliance with the following typical “preexisting condition” clause:

“The policy excludes coverage for those medical conditions that manifested themselves, became acute or had treatment/medication changes within the 60 days before purchase of these benefits.

“For example, if one has diabetes and takes medication on a daily basis, one will receive coverage so long as there has not been a change in the required medication or dosage and one’s diabetes was under control during the 60 days before the coverage went into effect.”

The bottom line is that there is more than a bit of a medical paperwork chase required to collect on a medically related claim. If you feel that you can meet the above criteria, then there’s little to worry about in the “preexisting condition” clause except for the potential paperwork.

The insurance company simply wants some assurance and predictability that you are fit to travel. If you have the waiver and file a medically related claim, you will have to support that claim with paperwork, but the insurance company will not do a “60-day look-back” regarding preexisting conditions.

 In response to Mr. Wirtanen’s comments about travel insurance (July ’04, pg. 34), including his statement, “you are not likely to receive a full refund of your trip cost unless you cancel very near the date of travel,” I would like to share a travel insurance technique that I use.

I use CSA Travel Protection (which has a website, www.csatravel protection.com, as well as responsive telephone agents, 800/873-9855). If I book a tour, there are always “graduated” refunds for cancellations. These are contingent upon the number of days before departure that a cancellation may occur. 

Therefore, if I am getting back 90% of my money if I cancel four months in advance, I only take out initial insurance for 10% of the trip cost, which would be my nonrefundable loss.

As the date of departure approaches and my refundable amount decreases, I ADD to my insured amount to cover that potential loss. I may do this twice, until I am finally insuring for 100% of my trip cost only on the date after which the tour/airline/cruise company will no longer offer any refund.

There is no point in buying insurance to cover a $5,000 trip when my refund will be $4,500 if I must cancel early.

I was at the Los Angeles airport, in boarding mode on my way to Istanbul and Morocco, at the moment that the 9/11 attack occurred. It took me four days and an additional $1,800 in airfares to reschedule and restart my trip, but since I had all of the proper rebooking documentation, CSA Travel reimbursed me in full. 

They also have special rates and schedules for preexisting conditions, both for the traveler and for a nontraveling family member who may have a medical emergency that forces one to cancel a trip. 

Also, since my car insurance does not cover me overseas, CSA includes rental car coverage in their standard policy. — CHERI HUNTER, Pacific Palisades, CA

The “graduated insuring” technique makes sense. Not all travelers will be wanting to take the trouble to “work this side of the street,” and not all travel insurance companies will allow it — many allow only for purchase of the complete cost of a trip.

 Allow me to offer strong disagreement with Contributing Editor Wayne Wirtanen’s response not to purchase travel insurance (July ’04, pg. 34). Instead of not buying it, buy cheaper and smarter. 

It was, in fact, a tour operator and ITN advertiser, Lost Frontiers, that referred me to Global Alert! trip coverage two years ago. It’s available via M.H. Ross Travel Insurance Services (phone 800/423-3632 or visit www.tripinsurance.com). This agency is extremely prompt and offers toll-free fax applications (888/424-8731). (I downloaded the form from the website and faxed it in so I would have a hard copy.)

The policy covers travel basics but costs 50% less than those of other insurers, specifically Travel Guard. You don’t need hundreds of dollars per diem for trip delay or thousands for baggage, anyway. 

Global Alert!’s claims administrator is a well-known company, Trip Mate (www.tripmate.com). You can also compare multiple travel insurance options and prices at www.insuremytrip.com.

As someone who marketed and administered insurance for 21 years, I know its value and when not to overbuy. Mr. Wirtanen is correct in saying that trip insurance can be overpriced, but his research apparently did not consider less costly coverage. All the more reason to purchase a standard policy, even with routine duplicate provisions, understanding it’s primarily for the cancellation and interruption value. Apply the same principle you would for other risks: insure the most catastrophic or highest-cost event, however unlikely. 

Statistics? I’ve been traveling for over 40 years but only insuring trips since 1995, the year of our first safari. We don’t buy coverage every trip, just the most remote or expensive. We don’t insure air (built-in cancellation fees) or items not paid predeparture. 

