Monday, September 19, 2011

Tips for Purchasing Trip Cancellation Insurance

There is a lot of work in planning a trip whether it is vacationing within the continental U.S. or going overseas. Plenty of research and time will be spent on choosing air carrier, hotel or cruise ship, as well as planning tours and outings during the vacation week. Getting there, staying there, and having fun all equate to a substantial amount of money spent in advance before even stepping off the plane. That being said, one should always consider the risk of money forfeited should the vacation need to be scrapped right before the departure day. Fortunately there is a way to protect that hard earned vacation expense through the purchase of trip cancellation insurance. The benefit of a trip cancellation policy includes coverage due to traveler or traveler family member’s death, illness, loss of job or other legitimate reason. Other reasons may include the resort, cruise ship or travel company going into bankruptcy leaving you with no service at the back end of your trip. Coverage can also be made possible if travel is delayed due to inclement weather and accidents. There are a variety of causal factors that can prevent you and your group from getting to your paradise destination, so it may be wise to consider insuring yourself against such a loss.

Is trip cancellation insurance a smart choice? Let’s just say it is important to weigh the cost and benefit before deciding to purchase this coverage. This insurance is usually not for everybody since many pre-booked vacations will have limited risk when people are traveling by car, have cancellation options through credit cards, and the hotel has a last minute cancellation policy which issues full refund or perhaps only a slight penalty. The risk increases dramatically when purchasing a cruise vacation or destination overseas for which the company does not offer any type of refund. Then it might be practical to consider this insurance. Generally the rule of thumb cost for purchasing cancellation insurance is that the policy will run between five and seven percent of your trip. That sounds small, but consider a $10,000 vacation could potential cost between $500 and $700 for coverage which is quite a large sum of money, though that expense may seem to be money well spent as those that elect for such coverage may find it easier to sleep at night.

Understand the difference between trip cancellation and trip interruption insurance. Trip interruption is having your vacation expenses covered for those remaining days that are forfeited due to medical, family, or other legitimate emergencies. Often times, insurers may have a bundled policy that will cover both scenarios (trip cancellation and trip interruption). Before going out to shop for travel insurance please review some of these tips:

1. Read the small print of airline travel policies about forfeiture of airfare should you need to cancel trip. The large buzz words of non-refundable equate to the need to purchase travel insurance. Many airlines will offer exchange for another date with only a small penalty that may end costing much less than the insurance premium which may end the pursuit of even considering such insurance.
2. When booking hotel or resort accommodations, read the small print regarding cancellation guidelines. If there is ample room up through the arrival date to cancel without penalty, it would make sense to forgo the decision to purchase insurance.
3. If purchasing the trip through your credit card, be sure to review the card issuer’s policy regarding travel expenses. Sometimes such travel charges will offer protection to cardholder in the event of cancellation.
4. Be advised that the insurance company will most likely not payout on a claim in which the traveling party has a pre-existing condition before cancelling the trip. This is good reason to purchase your travel coverage far in advance. Purchasing the insurance early on before the trip may mitigate any suspicion by the insurance company that the insured had a pre-existing condition.
5. When rate shopping different insurers, be sure to read the fine print. What might appear as a low rate may likely offer the least protection when it comes time to file a claim.
6. Be sure to have all your questions and concerns thoroughly answered by insurance rep before making the decision to purchase insurance.

1 comment:

Best Travel Insurance said...

Thanks for valuable post. I got the some important benefits of a Trip Cancellation Insurance policy. How it is supportive to traveler or traveler family member’s death, illness, loss of job or other legitimate reason. It is really informative post.