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Posted by on Jun 16, 2009 in TripClips, TripTips |

Travel Insurance – What it is, and why you should invest in it for every trip

What it is –travel insurance comes in three flavors:

  1. •By far the most grotesque nomenclature used in the industry, the so-called “Accidental Death &Dismemberment” or AD&D Coverage is a form of limited life insurance to cover your family, loved ones, or beneficiaries. in case of a severe accident or death.
  2. Trip Interruption coverage begins from the moment your scheduled trip begins until it ends and covers all that can go wrong during the trip. Some of the core coverages include your or a family member’s illness, travel delays, baggage loss or delay, and expenses to catch up to your remaining trip due to interruptions.
  3. Trip Cancellation covers the things that can go awry before your trip even begins, such as your or a family member’s illness, certain partner and family situations, some work related cancellations, job termination, or insolvency of the tour operator, among others.

Why you you should invest in it for every trip –what each coverage provides:
Most everyone knows about life or accident insurance; AD&D coverage is an enhanced form of this for a specific period. We get life or AD&D insurance to protect others in case something untoward happens to those of us who love them. Road warriors who travel for work often obtain annual policies of just this type of travel insurance to protect their loved ones. While many annual basic life insurance options exist, those traveling more than a couple of times during the year may consider investing in an annual travel policy. For others, basic travel insurance with a good AD&D coverage is an affordable option on a per trip basis.

Some others of us know of Trip Interruption insurance; this is the type of insurance most think of whenever “travel insurance” is mentioned. It is, however, only one third of the full umbrella of Travel insurance which covers you and your loved ones from risk when you are actually on your trip and most likely at risk.

However, the most important part of the investment in some instances is the Trip Cancellation or Pre-Trip coverage that that often goes unknown of unmentioned. In simplified terms, Trip Cancellation often comes in two parts, the basic form of Trip Cancellation coverage, and the enhanced or premium options that some insurers offer in their various flavours. Basic Trip Cancellation covers essentially the same risks of trip interruption, prior to the trip which force a covered vacationer (either one or any combination up to all) to cancel their trip entirely. This coverage’s main purpose is intended to insure your cancellation fees and penalties and make you whole if a covered event occurs.

By far the most complex coverage is the premium or enhanced forms of Trip Cancellation coverage which vary dramatically in coverage, reimbursement percentages and schedules from insurer to insurer. For purposes of completing this overview on travel insurance, two types exist and are often sold as an add on option, although these may also be packaged with premium travel insurance policies.
‘Cancel for Work reasons’ often provides coverage for situations where your job or business requires that you work during a previously approved vacation. Coverage percentages vary by insurer.
‘Cancel for Any Reason’, the most complex type of travel insurance coverage due to the many existing version and flavours available for the consumer, is simply that. You are provided the option to cancel for any reason, mostly up to 2 or 3 days prior to departure and commencement of trip and will be refunded your nonrefundable purchase price (up to a specific percent, anywhere 70% to 90% of the total value of the trip, depending on policy). This coverage even applies to non-refundable discount air tickets, tours and day trips, and all other travel products booked through your travel agent. Often, if the tours, hotels or other insured portion is 100% refundable, a 70% coverage on the entire trip may mean you receive 100% of your cancellation penalties for air and cruise {this can be illustrated by your travel insurance professionals}. Although always optional this inexpensive add-on is always highly recommended.

Through good planning and purchasing the appropriate Travel Insurance policies, “Cancel for Any Reason” coverage can be used to hedge against economic, employment, family, or health uncertainties giving YOU the option to decide if any reason warrants canceling your trip. Moreover, it can be used to hedge your vacation planning and allow you to plan trips earlier when the best pricing, availability, and options are available. You would never have to wait until the last minute to plan and pay the higher price when things are almost sold out. With travel insurance and optional “Cancel for Any Reason”, you can book your cruise or vacation package knowing that should you decide to cancel, you are protected. For example, cruises are refundable until final payment, usually 60-90 days out. However, most refund 50% and keep 50% as penalties when canceling less than 30 days, sometimes as little as 2 weeks out. With most cancel for any reason insurance, up to 50% of the insured value is 100% covered, meaning the cruise line or vacation company will refund you 50% and the insurance will cover the other 50% of your cost. Lastly, one policy even refunds the cost of the policy premium if you have to use the policy meaning you could get 100% of the trip costs and 100% of the insurance back too. Now that’s coverage.

If all of this seems overwhelming and complicated, it’s because it is. Using an experienced travel professional with detailed knowledge of the travel insurance products available will ensure your coverage is adequate and your investment in your vacation protected.

© 2009, This article is the intellectual property of Pride Travel and may not be reproduced in whole or in part without prior written authorization.

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