We used to spend $1,200 in premiums with Travel Guard per safari, only to find similar coverage for less than half via Global Alert!. Of 107 trips since 1995, 34 were international. We insured 18, and had to file five claims. The first was for 9/11 delays; four others involved weather (Venezuelan storms and Hurricane Isabel), a friend’s stolen passport at LAX and cancellation for medical reasons. Trip Mate’s claims service was prompt and reasonable. 

These four incidents all occurred in the last 12 months, coincident with reduced air schedules, security restrictions and less overall travel flexibility. Frankly, this underscores that frequent travelers need protection. 

Without coverage, we would have lost $4,000 in prepaid expenses. We spent 30% of that in premiums, but we’re not going to stop buying travel insurance altogether just because we also have homeowner’s, medical and credit-card coverage replicating some losses. You neither buy insurance to use it nor need to overpay given less expensive alternatives. — DIANE POWELL FERGUSON, Scottsdale, AZ

I agree with some of Diane Ferguson’s comments, specifically a) don’t overbuy and b) buy cheaper and smarter.

a) Don’t overbuy. Wirtanen’s rule of thumb for purchase of any kind of insurance is to “only protect yourself against losses that would not be manageable to absorb.” We carry fire insurance on our house and collision/liability insurance for our vehicles. Losses here could be major to catastrophic. Loss of trip deposits or even total trip costs would not be in the “catastrophic” category.

I’ve several times quoted the statistics that as few as 3% of trip-cancellation-coverage purchasers actually cancel a trip. (For a copy of my 1994 article, “Consider the Odds When Buying Travel Insurance,” send $2 to Wayne Wirtanen, 4341 Shangri-la, Placerville, CA 95667.)

If you have medical coverage at home which applies overseas (the Wirtanens have coverage that reimburses for these potential expenses; we make sure to have a healthy credit card balance while on a trip), then a separate travel policy for medical expenses does not necessarily make sense, since most companies pay “secondary” costs, that is, only what your primary medical coverage does not.

One travel-related problem that could be a major to catastrophic expense would be the cost for overseas emergency medical evacuation coverage. This problem is extremely unlikely to occur but could also be extremely expensive. DAN’s coverage costs $44 per year for the both of us.

b) Buy smarter and cheaper. Diane Furguson is correct in stating that the bulk of the cost in a standard travel insurance package is for the trip cancellation and interruption protection.

World Travel Center has announced a new “Trip Cancellation Lite — the Low-Carb Alternative.” It’s “Designed for the traveler who wants trip-cancellation protection but not all the extra benefits bundled into most protection plans.” 

“What makes this plan so special is its simplicity,” says Insuractive Executive Vice President Samuel Halpern. “Insuractive Trip Cancellation Lite covers trip cancellation, trip delay and baggage delay. That’s it. No frills.

“Trip Cancellation Lite is the right plan for travelers who already have comprehensive medical coverage and travel medical insurance” and “it costs the same for all ages.”

Among its special features are coverage for terrorism, strikes, disasters, bad weather and supplier default/bankruptcy. There is a preexisting-condition waiver (up to age 70), and there is no cost penalty for trips up to 180 days in length.

On the website www.worldtravel center.com, I requested a “Lite” price quote for two (ages 69 and 72) for a hypothetical international trip of 21 days with a cost of $2,500 per traveler. I was quoted a total cost of $285. (Adding $44 for DAN’s annual medevac coverage, which “Lite” does not provide, brings the cost up to $329 if you take only one trip per year.) Searching the Web for other, more comprehensive travel insurance packages for the same trip produced quotes that ranged from $337 to $519.

For more information or to purchase Trip Cancellation Lite, punch up the above website or call Dan Drennan at 866/979-6753, ext. 3621.

For price and detail comparisons of travel insurers’ offerings, punch up “travel insurance” on Google. Searching the Web for travel insurance packages, I found that at the lowest prices there are no preexisting-condition waivers available.

Happy trails.