Why You Need Trip Insurance Now

Planning a dive trip soon? Today’s tough times mean you should cover your butt if you’re going to spend significant money. With travel operators on shaky economic ground, job layoffs right and left, and now the threat of influenza pandemics, your overseas travel plans have a greater chance of being affected than ever before.

Of course, the need for trip insurance depends on what type of trip you’re taking, and what the insurance will and won’t reimburse you for. If you’re flying to the Florida Keys for a few days of diving, there is less need for it because major airlines offer refundable tickets. If you cancel your flight, you can usually apply all but $100 of your ticket to another domestic flight. But if you are making a nonrefundable deposit on a remote liveaboard trip a few months ahead of time, and you can only reach home port on a weekly flight, that is another story.

Age-Based Trip Issues

Trip cancellation and trip interruption insurance can cost between 5 percent and 8 percent of your trip’s price. Policy pricing is age-based and there is a penalty for seniors: The cost can run up to 12 percent for travelers 70 and older. Steve Dasseos, president of Trip Insurance Store (www.TripInsuranceStore.com), told Undercurrent that “Insurers realize the older you are, the more likely you are to cancel or file a claim for health reasons, so their policy prices are based on that.” One exception is Travel Guard trip insurance offered by Diver Alert Network (DAN). It says its rates are not-age based, so every diver’s policy costs around 6.3 percent of his trip’s travel price.

The majority of trip insurance policies offer medical coverage, important to divers over age 65 since Medicare does not cover them outside the U.S. (though some supplemental plans provide foreign coverage). Some travel insurance plans pay coverage for Medicare or Medigap, while others won’t. Call your insurance company and ask about the policy limits.

What If the Company Shuts Down?

The problem with buying trip protection plans from any trip company you’re traveling with is that these plans generally don’t cover you if the company quits operating. This scenario can happen, say, if you’re using a travel agency to book your dive trip details and it suddenly goes out of business. According to Dasseos, travel insurance doesn’t cover a travel agency’s financial default or ceasing operations. Supplier Financial Default does not cover you if the travel agency goes out of business. Ideally, the travel agency uses an escrow account to store clients’ funds while the money is in their possession. You are not covered for financial default for money the travel agency had not paid to the travel suppliers.

Scrutinize the “financial default” or similar clauses when it comes to travel suppliers and carriers. Some, like Travel Guard and Travel Insured, cover you for Supplier Financial Default if you buy your trip directly from the travel supplier and/or if you use a travel agent. On the other hand, Travelex and Travel Safe only cover you for Supplier Financial Default if you book through a travel agent or an online travel supplier, not if you book directly. Many insurers exclude companies in Chapter 11 bankruptcy protection.

Travel Insured International will cover your airline tickets if your travel supplier cancels its portion, but you have to insure 100 percent of your prepaid non-refundable trip cost. DAN’s Travel Guard policies do provide coverage for financial default of airline, cruise line, or tour operator, if the insurance is purchased within 15 calendar days of the initial trip payment (but there is other fine print).

Also, pay by credit card. You can always challenge charges if services are not delivered, and your card company is likely to refund the money, especially if you have a higher-end card.

Will Corporate Bankruptcy Affect Your Policy?

A few divers have asked Undercurrent whether the status of the crumbling giant insurance company AIG would affect its travel-insurance arm, Travel Guard, which is DAN’s carrier. Experts say no. Insurance companies and their subsidiaries must keep their finances separately, says Dasseos, and set aside financial reserves. “AIG can’t go to Travel Guard and take its money. I don’t think there is any fear for buying its insurance.”

DAN has no plans to fire Travel Guard as its policy agent, says its marketing director Christine McTaggart. “We have been assured that Travel Guard remains stable, and that they have enough resources at hand to continue to serve DAN members in the manner to which they are accustomed, and to fulfill the terms of policies issued.”

What If You Lose Your Job?

Travel Guard has upgraded insurance coverage for its four levels and one of the new features includes a provision for layoffs and job loss. Other companies are following suit. Expect to pay about 5 percent for that coverage, depending on the policy and trip.

Typically, these policies return trip deposits if you get laid off but it depends on the policy as well as on your job situation. If you’re a company owner, freelance or self-employed, the picture is murkier. And there is more paperwork - - Travelex wants an official note from your human resources department, such as a termination letter.

Health Hazards, Outbreaks and Pandemics

Luckily, the “swine flu” H1N1 strain is subsiding. However, experts are concerned that it may return later this year. Reader Steve Maguire (Columbus, OH) has a trip booked to dive the Sea of Cortez on the Don Jose in August and wrote Undercurrent, “With all the talk of swine flu lately, I was wondering if trip insurance would pay if I have to cancel the trip because of the disease. There are no travel restrictions so far, but we don’t know what may happen.” Maguire called the Web site InsureMyTrip.com and was told insurance will not cover cancellation for the swine flu. “The representative said you can purchase ‘cancel for any reason’ insurance, but it has to be done within two weeks of making your first payment for the trip.”

