Newsstand - Why It Doesn't Pay To Buy Travel Insurance

http://www.cbsnews.com/stories/2007/04/11/business/main2669693.shtml

Vacation season is coming up, and, if you're lucky, you have an exciting getaway in the works. But on top of airline tickets, hotel reservations and sightseeing costs, many travelers have added travel insurance to their list of expenses. In fact, Americans spend more than $1 billion on travel insurance products each year.
But you may be better off saving that money for a hotel room upgrade or a few nice dinners out, says Consumer Reports. Most travel insurance actually just "duplicates coverage" that people already have. According to Bob Hunter, director of insurance for the Consumer Federation of America, "sophisticated travelers don't buy travel insurance."

Whether to buy travel insurance? Depends on what is meant by travel insurance.

(1) Medical travel insurance: May or may not be duplicated by your present coverage.

(2) Trip cancelation insurance: Often will not pay off, "fine print" exclusions. Maybe sometimes it does. The exceptions tend to show up in ombudsmen columns. I wouldn't buy it, but, then, for airline flights and hotels, everything is generally cancelable anyway. Cruise insurance, flights through one of the consolidators--maybe another matter, I wouldn't know. And prepaid group tours, the possibility of a cancelation to watch for, and problems with "fine print" of coverage, judging by ombudsmen complaints?

(3) Evacuation/repatriation insurance? If you become sick, or, worse, if you happen to die overseas--a very unpleasant topic, but it shouldn't be shoved under the discussion mat. If I'm stranded sick or injured in some hospital in Europe, I would like to have a policy that will see that I get back to the States and to my very own preferred hospital. Of course, if you're young and if you aren't going to go skiing or otherwise be in danger of breaking your legs, you won't probably consider this type of insurance. But if you're not young, then I think it might be something to consider. I buy it. (Er--not that I'm not young, you understand--grin.)

My point: Consumer Reports and the person quoted are just, well, wrong. They don't seem to consider evacuation insurance at all, based on the excerpt given. (Caveat: I haven't read the article or the full statement by the person quoted. I am just commenting on the excerpt above.) I do often read CR, and I find that I can rely on it if I don't already know about the topic and if they have sampled enough products--cars, appliances, and the like. If I already know about the topic, or if the topic is more in the nature of opinion, I am often amazed at the CR superficiality.

The author of this article is a novice. He makes a good point that sometimes one might already have insurance that covers certain travel related expenses, but generally the author doesn't know what he/she is talking about.

A few tips/thoughts:

My best advice is to obtain insurance from a well known insurer. I bought insurance from www.insuremytrip.com underwritten by some no name company and they never paid out for damage to my baggage.
Make sure you are aware of which insurance is primary coverage and which insurance is secondary coverage. You may find out that you can't collect on the insurance you purchased.
Even though you may have some sort of coverage on your homeowner's policy, do you really want to file a claim against it for a relatively small loss? If you're like me and have a fairly high deductible, you'd never reach that level anyway.
Most of the time private travel insurance requires you to pay the money up front to cover the expenses and then submit a claim. Make sure you know what documentation you need to submit and how long you'll have to wait to get a check.
I've yet to find medical evacuation insurance that will fly you home. All of the policies that I've seen will simply put evacuate you to the nearest acceptable facility. Your definition of acceptable and their definition may be different!

Best insurance is US citizenship and a call to the embassy.

Now, Travel Delay Insurance is very worth it. I have it through American Express and used it just recently for me and my wife. Basically, if you get stuck overnight, you get 500 dollars each to spend on transport, food, hotel. Therefore, I hired a stretch limo, and stayed in a suite at a starwood hotel. I was reimbursed for the entire thing with no questions asked. I used up like 850 of the 1000. Very nice deal and highly reccommeded since travel delays are happening more often these days.

Yeah right - does the guy know what a Heli evac from a cruise ship in the caribbean cost these days??? One of these trips can cost anywhere between 15 - 25 Thousand USD!!! I guess he is also not aware of the fact that cruise ship docters get everything more serious than a minor cut off their ship faster than he can bat an eye.

