To Insure or Not To Insure

This should be a fairly easy question, but for so many people it is not.  My answer in general is yes, but sometimes it is a maybe.

According to Dictionary.com, to insure is “to guarantee against loss or harm”.  Life can be a craps shoot.  Because of this insurance companies came to be.  They are gambling that something won’t happen.  Life, home owners, health, auto, body parts, you name it, there is an insurance policy available for this.  You can take all the precautions you want but bad things can still happen and you just never know when it will.  For me, it seems to happen at the most inappropriate time!  So we buy insurance — at least for the important things or the required things.  I can’t skip insurance on my home as my mortgage company would not approve of that or my car because that would be violating the law in my state.  Health insurance isn’t required, but I certainly wouldn’t go without it.

Vacation insurance is one area of insurance that has caused many debates between travelers.  Many have told me “We are healthy and can’t see anything going wrong.  We are going on this vacation no mater what.” and decide not to get the insurance.  Let me tell you a few stories about things that can and do go wrong.  Things you cannot anticipate when you book a vacation.

When I booked my first cruise, my dad was in remission from leukemia.  I “accidentally” added insurance to my reservation.  I say accidentally because my travel agent just included it from the start and I didn’t think about saying to remove it.  Half way through the cruise I got the call no one ever wants.  My dad was failing fast and wouldn’t likely make it until my cruise was over.  I got off the ship in St. Thomas and flew home.  Thankfully I had insurance to cover my lost time on the cruise and all transportation expenses to get me home.

Just recently, we were cruising with friends when one of them became ill.  We were on our way out of San Francisco when the ship’s doctor alerted the captain that she needed to be rushed to a hospital for an emergency situation.  The ship made a U-turn and we were headed back to San Francisco.  She did end up having surgery and thankful is doing well.  The expenses associated with this experience were great.  It’s likely that her health insurance would cover the medical expenses in San Fransisco, but not on the ship.  Her health insurance certainly wouldn’t cover the cost of the missed nights on the ship.  Thankfully, they had travel protection to cover something like this.

I was on the same cruise and did not spend the money on insurance.  We took a gamble and won, instead spending our savings on souvenirs in the shops.

One more story for you.  Earlier this year I had a client booked in a suite on an Alaskan cruise.  There were very excited to go, everyone was healthy and remained so.  Unfortunately, within the penalty period, her husband lost his job.  The penalties to cancel the vacation at that point were 50% of the cost of the cruise.  Not to mention complete loss of the costs for the airfare!  Unfortunately, they did not have insurance.  This was a gamble they did not win.

I can’t give you all the answers, it really is a personal decision.  What I can give you is some examples and reasoning as to why insurance should be included for you. In an interest of full disclosure, a travel agent does make a commission on insurance that they sell you.  Some travel agencies sell independent insurance policies.  Others only sell what is offered by the travel supplier and refer you to independent insurance companies if the travel supplier’s policy doesn’t fit your needs.  We are the latter.

As far as the downside to using insurance, the only negative is the cost.  Insurance is not free.  Some coverage that you have at home may extend to your vacation, so you will want to check so you don’t double cover yourself.

The biggest pro is having peace of mind that you are covered if anything goes wrong.  This goes for having any insurance policy.  As far as which policy is the best for you, that is where there is some gray area.

Travel insurance policies are not created equal.  You can get policies to only cover your medical expenses or your trip cancellation or delay.  You can get a policy that will cover pre-existing conditions or a cancel for any reason.  The important thing to do is figure out why you want insurance.  Here are some of the top reasons and coverages you should consider:

• Medical Evacuation
• Injury or Illness
• Trip Cancellation
• Trip Interruption
• Baggage Delay
• Trip Delay
• Cancel for Any Reason
• Pre-existing Condition Waiver

Medical Evacuations can be very expensive.  If something happens on the ship to you and you are not able to get to a port of call, if a medical helicopter has to come and get you, the cost will be extreme.  If you are overseas and need to get back home or need to be hospitalized for a length time overseas, the cost could use all all your savings and more!

