Advice from a longtime travel insurance columnist

In my column this month, I will first answer a subscriber’s specific questions regarding purchasing travel insurance, then I will provide some thoughts and recommendations on the general subject.

QUESTION: Dear Mr. Wirtanen, my husband and I are planning a trip to China (including Tibet) and Japan in October-November and, for the first time, we are wondering about the value of purchasing travel insurance.

In the archives of your “Eye On Travel Insurance” column on the ITN website (www.intltravelnews.com), I read your July 2004 answer to subscriber Doreen Kennard’s question about purchasing travel insurance. I’m wondering if you still advise not purchasing travel insurance but purchasing only emergency-medical-evacuation coverage. We are in our 70s and in good health, with no preexisting-medical-condition issues.

I also was wondering about purchasing just enough insurance to cover our international airfare, in case we are unable to make the trip. I would appreciate knowing your thoughts on all this. — Dorothy Botnick, Dallas, TX 

ANSWER: Dorothy, first of all, I do NOT recommend not buying travel insurance. Rather, I recommend buying travel insurance wisely.

For instance, if you have overseas-medical-expense coverage from some other source, then buying additional overseas medical expense coverage is not necessary.

In the Kennards’ case that you cited, they already had medical insurance that covered them worldwide plus limited emergency-medical-evacuation insurance plus homeowners’ insurance that would cover lost property, and they said their airline would largely cover any lost-baggage costs. What they wondered was whether or not they could buy additional coverage only for certain risks, specifically, for trip cancellation or interruption. My answer was based on their situation.

Now, in your case, certain areas in the destinations you mentioned are not generally known for having top-notch medical facilities. Better than buying only emergency-medical-evacuation coverage, it would be best to have, at the least, emergency-medical-evacuation coverage PLUS coverage for overseas medical expenses. (Note: Generally, no medical coverage will also supply emergency-medical-evacuation coverage, but you can purchase stand-alone emergency-medical-evacuation coverage.)

Remember, too, that Medicare does not cover medical expenses overseas.

A policy using the “Betty James Travel Insurance Strategy” would provide coverage for both overseas medical expenses and emergency medical evacuation at a modest cost. For this, (1) you would select a travel insurance policy that includes high-limits coverage, (2) you would buy a “zero trip cost” (aka “post departure”) policy and (3) you would insist on a policy with which the insurance company will act as the “primary payer”; that is, it will pay service providers directly as compared to secondarily.

Life is a crapshoot. I recommend buying insurance only for losses that you cannot easily absorb, such as having fire insurance for your house. 

My general advice revolves around your financial situation. If the loss of your airfare would be in the neighborhood of catastrophic, then insure it, but if it would not be catastrophic, then don’t.

And, yes, you can purchase travel insurance to cover only the amount of your airfare. In fact, regarding travel insurance in general, you can purchase any amount of coverage that you want up to the maximum cost of your trip.

My recommendation — if you are both in good health and have no lingering medical issues, then buying trip-cancellation/interruption coverage is probably not necessary. And if you have no close relatives whose health issues would cause you to cancel your trip, then you might consider not purchasing coverage for your airfare either.

Enjoy your trip. — Wayne

Readers, after Dorothy received my answer, she let us know what she decided, writing, “In the end, I decided to purchase travel insurance. I called the number for Dan Drennen at the Travel Insurance Center [see below], but he was out of town, so I was referred to his colleague Alan Lightbody, who was professional, knowledgeable and pleasant to work with.

“Alan recommended the AXA Silver Plan, which gives all the coverage we need and is flexible, so we could insure only a certain amount and not the entire cost of the trip. We can, however, add to the insurance coverage should I decide to do so. — Dorothy”

Travel insurance basics plus rules of thumb

Dorothy’s questions about the value of travel insurance spurred some discussion at ITN, and we decided that — with my vantage point of having written about travel insurance over a period of 25 years — I should list in one spot the main things that I think travelers should be aware of and remember when considering purchasing travel insurance.

