A startling change in trip cancellation insurance occurred last summer. Most insurers dropped their ban on paying benefits when a policyholder’s trip was called off because of a “pre-existing condition,” an illness that began before the policy was bought. To get a policy that waived the ban, the companies required clients to buy policies swiftly–within a day or two–after making the first deposit on a trip.
In a way, this turned insurance philosophy on end: Companies selling big life insurance policies, for example, usually require a medical examination first. Similarly, selling insurance to protect applicants who have a very ill parent, or a spouse with diabetes, say, from losing down payments on travel sounds like what insurance companies call an adverse selection.
Most cancellation claims have been based on illness of the traveler, family member or business partner, and disputes over the dates when illnesses showed up, or were treated, or became stable, were creating endless exchanges of documents and a lot of ill will, according to the companies taking this step.
And the prompt-purchase requirement means that the companies get the premium payment, which is not refundable, long before the trip.
Mutual of Omaha initiated the change in May 1995, and the other big companies have followed suit. Most companies have also extended the allowable time for purchase of such a policy to seven days.
There have been other changes in trip cancellation insurance. Two companies using the same underwriter have shifted to a premium structure based on age. One now covers children under the parents’ policy, rather than requiring a separate payment for each child as well as each adult.
Most of these policies provide benefits to compensate for lost deposits or payments if a trip is canceled or interrupted; if a tour or cruise operator ceases operations; if medical expenses or emergency evacuation in certain circumstances are required; if baggage and perhaps documents are delayed or lost; or if a traveler is delayed and must catch up with a tour.
From the standpoint of medical coverage and lost-baggage insurance, the policies are expensive. But for anyone with chronic sickness in the family, insuring against losing big deposits or full payments is a good buy.
The fine print
Here is a round-up of changes in trip cancellation policies offered by eight companies.
Travel Guard of Stevens Point, Wis., dropped the ban on benefits for pre-existing conditions in June 1995, if the insurance was bought within 24 hours of the first deposit for a tour. At the time, policies with this waiver could be sold only by travel agents, but now they can be bought direct from the company, according to Sandy Bolz, a spokeswoman.
On April 1 this year Travel Guard extended the time for purchase to seven days after a deposit, and in June began covering children 16 and younger under the parents’ policy. The Travel Guard Cruise, Tour and Travel Protection Package raised its coverage for lost and stolen baggage to $1,000 from $500, but most travelers’ home insurance covers this adequately.
As a result of this and other changes, the premium rose. It is now $116 to cover a trip costing $1,501 to $2,000; the old price was $109. The underwriter is Continental Casualty Co. of Chicago. Information: 800- 826-1300.
The CSA Co. in San Diego, which sells travel policies underwritten by the Commercial Union Insurance Co. in Boston, has a new pricing policy based on age: a trip priced at $1,501 to $2,000 would cost a traveler 55 or younger $59 to insure, $85 for a traveler 56 to 70 years old and $110 for someone 71 or older. There is a seven-day deadline for purchase if the pre-existing condition ban is to be waived. Information: 800-348-9505.
Globalcare Insurance Services in Lynnfield, Mass., also sells a Commercial Union policy, Globalcare for Cruise and Travel, with the same escalating premium. The premiums here are $62 for travelers under 55, $96 for those 56 to 70 and $123 for those 71 or older. Both this under-55 premium and that offered by CSA are lower than the premiums charged by companies that lump all ages in the same rate. The over-71 premiums are higher than the others, of course. The seven-day deadline for purchase applies to the waiver on pre-existing conditions. Information: 800-821-2488.
Mutual of Omaha’s Tour Insurance and Cruise Insurance shifted last November to a seven-day deadline on the pre-existing condition waiver. The premium for a policy covering a cruise costing $1,500 to $2,000 is $99; for a tour of the same price, $107. The underwriter is Omaha Property and Casualty Insurance. Information: 800-228-9792.
The Berkely Group on Long Island sells Carefree Travel Insurance through travel agents and direct to the public, and also provides insurance for cruise and tour operators to sell under their own names–known as wholesale policies. This company was one of the few that did not follow suit on the pre-existing condition ban last summer. Robin Levine, executive vice president, said that the Carefree retail policies did go to a 24-hour purchase requirement for the waiver last fall, then quickly to a 48-hour requirement, which is in effect at this writing. The cost for a Carefree policy covering a trip costing $1,500 to $2,000 is $99.
On Berkely’s wholesale policies, Levine said, some cruise and tour companies do waive the ban. Some cruise companies use another system, awarding a voucher for the value of the cruise to be used later if a reservation is canceled because of a pre-existing condition. Chubb underwrites the retail policies; Chubb or a company affiliated with the American International Group of New York provides the wholesale coverage. Information about Carefree policies: 800-323-3149.
The Travelsafe Cruise and Tour policy sold by the Chester Perfetto Agency of Reading, Pa., has stuck with the 24-hour deadline for the waiver of pre-existing conditions. Scott D. Perfetto, the vice president, says he has noticed a rise in the ratio of losses to sales since the waiver came into effect and he expects further changes, probably higher premiums. The premium on this policy, which is underwritten by Chubb, is $109 for a trip of $1,500 to $2,000. The policy is sold only through travel agents, except on the Web, where it is found at www.travelsafe.com. Information: 800-523-8020.
Travel Pak, a policy sold by Travel Insured of Hartford, Conn., shifted to a seven-day deadline for obtaining the waiver in June. Premiums rise with each added $100 of trip cost; a $2,000 trip costs $110 to insure. The underwriter is Travelers. Information: 800-243-3174.
The Access America policy offered by World Access shifted to a seven-day deadline on May 20. The cost to cover a trip of $1,500 to $2,000 is $107. The underwriter is BCS Insurance. Information: 800-284-8300.
