Rules That Count


Just as clients need trip protection when flights are not on time, you must adhere to insurer’s deadlines to assure clients are protected if a claim arises later.


Selling travel insurance to protect a client’s vacation investment is crucial in today’s world, given the unexpected nature of labor actions, natural disasters, political strife and flight delays or cancellations. But just as important for travel advisors is to adhere precisely to the insurer’s rules and deadlines. It’s the only way to assure clients are protected if a claim arises later.

“For insurance, there is nothing more important than that [paying attention to the rules],” emphasizes Carlos Cividanes, director of national accounts, TravelSafe Insurance, Orlando. “We want to pay every legitimate claim, but in order for the claim to be legitimate it must meet the conditions laid out in the policy.”

Insure the Full Trip Cost: A recent news story about a different insurer detailed the case of a traveler who paid $10,074 for her trip but only insured it for $10,000. Essentially, she didn’t insure the full trip and thus, when she needed to make a claim, it stood invalid. The insurer refused to pay. A national ombudsman got involved, and the insurer did ultimately pay. But that’s not the norm.

What gets missed by retailers at times? Cividanes says it’s critical to remember to insure not just the trip itself but any cancellation or travel agent fees you charge. If the clients cancel and those fees have not been included in the amount insured as the full trip cost, the claim likely will be denied.

While no agent wants a client to pay more for insurance than need be, err on the side of caution, our sources say. Cividanes reports that a lot of insurers’ policies, including those issued by TravelSafe, are priced in $500 increments. So, don’t buy $3,000 in insurance if the trip cost is $3,010.

“Ensuring the full trip cost is the safest, most conservative advice we can give,” emphasizes Cividanes. “It’s the simplest to understand and the one most likely to keep you out of trouble.”

Meet Deadlines for Bonus Coverage: Most insurers offer pre-existing medical condition waivers, bankruptcy default protection and cancel-for-any-reason coverage linked to or as a part of their main policies. Some clients may not think to ask about this when they initially buy the insurance.

And while most insurers do not charge for a preexisting medical condition waiver, the key to remember is that it’s only available for a limited period that’s usually connected to the initial deposit. The majority of policies require that people complete their insurance purchase within seven to 21 days of the initial vacation deposit; many policies specify 15-21 days. Check with your individual insurer about their rules.

“If you buy travel insurance, then you receive bonus benefits,” notes Cividanes, but he urges agents to remember that, while a pre-existing condition waiver doesn’t cost more from his firm, it’s not available if the client simply doesn’t meet the deadline.

Cover Air Tickets or Hotel Arrangements: So what if your client buys a cruise, wants the preexisting condition waiver and buys the insurance as required within 21 days of the initial deposit, but then purchases airfare or a pre-cruise hotel stay a few weeks later.

With TravelSafe, for example, “the clients must increase their insurance to reflect the cost of that airfare [or hotel arrangements] within 21 days of paying for those tickets,” asserts Cividanes. Whatever the specific insurer’s deadlines are, meet them. “Here’s the tricky part,” he stresses: “If you miss that deadline, you can lose the preexisting waiver on the entire trip.”

Bankruptcy Default Has a Delay Period: Bankruptcy default protection is typically tied to the initial deposit, but it also may have a built-in delay period. So if you bought a policy that included bankruptcy default from TravelSafe, for example, and you paid for it within 21 days of initial deposit,you get the default protection. But, the timing of the bankruptcy still is important.

TravelSafe’s policy is that the bankruptcy cannot occur within 15 days of the insurance purchase. After that, the client is okay. Other firms have different deadlines. In addition, some other firms have lists—either a black list of companies that the insurer won’t cover or a white list to show only those firms that will be covered. Again, this varies with insurer.

Separately, the bankruptcy protection insurance may not kick in immediately. In 2010, CruiseWest terminated its World Cruise early, guests were told to leave the ship, and yet the line hadn’t declared bankruptcy. Many insurers wouldn’t pay initially. Today it’s changed a bit. “While some companies still do require a filing of bankruptcy [to pay a claim] that’s less common than in the past,” Cividanes notes. “At TravelSafe we don’t require that filing, as long as we can see a cessation of service.”

Cancel for Any Reason or Not: Some companies offer “cancel for any reason” insurance, but some may actually have exclusions. Know what those are, if any. Even if there are no exclusions, you still must meet certain requirements for this coverage to apply.

For example, “we have no exclusions but three conditions must be met,” says Cividanes, speaking about how it works at TravelSafe. “The insurance must cover the full nonrefundable, prepaid trip cost; it must be bought within 21 days of initial deposit; and you must cancel at least two days prior to the departure.”

Client Resistance Equals Heartbreak: No one thinks they’ll really need insurance. A few years back, “if I had told people that a major Icelandic volcano would shut down air travel all over Europe, I’d have been laughed out of the room,” says Cividanes, who calls that situation “a teachable moment.”

He says a vacation is a valuable investment worth insuring, insurance is a business of risk management, and only unknown events are insurable. Once clients watch a strike, natural disaster or political strife on TV or read it in the paper, it’s too late to buy insurance for a trip that may be affected.

Not surprisingly, “the greatest level of satisfaction with the purchase of and use of travel insurance comes with consumers buying through travel agents, rather than buying direct,” he stresses. Still, agents aren’t usually insurance experts. While understanding general policies is certainly helpful, the rules can get complicated. That’s why insurers have phone numbers that agents or clients can call for assistance.

At some point, most agents will encounter a client with an unusual excuse to cancel his vacation. Being prepared with the right insurance is important, and often that means “cancel for any reason.” Cividanes quips: “Best one I’ve heard of is that a client had a dream that he shouldn’t go on the trip and wanted to cancel.”

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