So first, this is NOT consumer reports folks. This is Consumer Federation of America. And I'm not even sure after looking at their web site who or what they are.

In any event, the article is written by someone who doesn't know what they are writing about.

Insurance overall is something that most people find overwhelming. Understanding it and buying it involves lots of reading and comparison.

There is definitely a place for travel insurance. For starters, health insurance does not travel outside U.S. and Canada 90% of the time. Good luck if you don't have something to cover you on your next trip to wherever. Flight cancels or delays and you miss your cruise. No insurance huh? Mother-in-law strokes out a week before your prepaid and nonrefundable cruise and you don't have insurance. Good luck.

Contrary to what was previously stated, insuremytrip.com is a good place to start to read and compare, simply because they rep so many companies and different policies. Remember that because they sell it doesn't mean it is right for your needs or that you should buy a specific policy. Read, read, read. If not sure, ask.

It is no different with health insurance, homeowners insurance etc. Otherwise you can ostrich it and pray that you have the insurance you hope that you have.

I've yet to find medical evacuation insurance that will fly you home. All of the policies that I've seen will simply put evacuate you to the nearest acceptable facility. Your definition of acceptable and their definition may be different!
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Have you checked MedJetAssist? (There's also a similar company, somewhat newer.) They are more of a prepaid membership plan technically rather than insurance, but they do advertise that they will fly a member back home, with appropriate medical accompaniment if necessary. I assume that benefit would apply only for very serious hospitalizations, not routine broken legs or arms.

There's also AMEX, which "may" fly one home to a nearby hospital to recover, but evidently only after spending some time in the foreign hospital.

I recall one plan of one company that indicates it would do same. I don't recall which one. There may be more than one. I've researched the topic in the past but don't want another Exedrin headache in reading the "fine print" again. (smile)

This topic has been covered several times in TravelBuzz, if anyone is interested in reading more about it.

So first, this is NOT consumer reports folks. This is Consumer Federation of America.

I think we all noticed the distinction Thanks. (smile)

CR and Consumer Federation of America are juxtaposed because Hunter was one of the sources quoted in the article: http://www.consumerreports.org/cro/travel/travel-insurance-5-07/overview/0507_travel_ov.htm

Consumer Federation of America is an umbrella group of around 800 consumer groups nationwide which studies consumer issues and provides information to Congress.

As to travel insurance, it is pretty much always a lousy deal. I didn't need the CFA to tell me that.

Plus, as has been noted in many threads, many credit cards cover medevac overseas if you charge your ticket on them. I am getting rather aged, have been overseas for many years. Never need medevac. And, you know, they have pretty good docs most places. Would you rather be is a NYC hospital or a Zurich one

Consumer Federation of America is an umbrella group of around 800 consumer groups nationwide which studies consumer issues and provides information to Congress.

As to travel insurance, it is pretty much always a lousy deal. I didn't need the CFA to tell me that.

Plus, as has been noted in many threads, many credit cards cover medevac overseas if you charge your ticket on them. I am getting rather aged, have been overseas for many years. Never need medevac. And, you know, they have pretty good docs most places. Would you rather be is a NYC hospital or a Zurich one

Seriously curious if you travel much internationally, and if so, how you cover the issues I raised above for example.

Thought it was obvious from my post that I travel internationally a lot.

As far as the "issues," I didn't really see any in your post. Aside from a disapproval of Consumer Federation and those who don't buy ripoff insurance.

Contrary to what the insurance industry pushes, it is not possible, and not desirable to buy insurance against every calamity that could ever happen.

Mostly, you can get decent medical care abroad a lot cheaper than you can get it in the US of A.

Plus, as has been noted in many threads, many credit cards cover medevac overseas if you charge your ticket on them.

I'm not sure which credit cards you're using, but none of mine (MC, VISA, and AmEx) include medivac coverage when I charge a plane ticket.

Now, Travel Delay Insurance is very worth it. I have it through American Express and used it just recently for me and my wife. Basically, if you get stuck overnight, you get 500 dollars each to spend on transport, food, hotel. Therefore, I hired a stretch limo, and stayed in a suite at a starwood hotel. I was reimbursed for the entire thing with no questions asked. I used up like 850 of the 1000. Very nice deal and highly reccommeded since travel delays are happening more often these days.

