Bad weather and travel insurance

The winter of 2009-2010 will be known as one of the worst and snowiest that we, in the north east, have ever seen. Washington DC got more snow than Buffalo, NY. Philadelphia got blasted with one blizzard after another. New York and New Jersey recorded near record snowfalls. In other words, the weather played havoc with traveler’s plans.

One of my colleagues called me after a horrendous storm that affected her clients to the point that 2 out of 3 couples missed their cruise on Royal Caribbean’s Oasis of the Seas set to sail from Fort Lauderdale on Feb 27, 2010. The third couple drove down to Florida from NJ and left early enough to miss the storm. They were able to embark on the cruise as planned- but without their friends.

I decided to devote my March Feature of the Month to the topic of how travel insurance can play an important role in bad weather. I used my colleague’s client’s example as my basis for the questions that I posed to 3 of the travel insurance companies that I offer to my clients. Only 2 of the three responded to the scenario and questions. The policies that were compared were Travel Insured’s World Wide Travel Protection and Travel Guard’s Gold Plan (Protect and Assist). Access America did not answer since their communications department was working on a special project.

Here was the scenarios and questions posed:

Couple #1 and Couple #2 were flying down on Continental. Due to the storm that hit Newark on Thursday Feb 25 into Friday Feb 26, thousands of flights on Continental were cancelled. To the best of my knowledge, the airport was NOT officially closed. Since they were flying out on the day of the cruise, they scheduled the first flight out of the day. None took insurance, which I always recommend to my clients.

On Friday Feb 26, they were told that their flight was cancelled for Saturday 2/27 and that they could NOT be re accommodated on ANY flight that would get them to the ship in time for embarkation. They checked multiple airlines flying from all of the major NY/NJ airports as well as Philadelphia.

Question #1- could they have cancelled their cruise at this point had they taken out your insurance policy?

Next, scenario: the agent was able to get them flights to St Thomas (the first port of call). The flight is on Monday 3/1. The ship gets into St Thomas on Tues. 3/2. The clients were required to pay a fee to change the tickets to St Thomas (since they were originally set to fly to Fort Lauderdale). The change fee was $250 per person. They are now staying in a hotel for 1 night in St Thomas prior to embarking on the cruise. The hotel cost is $250 per room. With this change, they are still missing 2 full days of the cruise which cost $1400 per person, with all taxes and fees.

Question # 2: What can the clients claim on their policy for reimbursement for these out of pocket expenses? Again, which category does this fall under?

Question #3: What does your insurance company offer to the client to assist with making all of these changes?

These were the responses from my sales managers at Travel Insured (TI) and Travel Guard (TG):

Question #1: Could the clients have cancelled the vacation since their flight was cancelled and they would miss the cruise.
TI- Based on the info provided it appears that they would have coverage under Trip Cancellation and would be able to claim for the entire cost of their cruise. The time frame for weather delays/cancellations is as follows (details of each will be answered in the remaining questions):
3 hour+ delay – eligible for missed connection coverage
6+ hour delay – eligible for trip delay
24 consecutive hour delay – eligible for trip cancellation
The key for trip cancellation is not being able to be rebooked within 24 hours of the original scheduled departure time. In this example, they would not have been eligible for trip cancellation had Continental been able to get them on a flight later that same afternoon, even if it meant missing the cruise departure. Clients need to be conscious of time frames and flight schedules; just because the gate agent tells them they will be covered by insurance does not mean they will be. The key thing to remember with weather events is that they cannot be accommodated within 24 hours of their originally scheduled departure time.
TG- Travel Guard’s Gold plan covers for cancellation of travel arrangements due to severe weather conditions. So in this particular situation, the insureds would have been covered for cancellation of their cruise since their air transportation was cancelled due to inclement weather. There is no requirement that the airport be shut down for a determined amount of time such as 12 or 24 hours before benefits would be payable.

Question #2: What can the clients claim on their policy for reimbursement for these out of pocket expenses?
TI- The clients would have Missed Connection, Travel Delay and Trip Interruption available to them. First, Missed Connection (after 3 hour delay) would reimburse the change fees and additional fare up to $500/person to help the client reach the first port of call. It is important to note that there is a maximum limit on this coverage so the client may not receive the entire additional cost. The maximum on Worldwide Trip Protector is $500 per person.
Trip Delay (after 6 hours) would provide reimbursement for hotel expenses, meals, etc up to $200/day/person maxing out at $1,000/person.
Lastly, they would have trip interruption available to cover the unused days of the cruise. Assuming the cruise is 7 days, and they missed 2 days cruising, they would receive $200/day for the missed days on the ship. This is determined by taking the total per person cost of the trip and dividing by the number of days traveling. In this case, $1,400/person divided by 7 days is $200/day.
TG- The insureds would be covered for the air ticket change fees under their Trip Cancellation/Interruption benefit. The two “lost” days of the cruise would also be covered under Trip Cancellation/Interruption. Travel Guard would pro-rate the daily cost of the total cruise to come up with the per-day amount. The hotel charge for the night in St. Thomas would be covered under the Trip Delay benefit of $150 per person/per day up to 5 days.

Question #3- What does your insurance company offer to the client to assist with making all of these changes?
TI- We always recommend the clients contact their travel agent to help them make arrangements but our 24 hour assistance that is included in the policy will help them rebook the flights, book hotels and any other related services that they would need help with.
TG- Travel Guard’s GOLD plan includes 24/7 Emergency Travel Assistance Services at no additional charge. Travel Guard’s assistance reps will make emergency or last-minute travel changes such as rebooking flights, hotel reservations or ground transportation, as well as tracking lost luggage. In addition all policyholders receive a full menu of concierge services, emergency medical assistance, pre-trip advice, email and telephone message relay, assistance for replacing lost travel documents, obtaining cash advances, or language translation.

I want to thank both of my sales managers for the responses and their assistance in helping me to post this blog. It is important to remember that with both policies, these clients would have been able to cancel their cruise OR get reimbursed for the out of pocket expenses that they incurred (some limits do apply).

In this case, since the clients did not have insurance, they lost a considerable amount of money (over $1500 in lost days on the cruise, change fees plus hotel in St Thomas). In both cases, for these clients who are 65 years old with a trip valued at $1700 per person, the insurance would have cost less than $260 per couple. Prices are much less for younger travelers since travel insurance is based on the age of the traveler and the price of the trip.

The morale of the story- both couples now swear that they will take out travel insurance the next time they book a vacation.

Please realize that bad weather is not only for hurricanes and blizzards. Many times, flights will be cancelled due to very high winds or very heavy rain.
What do you think- would you rather lose $1500+ or spend $260 to begin with?