Have you heard about people getting quarantined in their rooms on the ship because of an illness?  This can ruin a cruise.  Why should you have to pay for the time you couldn’t enjoy the cruise while you were sick?  You can get coverage for this.

I have a client traveling now whose mother got ill last week meaning she needed to cancel her room.  Her insurance will cover that cancellation.

An example of trip interruptions would be what happened to me on my cruise, having to fly home mid-cruise or my friends with the medical emergency.

It’s horrible when the airline loses your luggage.  Many times, your luggage just took a different route to get to vacation.  There is a chance your luggage could turn up on a later flight, even the same day.  The problem is, if you are going on a cruise, you won’t be there for your luggage arrival.  I’ve cruised with people who didn’t get their luggage for a couple days.  Limited clothing is available on a ship and the prices are usually high.

Have you ever gotten on a plane to find out there is a mechanical problem and your flight is delayed?  How long of a delay have you experienced?  The ship is not going to wait for you.  In general, you can fly to the first port of call and catch up but what about your lost time on the ship?  This can be covered.

Cancel for any reason is becoming very popular.  In fact, many of the cruise lines are including this with the policies they offer.  My clients who lost their job would have been covered under such a policy.  Some of these work differently though so you want to be sure you understand how the policy works.  With Holland America Line, if you cancel in advance of the cruise, it is a Cancel for any reason policy and you receive a certain percentage of the cruise fare back in cash.  With Disney Cruise Line, if your cancellation is not covered under the insurance policy, you will receive a future cruise credit in the amount of the penalty.  Other cruise lines offer a cruise credit of a certain percentage.

If you have a pre-existing condition (or a relative you are concerned about that would make you cancel your trip), you will want to make certain you have coverages for any pre-existing condition.  Some policies will waive this if you purchase the plan within a week or two after paying your initial deposit.

You should make sure when you have insurance that you understand when it becomes effective.  With the independent policies it is effective the date you pay for the contract.  With the travel suppliers, that is not always the case.  With some cruise lines, it is not effective until the final payment is made.  That means if you made your reservation before any family member was ill but didn’t pay in full, added the insurance with the cruise line and then they got ill, any cancellation regarding that family member’s illness would be considered a pre-existing condition and may not be covered.  Just because you added the insurance, doesn’t mean it is effective.

What I look for is the cost of the policy and what it actually covers.  Some policies will not cover anything not purchased through them.  For instance, Disney Cruise Line’s policy does not cover your airfare if purchased independently.  If you are doing back to back cruises, you will need two policies, one for each cruise.  Many times I will purchase independent insurance to cover my flights, pre or post nights and cruise.  You can get insurance with your airfare too.  It’s best to just compare all policies you are considering for what they offer and get the best options for you.

My personal decision on insurance has to do with the cost of a situation arising.  If I am going to a hotel or resort in the US, I generally do not get the insurance.  Most cancellation policies have a minimal penalty if I cancel very close to the travel date.  The cost to change my airfare is a little more than the cost for my insurance.  For me, this is a risk I’m willing to take.  Going on a cruise or out of the country, I have a much different view.  Nearly always I purchase insurance.  I didn’t on our Alaska cruise because we were going to be in US ports the majority of the cruise with pre and post nights booked.  For our cruise to Canada and New England, we did purchase insurance because we are arriving the day of the cruise.  I will just feel more comfortable with this.

So who do we recommend getting insurance from if not the travel supplier?  I suggest all my clients check out Insure My Trip.  This site lets you add in the costs of all the trip components and you can select what type of coverage you are looking for as well as limits.  It then gives you a number of companies that you can compare policies.

While your travel agent should be able to give you basic information, I would not go to your travel agent for policy provisions and limits.  This should be handled by an insurance professional.  Your agent can give you contact information for the insurance company.  When your travel agent is recommending a particular policy, it is ok to ask they if they have a financial interest in getting you to add that certain policy.

It’s your turn.  To insure or not to insure?  That is the question.