Travel Insurance – Do you need it?

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.

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