Not So Prime Travel Protection

I just read an article from Travel Weekly dated 1/27/09 that Prime Travel Protection closed their doors and hopes to file Chapter 7 Bankruptcy.

I am amazed that they’ve been in business for any length of time. It appears that they were like another travel protection company from a couple of years ago, Trip Assured. Both of them were offering travel protection that looked like insurance, acted like insurance, but was called protection instead of insurance. So, by calling it something other than insurance, many consumer safeguards were avoided. Chief among these safeguards are the capital and surplus requirements that licensed insurance companies have to comply with. Also, client’s of licensed companies are covered by State Guarantee funds that are used to guarantee claims in case a licensed company goes bankrupt.

Prime Travel Protection’s web site said they are filing for liquidation(probably Chapter 7 Bankruptcy) and that client’s will be receiving written communications relating to the processing of their claims. To translate that it means that clients are unsecured creditors and as such will only be paid after all others are paid.

How can consumers avoid this type of thing from happening? Here are some red flags to look for:

  1. If it is too good to be true than it probably is. If the cost or benefits are way out of alignment compared to other policies than a red flag should be raised.
  2. Can’t find the name of a licensed insurance company in the advertising material that you receive than another red flag should be raised. Insurance advertising laws require the name and address of the underwriting insurance company to be shown.
  3. Can’t find the name of a licensed insurance company when you buy a policy than another red flag should be raised. The policy or certificate is a legal document between you and the insurance company; their name and address has to be in the document. Research the name in the document, make sure they are licensed. Generally the name in the recital area of the contract should not be the name of the administrator but rather it should be the name of the underwriting insurance company. So if you’re offered a plan by XYZ Travel Protection and in the contract it says that the contract is between you and XYZ Travel Protection than a red flag should be raised.

If a travelers doesn’t recognize the name of the insurance company than research it on the internet. A couple of good sources to use are and Or any of the other travel insurance comparison web sites. All of us do our diligence before adding companies to our sites.

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