With the exception of Travelex and Travel Guard, once an outbreak is officially declared to be an epidemic or pandemic, then coverage from insurance firms won’t provide benefits, as there are specific exclusions for epidemics and pandemics in their policies.

If you purchased a policy then contract a disease, you can be covered for trip cancellation if your doctor advises you against traveling. If you are traveling and contract the disease, you’re covered up to the plan limits for medical expenses, subject to the plan provisions and exclusions. In either case, you need documentation. But if you want to stay at home because an epidemic is raging at your destination, you won’t be covered unless you have a “cancel for any reason plan.”

The Best Trip Insurance in Troubled Times

Many dive travelers think “Cancel for any reason” policies are the best these days. It can be purchased as a stand-alone policy or an optional upgrade to a regular policy. With some exceptions, it covers most any eventuality, including job loss. It costs 40 to 50 percent more than a standard trip policy, and you may only get refunded up to 75 percent of your trip cost but if anything goes awry, you are better protected.

Travel Guard, Travel Insured and TravelSafe have deadlines of within 14 days of the date you made your initial trip deposit or payment (the CSA Freestyle Luxe’s policy deadline is no later than 24 hours after your initial trip payment). The plans also require that you insure all prepaid trip costs subject to cancellation penalties or restrictions, and also insure within seven days of the payment the cost of any subsequent arrangements added to your trip. “If you insure an amount less than your total pre-paid trip costs that are subject to cancellation penalties or restriction, there will be no coverage available as a ‘cancel for any reason’ benefit,” says Dasseos. Also, you must cancel your trip more than 48 hours prior to your scheduled departure date.

When Your Dive Trip Goes Bad

Divers usually have two big questions about bad-case scenarios on dive trips. What happens if my plane arrives late and the liveaboard has left? And what happens if bad weather wipes out my dive trip?

Before you buy a policy, you need to be clear on what will trigger the plan’s coverage for your protection. For example, most of Travel Guard’s trip cancellation/interruption policies typically cover flight cancellations due to bad weather conditions, labor strikes and airlines’ financial default, but not carrier- caused mechanical problems. That is something to keep in mind if you are going to exotic locales like Indonesia and Papua New Guinea. The more remote the dive site, the less frequently planes fly there. Those local airlines are not very predictable and schedules are erratic and sometimes ignored. Insurance is a good idea because if you miss the flight to pick up a liveaboard in the Galapagos or Costa Rica, you’re out of luck - - they won’t wait for you. And don’t expect refunds from the liveaboard if a missed, late or canceled plane leaves you in the lurch. Peter Hughes’ standard policy, for example, is that cancellations inside of 60 days, including no-shows, are non-refundable.

Trip cancellation or interruption for bad weather doesn’t cover rainy days in Cozumel when you can’t dive. You won’t have much fun, but unless the bad weather prevents you from getting there, you won’t have a valid claim. Also important: If you see a hurricane bearing down on your destination, you can’t cancel your trip and expect insurance to cover it. Your airline or travel supplier has to be who cancels it. However, if your destination is under an official hurricane warning, you are usually covered it you cancel within 24 hours of departure.

Now say you go on your scheduled dive trip to the Turks & Caicos or the Caymans after the storm hit. If the dive resort is inhabitable but isn’t what you expected or there are damaged facilities, travel insurance won’t cover you. It’s the responsibility of the travel supplier to make any adjustments.

Think Before You Buy

There are a few diver-specific trip insurance policies to check out. Dan’s Travel Guard plan covers 100 percent of tour costs for trip cancellations, 150 percent of the costs for trip interruption, $20,000 for medical expenses but no emergency evacuation. PADI’s Travel Protection plan covers trip cancellation/ interruption costs up to $10,000 per person, $10,000 in medical costs and $50,000 for emergency evacuation. DiveAssure offers Gold, Platinum and Diamond packages that combine dive-accident coverage with trip insurance, but it’s only the Diamond that offers good coverage for travel cancellations and interruptions. It pays up to $25,000 for cancellations, $37,500 for interruptions and up to $1 million for medical expenses and evacuations.

Before you purchase trip insurance, write down the situations for which you may need it. If you think you might have to leave a trip early to care for an ailing family member, make sure that’s included. If you’re concerned that a dive operator may not be financially solvent, book through a travel agent who is on top of things. Get trip insurance through your travel agent, or online through InsureMyTrip.com or TripInsuranceStore. com to ensure you are dealing with a reputable company. All insurance companies have a toll-free number you can call to ask staff representatives as many questions as you need with. Do that to make sure your butt is fully covered in case the worst happens before you leave or during your trip.

- - Vanessa Richardson