Travel insurance is a tricky, slippery world. "I don't know how people without insurance backgrounds figure out insurance," said Steve Dasseos, president of TripInsuranceStore.com (www.tripinsurancestore.com). A reputable broker like Dasseos can definitely help you navigate the world of insurance, but even he can't help if you don't know what questions to ask.
Here's the best question to ask: Everything. Don't assume anything is covered; get it spelled out in plain English, and expect to spend a long time on the phone doing it. We've identified 10 good questions to ask any broker or insurance company to get you started.
1. What state is my insurance company regulated by, and what's the company's license number? As columnist Christopher Elliott wrote on this site, there's a big problem right now with fake travel insurance. Companies advertising themselves as "travel protection" or "assurance" firms smooth-talk travelers into picking up policies without much inspection, often by cooperating with travel agencies or cruise lines. Real travel insurers are regulated by state insurance commissioners, and have license numbers you can check on those insurance commissions' websites.
2. Who's underwriting this policy? The company you're buying travel insurance from isn't really paying out your policy; that job goes to an underwriter, a separate company with a different name. Get your policy underwriter's name, and check them out on the website of AM Best (www.ambest.com), an insurance company rating agency. If the underwriter isn't rated by AM Best, you may have a problem.
3. What bonuses do I get by buying insurance early? If you want coverage for terrorism, pre-existing medical conditions, and airline or cruise line bankruptcy, you need to buy your insurance within 24 hours to 21 days of making your first payment for the trip, said Jim Grace, CEO of InsureMyTrip.com (www.insuremytrip.com). Travel insurance experts told us that if you buy your trip and your insurance at almost the same time, you'll get the most coverage. If you wait, the policies may get more expensive and less comprehensive.
That said, don't just click willy-nilly on check boxes when you're booking your trip. The insurance sold directly by airlines and online travel agencies is extremely stripped-down and will often only cover trip cancellation if you personally have an accident or get ill -- and not always then, said John Cook, CEO of QuoteWright.com (www.quotewright.com). Unfortunately, you have to shop around.
4. What's the toll-free, 24-hour emergency assistance number for my destination, and how do I dial it? Travel insurance should provide a 24-hour assistance number you can call from anywhere in the world. In some countries, it may be a collect call. Find out the digits you need to plug into pay phones and hotel phones so you don't get stuck without help in a panic.
5. Can I get a waiver of pre-existing medical conditions? How about of Grandma's pre-existing medical conditions? Pre-existing medical conditions are the number-one reason claims get denied, Cook said. In his experience, 21% of all claims filed used to be denied because of pre-existing medical conditions -- that's a huge number. This is because of the nightmarish confusion surrounding "pre-existing medical conditions." Usually, they're anything you have received care or treatment for that has altered within a set time period, between 60 and 180 days, Cook said. So if you're on heart medication and you changed your dosage four months ago, you're not covered if you have a heart attack -- unless you get that waiver.
The pre-existing condition rule may apply to anyone under the 'umbrella' of your policy. If the policy lets you cancel because of the death of a family member, and Grandma has a heart attack because of her heart condition, you still might not be able to cancel -- unless Grandma's heart condition was exempted, too.
"If you can find a plan with a waiver, I strongly recommend it," Cook said. If you can't, at least try to get a policy with a short "lookback period," which measures the amount of time the insurance company plumbs the past to dig up your health problems. If you're still stymied, you may be in the market for "cancel for any reason" coverage, which we'll discuss more below.
6. What costs will the insurer pay up front, and what costs do I have to file for reimbursement for? How long does reimbursement take? Most elements of most policies are reimbursable -- you pay up front, then file a bunch of forms with the insurer and hope for a payback. If your own finances are tight, you need to know what you might be in for, and how long you'll be loaning your insurer money for. Some medical costs, on the other hand, are handled directly by the insurer. That's critical especially in Europe, where medical costs can get extremely high, or on trips to distant locales where you may need to use a medical evacuation service to save your life.
7. Are all of my travel providers currently covered? Don't assume you'll be covered if your airline, cruise line or tour company goes out of business. Travel insurers have lists of companies they will and won't cover for "financial default." Think about every company you might owe money to on your trip, and ask your insurer if each company is covered.
8. What are the exceptions to the cancellation coverage -- and how much more does "cancel for any reason" cost? The more you look at a typical trip cancellation policy, the more holes you can find in it. For instance, some insurers exclude coverage for "pandemic" diseases. But the WHO currently classes both H1N1 and H5N1 influenza as pandemics, which means your cancellation policy could be useless if you're laid up with the flu.
According to QuoteWright.com, some policies don't cover an airline bankruptcy if you bought your ticket directly from the airline. That's tricky and annoying. Here's another one: most travel insurers will nullify your policy if you don't want to travel because of "civil disorder or unrest" at your destination, which most people would think is a very good reason not to travel. There's also often a really complicated set of rules around pregnancies; basically, if you're already pregnant when you buy the policy, you usually can't cancel because you're having a baby.
If all of this sounds like a headache, you need to look at "cancel for any reason" policies. They cost more, but they let you get at least some of your money back if you cancel for any reason.
9. When does coverage begin and end? Some travel insurance takes effect from the moment you leave your door to the moment you come back home. But some insurance stops covering you when you arrive at your "Destination," which could be your home airport rather than your actual house, Cook said. If an airline loses your luggage and you discover it after the plane has touched down, you might then be out of coverage because you've arrived at your "Destination." Make sure your insurer covers you for as much of your trip as you feel comfortable.
10. Can I get that in writing -- and can you show me where it is in the writing? Remember, nothing matters unless it's in writing. If a travel insurance company assures you something is covered, they can't just point you to a page on their website; they need to point to a paragraph in your policy. If a promise isn't in the document you signed, assume you'll have trouble when it's time to pay up.
Bottom line: It's wise to always consider a travel insurance plan to cover your trip costs from the unexpected.
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