Travel Insurance and the Costa Concordia

I read today that Carnival Corp, the owner of the ill-fated Costa Concordia has stated that they are providing “lodging, refunds and other support to people affected by the accident”.  I instantly thought about what would have been covered by travel insurance if Carnival didn’t step up to the plate to do the right thing.

What could cruisers expect from their travel insurance depends on the coverage that they purchased and whether or not they were on the ship when it capsized or if they were scheduled for a later cruise.

Let’s deal first with cruisers who were aboard at the time that it capsized what are the possible benefits:

  1. Medical Expense for injuries that were sustained during the accident or evacuation;
  2. Emergency Medical Evacuation that resulted from injuries sustained during the accident or evacuation or sickness which are caused by the accident,
  3. Trip Delay:  additional living expenses that are caused by the accident,
  4. Baggage:  Lost or damage to personal effects and luggage caused by the accident,
  5. Accidental Death:  death that results from injuries sustained during the accident,
  6. Trip Interruption:  up to the cost of an economy ticket home and the unused cruise cost at the point of interruption. However, this one is less clear since none of the policies have a specific covered reason for a common carrier accident.  If a traveler is injured as the result of the accident than there is clearly coverage however, if they did not sustain injuries or receive medical treatment than there might not be coverage unless the insurance companies choose to interpret coverage to the benefit of the cruiser.
  7. Travel Assistance:  emergency travel assistance to help make return flight reservations, replace lost travel documents, passports, and notify family members at home.

Now let’s deal with the cruiser who is booked on the Costa Concordia for a future trip:

  1. Trip cancellation:  loss of non-refundable fees paid to participate on the cruise which now is cancelled because of the damage to the ship.  In theory there would be no loss of the cruise cost because the Costa is unable to fulfill the cruise however, if the cruisers airfare was booked separately than the airfare might be non-refundable.  Again this one is less clear because there is no clear “covered reason” dealing.
  1. Cancel for Any Reason:  an option offered on some plans.  The cruiser must  qualify for coverage by buying the insurance within 1 to 30 days following their first trip payment and by insuring the full, pre-paid value of their trip.  The “cancel for any reason” option allows for any cancellation that is caused by a reason that is not covered under the trip cancellation coverage.  Usually there is a large copayment, 25% or more, that the cruiser would have to incur.

Bottom line is that travel insurance is valuable precaution regardless of the trip but you need read and understand what the insurance covers.

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