Travel Insurance: Part I Insuring your Trip

It may seem out
of place to be talking about trip and travel insurance in the summer on the
Olympic Peninsula.  We have our best
weather now, there are festivals and activities from Brinnon to Forks and generally
it is the best time of year for us locals to settle in and watch everyone come
to us.  However, on those odd rainy days
between now and the end of September when your mind starts wondering about what
warm and dry place you might like to head to on vacation, you will want to be
fully armed with information about how to manage your risks associated with
travel.  In particular, if you are an
early bird and like to get your trip lined up months before you go, you need to
weigh whether you will invest in travel insurance and if so, what type. 

Travel insurance
is a generic name for insurance that offers risk management for two classes of events

  1. 1.  Assurance that your financial investment in a
    trip is protected and
  2. 2. Assurance that
    if a medical event occurs on your trip your health and your financial
    well-being are protected. 

These two
assurances can be purchased separately, or in various combinations of
both.  They are typically sold directly
by travel insurance companies, through travel agents or credit card companies,
not through Washington insurance agencies. 
Today, we will look at the first type of insurance –Trip Protection or
Trip Cancellation Insurance.  In another
blog we will look at the medical aspects of travel insurance.

Trip protection
is attractive to prospective travelers because it offers protection against a
variety of unforeseen events that could cause loss of the financial investment
in the trip.  The policy benefit is
generally limited to the total cost of the trip and provides reimbursement in
the event some named peril prevents, shortens or devalues the trip.  Named perils include things like an accident
or illness in you or a close relative that prevents or interrupts a trip, or
severe weather, like a hurricane, that prevents the trip from occurring.  Pro-rated compensation is also available for
trips that are interrupted or curtailed and compensation is provided for trip
related events like lost, stolen or delayed luggage.  Some policies will even compensate the
policyholder if the hotel or airline where you made non-refundable payments
goes bankrupt.

There are good
reasons to consider purchasing trip protection insurance.  If you are purchasing a vacation package,
such as a cruise, you are likely required to make significant prepayments.  These payments are at risk if you cannot take
the trip and partially at risk if you must cut your trip short.  Other circumstances may force termination of
a planned vacation – bad weather or, these days, bad people, may prevent
continuation of a trip.  Trip protection
insurance mitigates the financial risks associated with these events.  You should consider your own situation.  For example how long will you be
exposed?  If you are buying a vacation
package for tomorrow, you may not be concerned about the possibility of
illness; if the trip is a month away, it could be a different story. 

You should also
shop around a bit.  There are many
companies and plans to choose from and policies may differ in the named perils
they cover as well as in their willingness to waive pre-existing conditions or
offer other coverage.  If you are headed
toward the Bahamas during hurricane season, you would want to make sure your
policy listed cancellation due to hurricane as named peril. 

If you are
planning the trip of a lifetime, take a few extra minutes to think about your
travel insurance needs.  The costs are
likely to be in the area of 5% of your travel costs but well worth it when Aunt
Tillie’s untimely demise in a baking accident threatens to turn your dream
vacation into a nightmare. 

In our next blog, we
will look at the health and emergency components of travel insurance.

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