After the volcano, a whole new set of issues and questions about travel insurance

Clients often ask, “Should I buy travel insurance?” The answer varies because there are so many variables involved. It’s not just how much you stand to lose on the trip itself, but how much any delays, injuries or illness, while on route, could cost. Then, there is the unexpected — things like volcanoes.

This post doesn’t propose to give all the answers on the subject, but should at least provide some aspects for consideration.

I just returned from a brief trip to England, where the papers were full of horror stories about stranded Brits. In some cases, the airlines had helped out, in other cases, they hadn’t. In some cases, traveler insurance turned out to be not worth the paper it was written on (assuming it wasn’t an online policy).

The problems come from definitions of what incidents are covered. Some insurance covers “Acts of God,” some doesn’t. Some policies cover weather issues, others do not. Plus, there are other costs that don’t seem to fall under any policy rules.

For many travelers, cellphone bills became their largest expense. Those who had not used travel agents waited for hours to reach call centers, at international cell phone roaming rates.

Some business travelers also had traditional land-only family trips that had to be canceled, because they were stranded at distant meetings.

Some insurance policies covered expenses up to the total cost of the trip, but didn’t cover expenses while stranded. Then, when making claims, there’s the whole issue of what’s considered a reasonable expense? If the only way home is a very expensive ticket, it might not be covered, especially if in business or first class.

So what should travelers do? Here are five tips for starters:

1. Decide what you want to have covered. Basic trip cancellation, medical evacuation or a lot more?. Admittedly this volcano was an unusual incident, but there are no guarantees it won’t happen again. In general, but not always, buying a more expensive premium policy (often titled something like “Gold” or “Platinum” or “Select”), will get you more coverage.

2. If there is some specific condition that you know could affect your trip, shop around to make sure you can find a company or policy that will cover it. Most companies will sell “pre-existing condition” policies, IF purchased immediately upon payment of deposit, and for an extra charge. This could be well worth it if travelers are dealing with a chronic illness.

There are also variations in what constitutes a “relative” for insurance purpose. If you have an aunt or cousin, for example, whose health might affect your trip, make sure they are on the list. Other conditions that vary a great deal between policies are job-related cancellations, military issues, and the aforementioned “weather” and “Acts of God.”

3. Be aware that known problems can affect insurance. If there are rumors of an tour company’s poor financial health or a travel advisory, insurance may not cover resulting problems. For example — with U.S. Government warnings about Bangkok due to the political climate, trips booked today may not be covered, especially if travel is anytime in the near-term. Check.

4. Read the policy, carefully. Yes, I know, they are boring. They are designed to be. But the time to find out if something is a potential problem is before purchasing the insurance. If you are still not sure, call the company, ask your question, and GET A NAME of whoever gives you the answer. (I, alas, cannot count the number of times I get the “someone told me” response. “Someone” likely won’t be enough to win a dispute.)

5. While in general it’s safer to purchase third party insurance, in some cases, tour operator’s insurance may be a better bet, since many sell a “for any reason” policy. This means then if your child’s soccer coach demands your son or daughter be back early for practice, or your teenager cannot bear to be parted for so long from their current love, or you decide you need to watch your team in the playoffs and postpone the trip, those things are covered.

(And yes, I have had all those reasons come up, and more. Sick pets are another frequent issue.)

Most of the time, fortunately, these problems don’t come up. In fact, I have one long-term wealthy client who long ago decided to “self-insure,” as he figured that if he canceled less than five to ten percent of his trips, he would come out ahead even if one occasion was expensive. For him, that is a valid choice.

The important thing, however, is that it be an informed choice. So if insurance of some kind is a potential option, take a little time and get the one that’s the right fit for your needs.

Plus, be aware that there are plenty of travel insurance and travel “protection” scams out there. The National Association of Insurance Commissioners (NAIC) reminds consumers to “Stop. Call. Confirm. STOP before signing any paperwork or writing a check. CALL your state insurance department, which is easily reached by phone. CONFIRM the company or agent offering insurance is legitimate and licensed in the state.”

If it appears that your policy isn’t worth the paper it is printed on, of if you have any complaints, the NAIC also has established the Online Fraud Reporting System (OFRS) through which consumers can report suspected fraud or file complaints. The OFRS Web link is located on the NAIC Home Page at https://eapps.naic.org/ofrs/. Through OFRS, consumers can pursue a proactive role in identifying and reporting insurance fraud and poor business practices.