I have taken advantage of this as well. I always pack some essentials in my carry-on. Usually, I am happy when my bags get to me a day late.

I'm not sure which credit cards you're using, but none of mine (MC, VISA, and AmEx) include medivac coverage when I charge a plane ticket.

Amex Platinum, among others, includes this coverage.

By the way, the Amex coverage (and I bet the same applies for coverage you purchase independent of credit cards) appears to require that a local Doc certify that you need medevac. Wonder how that plays out if you are in the jungle and there is no local Doctor? Or if the insurance company decides ex post facto that the local Doc wasn't up to their standards.

One secret of making lots of money in the insurance business is to sell coverage that sounds great but on which the company can find way not to pay off. Ask the folks in New Orleans about this.

I note, that in my own experience, Amex has been pretty good. But they are primarily in the credit card business, not insurance.

I have taken advantage of this as well. I always pack some essentials in my carry-on. Usually, I am happy when my bags get to me a day late.
Yeah, I find so many people complain about Travel Delays. I am always hoping. It works out that I can usally earn enough points that I can get a free night at another Starwood Hotel. The baggage part of things has not paid off yet. I am still hoping for my bags not to show up. We shall see. I may end up cancelling that part.

How many others have benefited from the Baggage lost insurance? Is it worth it to keep?

For starters, health insurance does not travel outside U.S. and Canada 90% of the time.

Is this actually true (for US private insurance)? When my wife got sick abroad (Peru) she was covered. I thought most private medical insurance traveled. Regardless, I would self insure if medical coverage is your only concern (evacuation is different). Medical costs are way WAY less overseas (again from a US point-of-view).

Most private medical insurance in the US will cover you for emergency treatment overseas. The tricky part is getting the insurer to agree that it was an emergency.

Any Aussie who travels without insurance is a twit. And there are plenty of them! We have a universal health care system Down Under... and you wouldn't believe the number of people who get ill/injured overseas and act amazed when told the Australian government is NOT going to pick up the tab! The policy I always take out when going to the US has basically unlimited medical (of course), excellent liability cover, AND aeromedical evacuation...HOME - not to a "suitable facility". Our credit cards provide even less in the way of those benefits... we don't even get rental car cover through them.....

I don't even want to THINK about the aeromedical evac costs!!! :(

Having mentioned those dumb countrymen of mine... I have to ask Climbguy.....

Just WHAT will your embassy do if you are sick/injured and have no cover?? Are you suggesting the US Government will pick up the tab??? That'd be amazing!

I know OUR Embassies are great for helping with lost passports and ADVICE etc.. but it is made quite clear that they are NOT there to "bail out" Aussies who get in trouble through lack of planning or bad luck..... (including illness & injury)

As the consular assistance section of our Foreign Affairs website says... "If you cannot afford travel insurance, you can not afford to travel!"

I used to buy per trip travel delay insurance from AMEX and it paid out once. I since bought the yearly policy and have had no need for it. I intend to always carry this policy. I have the max of $300/night for 2 nights so I'm curious where the $500 limit is from.

I normally don't check baggage but have purchased the baggage insurance a time or two when I know I'll have to. Most of the time I am involuntarily forced to check luggage and left with no insurance so a yearly policy might be good considering it isn't expensive at all. I had my first issue with a bag permanently lost and you must wait for the airline to completely settle your claim before you can submit a claim to AMEX (they are secondary insurance only). The good thing is that AMEX's insurance will cover electronics and many other things that the airline won't pay you for.

My one and only claim with AMEX was processed in 3 weeks. They said it takes two weeks and two be fair they contacted me after a week and said they couldn't read one of my pages and needed me to refax it. If you want a check in a hurry, I might suggest overnighting a copy to them so you know everything is legible. Sometimes faxed copies of receipts don't come out the way they should. In my case the check came before my credit card bill ever came due anyway.