What I came up with is not everything you need to know about purchasing travel insurance, but it will help provide a basic understanding.

Types of policies

There are two basic types of travel insurance. 

1. The first is a full-feature policy, which, among having other inclusions, provides coverage for trip cancellation and trip interruption.

It’s important to realize that, in most policies, coverage for trip cancellation and trip interruption is provided primarily when the purchaser or a close family relative has a medically related emergency. 

2. The second basic type of travel insurance is post-departure coverage. As the name suggests, this kicks in only after departure. It has all of the features of a full-feature policy, such as baggage loss, etc., except for trip-cancellation and trip-interruption coverage. 

The advantage of post-departure coverage is it covers overseas medical-emergency costs and emergency-medical-evacuation costs for a modest sum ($50 to $100, depending on the age of the traveler) compared to the cost of a full-feature policy.

The name I coined for this type of coverage is the “Betty James Travel Insurance Strategy,” after an ITN subscriber in Florida who, while traveling overseas, incurred about $80,000 in medical and evacuation expenses on a trip but paid not one dime for her treatments overseas and delivery to her front door (Sept. ’10, pg 54). Most travel insurance companies offer this coverage but do not advertise it, as they would rather sell the more expensive policies.

More travel insurance basics

Primary- and secondary-payer policies — Simply put, “primary payer” policies will pay claims relatively quickly, whereas “secondary payer” policies will pay only after you prove that you have no other insurance coverage that is applicable to the claim and after those other insurers have paid their shares. Insist on buying only a primary-payer policy.

It is important to get a “waiver” of the preexisting-condition clause, a clause that is in every travel insurance policy. 

If you do not have this waiver and you have a medical emergency overseas, your claim will not be approved unless you can provide proof that your emergency was not related to some medical condition that you already had (or even to a change in the dosage of a medication you were taking) within a certain period of time (typically, 90 days or more) before your trip. 

Avoid this problem by always insisting on this waiver. Most companies will provide this waiver if you purchase a policy (even a “Betty James” policy) within some stated number of days after making your first trip deposit (typically, 14 days). 

Travel insurance will not protect you from every travel problem. If your trip is interrupted by anything other than a medical problem as described in the policy, you will not be able to collect on a claim for trip interruption (even if a problem involving the tour operator causes the interruption of your trip — for example, the company’s riverboat sinks or the river is too shallow for the ship to continue the cruise).

Be advised that a travel insurance policy will reimburse you only for your specific loss. In the case of a trip’s being canceled, for example, if your loss is only the amount of the trip-package deposit, then that’s the maximum amount that you will be reimbursed. 

Where to purchase travel insurance

I recommend buying travel insurance from a travel insurance broker. He or she will have access to many types of coverage and can make a personal recommendation based on a phone conversation with you. 

Remember that a travel agent knows about travel, but a travel insurance broker knows about travel insurance. And, in case of a problem with a claim, he or she would be a knowledgeable person to have on your side.

I recommend Dan Drennen of the Travel Insurance Center (Omaha, NE; 402/343-3621). Dan can also answer all of your questions about the Betty James Travel Insurance Strategy.

For a free monthly e-newsletter with updates on travel insurance plus travel tips, visit travel
insurancecenter.com/eng/newsletter/subscription.

Additional information

I have written a large number of in-depth articles related to travel insurance, including “When Is It a Good Idea to Buy a Full-feature Travel Insurance Package?,” “Consider the Odds When Buying Travel Insurance” and “Emergency Medical Evacuation 101 — What Overseas Travelers Need to Know.” 

If you are interested in some facet of travel insurance, I’ve probably covered it in depth. To review the list of topics covered, visit www.intltravelnews.com and click on “Departments” and “Columns” and then on “Eye On Travel Insurance.”

Happy trails! 

Readers with questions are welcome to contact Wayne Wirtanen, c/o ITN.