One of the better newspaper articles about travel insurance appeared this past Sunday in the New York Times Travel Section under the byline of The Practical Traveler. The title of the article is, “When In Doubt, Insure” by David A. Kelly. Mr. Kelly did a good job with a difficult subject.

This past week two so called personal financial experts recommended that you not buy travel insurance.

The first one appeared on CBS news and recommended that you not buy trip cancellation coverage because, according to the web article, you could deal with a reputable travel agent who could get you a refund.

WRONG! It was obvious that the author didn’t do his homework. If he had he would have known that when you book a trip you are entering into a contract with a travel supplier like a tour operator, cruise line, or airline. The travel agent is acting as an agent between you and the travel supplier and can not change the contract that you’ve entered into which includes the cancellation penalties. It’s basic contract law. To give public advice that contracts don’t matter is misleading because they do. I posted a comment on the web site and just checked and it appears the article has been changed but the was not footnoted to show when it was changed. The old advice has been changed to now recommending that you buy a “cancellation waiver” from the travel agent. Again – off the mark. Travel Agents don’t offer “cancellation waiver” plans. They are offered by the travel supplier because they “waive” their own cancellation provisions. Should you consider them? No, is the advice from most consumer advocate. Why? For a couple of reason; first the travel supplier is self-insuring and if something were to happen to them you would be out of luck. Secondly many of the “waiver” plans only offer a credit for future travel with the same travel supplier instead of cash. Also in New York some of these “waiver” plans are considered to be illegal by the New York Insurance Department

The other “expert” posted an article on his blog saying, among other things, that travel insurance is identical to insurance provided by credit cards.

WRONG! Most travel insurance provided by credit cards is very restrictive and is usually limited to travel with suppliers where you’ve used your credit card as payment. Coverage can also be very limited such as no coverage for pre-existing medical conditions. Some cards offer “Emergency Medical Access” which will help you arrange an emergency medical evacuation but you will still have to pay for it because the benefit is access to a call center without the insurance benefit. Ironically, I left a comment on that blog offering correct information but it was removed by the blogger.

It’s best to be skeptical when reading advice from “experts”. Always check their credentials and than be skeptical when they use general terms like “experts agree” or “most plans” without presenting empirical data to back up their statements.

Here are the latest position statements concerning the volcanoes in Iceland and future impact on travel insurance:

CSA Travel Protection
Travel & Coverage Alerts from CSA
Volcanic Ash Cloud Update
05/21/2010

A cloud of volcanic ash again interfered with regular flight patterns beginning Sunday May 16, 2010, in Northern Ireland, Scotland and England. A flight ban was imposed in the area on Sunday, and restrictions, delays and cancellations are still lingering.

For those plans that do offer coverage for adverse or inclement weather, there is no coverage for this specific event under any plans purchased on or after May 16, 2010.

05/14/2010

This is an update regarding the flight disruptions due to the volcanic activity. We now consider the volcanic event which happened on May 8, 2010 to have ended on May 14, 2010, when Eurocontrol—the European air traffic authority—expected fully normal operations to resume. At this time, no-fly zones are limited to an area close to the Icelandic crater and another area north of Scotland. Eurocontrol advised that air traffic is likely to be at normal levels, with all of Europe’s airports open to services, and the situation is unlikely to change over the next 24 hours.

As with the Icelandic volcanic ash cloud eruption in April, CSA considers this event to be adverse or inclement weather. Certain CSA Travel Protection plans offer benefits for some effects of adverse or inclement weather. Customers are strongly encouraged to read their Certificate of Insurance or Insurance Policy for details regarding their available coverage.

General Information
For those plans that do offer coverage for effects of adverse or inclement weather, please note there is no coverage for the specific volcanic ash cloud events under any plans purchased on or between the start and end dates noted below.

•Event 4 – Start May 16, End May 19
•Event 3 – Start May 8, End May 14
•Event 2 – Start May 3, 7am, End May 3, 1pm
•Event 1 – Start April 15, End April 22
Please note: If you buy a policy today to cover a weather event that is currently happening, you will not have coverage as it would be a foreseeable event.

Once an ash cloud dissipates, and travel schedules resume to normal, new policies can afford coverage if a new ash cloud event interferes with airspace, and causes delays or cancellations (provided all requirements of the policy are met).

Latest news – 5/1/2010

This is an update regarding the flight disruptions due to the volcanic activity. We now consider the volcanic event which happened on April 14, 2010 to have ended on April 22, 2010, when Eurocontrol announced that air traffic had returned to normal levels. We are pleased to confirm that any future volcanic events occurring after April 22, 2010 will be considered new events.

HTH

We now consider the volcanic event which happened on April 14, 2010 to have ended on April 22, 2010, when Eurocontrol announced that air traffic had returned to normal levels. We are pleased to confirm that any future volcanic events occurring after April 22, 2010 will be considered new events.

Travel Guard

Question Two: “I am scheduled to travel this summer and have not yet purchased a policy. If I purchase a policy today and a future eruption of the Iceland volcano occurs would I be covered?”

Answer: If the current Iceland Volcano situation subsides and commercial airlines resume normal schedules prior to your trip, any new eruption would be considered a new event under our US policies. Coverage would be administered according to the product purchased (based on limits and exclusions). We encourage you to contact our 24/7 Service Center or your Travel Guard sales representatives with additional questions as coverage and benefits vary by product.

As you can guess we’ve had a lot of calls from travelers concerning the current problems in Europe that are being caused by the ash cloud that is spewing into the atmosphere from the volcano eruption in Iceland. Most travel insurance companies have stated how their policies will react. Click here for the most current announcements.

As you can imagine we’ve been receiving questions about the current volcano eruption in Iceland and the ash cloud that it has released. How does travel insurance apply?

Travel Insurance policies contain 4 separate coverages that might apply:

1. trip cancellation,
2. trip interruption,
3. missed connection, and
4. travel delay.

All 4 of these are “named peril” coverages which will only provide coverage if the claim was caused by one of the specific covered events.

The ash cloud caused by the eruption can be classified as either a “natural disaster” or an “adverse weather” event. This classification can have a big effect on coverage for trip cancellation and interruption coverages. Under those coverages some, but not all, companies include “natural disasters” which causes your airline to cease operations to be a covered event. Most of the plans limit coverage for “natural disasters” that make your destination uninhabitable. A more common covered event is “adverse weather” causing your airline to cease operations for a specific time period(usually 24 hours). If the event is interpreted to be a “natural disaster” coverage might be limited for trip cancellations or interruptions unless it’s one of the plans that include “natural disasters” in their covered events that causes your common carrier to cease operations otherwise the question is did it make your destination uninhabitable?

Coverage for travel delay and missed connection is clearer. These coverages are also “named peril” benefits however, the majority of plans include “natural disaster” as a covered event.

As with all travel insurance coverages, the event that causes your loss has to be reasonably unforeseeable at the time you purchased your policy. For some plans you would have had to purchase the insurance prior to April 13, 2010 for it to be unforeseeable others are using the 14th or 15th as when it became foreseeable. Click here for a current list of Travel Insurance Company announcements concerning this event.

Bottom line is to read your plan carefully and don’t assume that there will or will not be coverage.