The baggage thing is very annoying. I'm out thousands of dollars worth of stuff and will have no idea if I should go out and replace these things or just wait and hope the airline will find them. AA says they take two months to look for my bag and either send it to me or send me a check. Then we're looking at another 2+ weeks from AMEX. I still think the baggage insurance is very much worth it but the whole situation still sucks. In the end, if I get the max payout from AA and also from AMEX, I should come out fairly well considering the replacement value of things when you start adding it all up.

Hm.....I carry more travel insurance than I should, I gather, with AmEx and Diners and the others providing insurance, as well as my employer having an universal insurance for professional travels.

Still, with baggages being delayed and an occational forced night here and there due to missed connections and such, and with more and more restrictions on carry-on, I more than make the fees back and more: I've not had to buy shirts, underwear, pants or shoes myself for years, since with a >6h baggage delay my insurance kicks in with (I think) 500 Eur for necessary replenishments. Since I usually have meetings starting <6h after landing where I need to look representable, this is wholy justified and even encouraged by the insurance folks, who turn around my claims in ~10 days or so without hick-ups.

Fortunately, I've not had to use the medical insurances (touch wood) yet.

Yeah right - does the guy know what a Heli evac from a cruise ship in the caribbean cost these days??? One of these trips can cost anywhere between 15 - 25 Thousand USD!!! I guess he is also not aware of the fact that cruise ship docters get everything more serious than a minor cut off their ship faster than he can bat an eye.

Most people have no idea that cruise ships will not take your medical insurance Medicare or regular and anything from broken ankle to greater will get you put off in the next port whether you want to or not. You have to figure out how to get home.

If you booked your flights with award miles, any credit card coverage you might have isn't going to kick in.

The OP is way off the mark and is giving out bad advice.

My starting point is that you buy insurance against catastrophic kinds of costs you couldn't handle on your own... you don't buy insurance for minor expense items.

I never buy insurance for electronics purchased at Best Buy or Circuit City.

Separately, insurance is rarely a deal when you factor not just cost and risk-adjusted payouts, you also have to factor the hassle of actually filing the claims.

Folks whose health insurance won't cover them abroad should certainly consider coverage. And travel to certain parts of the world might warrant med evac or even K&R coverage...

But travel delay and lost baggage? I pass... Instead I'll redeem hotel points or Priceline an airport hotel or worst case shell out the cost of a hotel night (big deal) and buy some extra underwear if I don't have any clean stuff in my carryon.

The OP is way off the mark and is giving out bad advice.

In all fairness, the title is misleading and doesn't quite match the substance of the article. The title makes the broad, plain statement, "Why It Doesn't Pay To Buy Travel Insurance", implying that travel insurance should never be purchased. Then the article states that your homeowners insurance *may* cover a loss, your health insurance *may* cover a loss, and your credit card *may* cover a loss, and one should check prior to purchasing additional travel coverage. This is not bad advice, since most people don't know what coverage they already have. For example, someone with the AMEX coverage people have spoken of may not need additional coverage. Or maybe someone is covered under a family member's policy and doesn't know it. But one would never know without first looking at the degree of coverage of existing policies and it makes sense to know that info prior to shopping for additional coverage.

Frankly, I think the Consumer Reports article is much, much more irresponsible. Force Majeure situations are a nightmare and companies aren't in business to pay someone back willingly.

When it comes to travel insurance, there are a lot of factors that come into play.

1) Are you already covered for medical outside of your home country? If in the US, just how good is your medical policy?

2) What coverage does your credit card provide?

3) What might be an excessive cost to one person may not be excessive to another person. Are you a college student or are you well established in a profession with $$ in the bank, a home, w/homeowners policy, good medical, etc? Are you self-employed with a limited medical policy? Are you retired?

Generally medical expenses are much much cheaper outside of the USA, even for an Emergency Room visit. I got a bad upper respitory infection in Spain once. I was shocked at how cheap the ER visit, including x-rays and medication was. I had travel insurance on that trip because my primary medical policy I had at the time wouldn't cover me abroad, but lets just say if I didn't have travel insurance that ER visit wasn't going to break the bank by any means.

Look at what you already have, what it covers, where you're going, and what you will need to protect yourself from a significant loss.