Travelers can use travel insurance to help protect themselves but there are a few things they should know before buying:
- Buy travel insurance from an independent source rather than from the travel provider. Travel Insurance policies offered by tour operators, cruise lines, or airlines either don’t cover their own financial default or they exclude the financial default of the company from whom you purchase your coverage.
- Check the insurance plan to see if they have a list of airlines or travel companies that they either will or will not cover. Two companies, Access America and Elvia, provide a list of companies they will cover while two other companies, AIG Travel Guard and Travelex, provide a list of companies they will not cover.
- Buy travel insurance very soon after they make a deposit. Default protection is only available if you purchase your travel insurance within 10 to 21 days of your initial deposit. The time period varies with each company and plan so our advice is to do it within 10 days to ensure that you have the maximum flexibility.
- Review the coverage carefully. Some plans will have a “waiting period” after the coverage is purchased before the default coverage goes into effect. In some cases this is 14 days after you buy the insurance. Another reason to buy coverage early.
- Buy your trip or airline ticket through a travel agent. Some insurance plans exclude coverage if you have purchase your trip directly with the travel company. Most travel insurance plans will not, however, to have the maximum flexibility you should purchase your trip through a travel agent, whether locally or online, rather than buying direct.
- Always use a credit card for the payment of your ticket or trip. In the event of a default you might be able to dispute your charge and have the credit card company remove it from your billing. This is fine if it happens prior to your trip but doesn’t help much if you are traveling at the time of the default. If that happens other airlines might offer you an alternative flight on a standby basis but it can still result in delays and additional expenses that would be covered by many travel insurance policies.
These are all ways that a consumer can minimize their risks. You can never eliminate all risks but you can take prudent measures to minimize them before you travel.