Trip-Cancellation Insurance (TCI) is designed to reimburse you for the financial losses that you incur when you are required to cancel a trip before departure or interrupt it somewhere along the way. But TCI will not reimburse you if you simply change your mind about traveling.
Virtually all TCI policies are effective in the case of sudden illness, injury, or death, yours or a family member's. Also covered in most policies are cancellations due to a wide variety of "unforeseen events": your house burns down, you are summoned for jury duty, you get a flat tire on the way to the airport and miss the flight, or a travel supplier is crippled by an unannounced strike.
Don't consider it if you can accept the occasional forfeit of a modest deposit or prepayment. Nor does it make sense as protection against smaller travel risks such as on-the-spot clothing allowance if baggage is delayed. But if you've put down a large prepayment on a major trip, tour or charter — money you can't afford to lose — then TCI makes the most sense.
Risks To Your Trip
Package tours and charters usually require big deposits far in advance of departure, well before you leave. Cancellation clauses often provide for a complete forfeit if you cancel within a month or less of departure. Most consolidator tickets are also nonrefundable: you get back nothing if you don't take your trip as originally ticketed. Whatever your reason for changing travel plans, loss of prepayments is usually your most serious financial risk.
Most TCI polices will reimburse you in the following situations:
In general, TCI payments are designed to make good to you in case of a problem.
The Cost Of Your Policy
Although prices vary depending upon how comprehensive you want your policy to be, for basic coverage expect to pay between $5 and $7 for every $100 worth of protection. In other words, if you buy a trip-cancellation policy worth $5,000, the onetime premium will cost $250-$350.
How Much Protection Do You Need?
At first glance, travelers who pay $5,000 in advance for a vacation might assume they need to buy $5,000 worth of TCI coverage. But that's not necessarily true. The determining factor is the amount of the investment you stand to lose if the trip is canceled or interrupted. For example, if you are required to pay a 25% cancellation fee (or $1,250) but are promised a refund of the balance, you need to buy TCI to cover only the $1,250 at risk.
Travel Insurance You May Already Have
Before you buy additional insurance, check the protection you may already have from the following sources: Credit-card insurance. American Express automatically gives card members $100,000 worth of travel-accident insurance whenever they charge an airline, train, bus, or cruise-ship ticket to the card. Visa Gold cardholders automatically receive $150,000 worth of coverage.
Most credit cards offer car-rental insurance whenever you charge the rental to that card. This insurance is limited — it covers only damage to the rental vehicle, not medical costs or liability — but it allows you to decline safely the rental company's "collision damage" coverage. Some card issuers also routinely offer emergency worldwide medical and legal-assistance plans. Other coverage offered with certain credit cards includes a lost-baggage plan, trip-delay protection, replacement of lost or stolen items that were purchased with the card, and roadside assistance.
Homeowner's protection. Buried in the fine print of most standard homeowner's policies are several types of valuable travel coverage. In fact, whatever is scheduled for coverage at home is also protected when you take it on the road. For example, if your hotel room is burglarized, most policies will treat your losses no differently from the way they would had the theft occurred at home. Lost or stolen passports, tickets, and even cash may also be partially reimbursed.
Automobile coverage. Six out of ten car owners have automotive insurance that includes coverage of the cost of any damage you might do to a rented car. Virtually all automobile policies also cover liability to any third party injured in an accident with your rented car. In other words, almost anyone who owns a car is duplicating his coverage if he buys optional insurance packages from a car-rental firm. But beware: standard personal auto insurance is valid only in the United States and Canada; you may need special coverage if you plan on driving internationally.
Where To Find It
Among the best-known names in the TCI field include:
Access America Service Corp: 800-284-8300
American Express: 800-234-0375
CSA Travel Protection and Assistance Services
Health Care Abroad/Global: 800-237-6615, 703-687-3166
International Medical Group (IMG): 866-368-3724
Mutual of Omaha (Travel Assure): 800-228-9792
Travel Guard: 800-826-1300
Travel Insurance Services: (800) 937-1387
Travel Protect: 800-694-5921
The Travelers: 800-243-3174
Worldwide Assistance: 800-821-2828
What About Doctor's Bills?
If you are planning to travel extensively in remote areas or in regions where local health services may be inadequate, you may want to consider emergency medical evacuation (EME) insurance. Most people probably have year-round health policies that cover medical and hospitalization costs in foreign countries. But check to make sure your policy covers you. Those who depend on Medicare for their health insurance aren't covered overseas. Moreover, some other health policies limit coverage outside the US. Medicare supplements extend coverage overseas; others don't. If your regular policy, health maintenance organization, or Medicare supplement doesn't cover you overseas, travel insurance can fill the gap.
EME is usually bundled with TCI. But if it is not, it's available separately (or as part of a medical package) from all standard retail policies. Coverage limits vary from $20,000 to $100,000. The prices are based on length of trip (in days); for a two-week trip, you'd pay $49-60.
Specialized EME Policies
If you need emergency medical coverage only infrequently, you can easily buy it as a supplement to TCI. But if you travel for extended periods, you may want to consider buying it from one of the several companies that specialize in EME services. Those companies maintain worldwide networks of assistance representatives. Among the companies that offer extended EME policies are Health Care Abroad/Global, TravMed, and Worldwide Assistance.