Ready For a Vacation? Don’t Bank on Travel Insurance

(Bloomberg Opinion) -- There are tentative signs that more Americans are itching to get on the road or an airplane again. Hoping to reconnect with family or friends, or just enjoy a change of scenery, about 22% of respondents in a poll last month said they expect to travel for leisure this summer, and an additional 25% said they're considering traveling in the fall. .But with the resurgence of vacation bookings comes trepidation. A recent survey of traveler sentiment from the luxury travel company Indagare shows that people are feeling hopeful, yet anxious. .So what's the best way for travelers to protect themselves financially when booking a vacation, given concerns about a second wave of the virus, widespread economic uncertainty and, for some, money already lost on trips planned earlier this year? .First off, forget about most standard travel insurance policies if the anticipated reason for canceling is coronavirus-related. They typically don't cover pandemics. Even for the most common covered reason of unforeseen illness, injury or death, each policy will have different definitions of what illness or injury is, who has to be sick to qualify and what kind of documentation is required. .Just one out of about two dozen insurance providers listed on aggregator Squaremouth offered coverage related to alerts from the Centers for Disease Control and Prevention. That may change, with more insurers eventually offering coverage for some of the impacts of future pandemics tied to CDC warnings or alerts, according to Squaremouth's Kasara Barto. Still, it's a long way off for those booking now or in the near future..Also, skip the travel protection that pops up when buying airline tickets. It's generally even less comprehensive than standard travel insurance policies, while also being pricier. .That said, one type of add-on to a standard comprehensive travel insurance policy, called “cancel for any reason,” may give some travelers some peace of mind. This is especially the case for those who are planning expensive, once-in-a-lifetime trips, or who are finding they can't negotiate some degree of flexibility when booking a flight, hotel or rental home. As with any insurance, it's important to understand the fine print and exclusions. .Cancel-for-any-reason insurance is expensive: People will pay 12% to 14% of the cost of the trip, compared with about 8% to 9% for a standard travel policy (with factors such as age, length and cost of the trip taken into account). And providers of cancel-for-any-reason policies will usually only cover up to about 70% of the trip cost. Travelers often have to buy the policy within a certain period of time of an initial trip payment, and cancel the trip at least 48 hours before departure. .Also beware that cancel-for-any-reason policies have become hard to find, as many providers have stopped offering the additional coverage. Check websites such as Squaremouth and InsureMyTrip to compare and contrast the coverage. .One other point: Cancel for any reason isn't actually for any reason, apparently. Several travel advisers said they've heard that if clients tell the insurer they're canceling because of the coronavirus, they won't be covered, but if they say it's for personal reasons, they will be..Given all the caveats with insurance, it seems like the better option for most travelers is to try to negotiate directly with airlines or hotels, or to consider hiring an experienced travel adviser or tour operator to act as an advocate from the outset. That means pushing for cancellations or postponements that will be honored as close to the departure or arrival date as possible, and delaying due dates for deposits. Providers want business right now, so are more apt to meet consumers on their terms, said Alexandra Hanover, founder of the luxury travel consultancy Local Foreigner. .For airline travel specifically, Brian Kelly, founder of the travel website The Points Guy, suggests sticking with Delta and Southwest, which he says have been more consumer friendly than other carriers when canceling or rebooking flights. Also, unlike some other domestic carriers, Delta has pledged not to pack its flights through September. .Kelly said he doesn't recommend booking refundable tickets because they tend to be so much more expensive. A better option right now is to just book closer to the departure date. .Having patience and waiting it out may be the best tactic for travelers who end up having to change their flights. If the airline cancels or changes the flight, passengers are entitled to a refund, but if they're the ones who cancel pre-emptively, they're more likely to just get a credit. .For those contemplating international travel, it's important to be aware of what's happening in each country on a daily basis. Melissa Biggs Bradley, the founder of Indagare, cautions that travelers should not only consider the health infrastructure of a country when booking, but also that country's relationship with the U.S. and what would happen to U.S. citizens if there were a virus outbreak there or some other emergency. Country-by-country details and advisories can be found on the CDC and State Department's websites. The International Air Transport Association also has an interactive map that displays current travel regulations..Booking with a credit card, especially one that comes with an annual fee and associated services, is often a good idea, since it may provide some built-in protections. For example, if an airline or hotel goes out of business, certain credit cards say they will reimburse cardholders up to a certain amount. .A final tip on value to keep in mind while planning: There may be deals out there, but what travelers pay for this year won't necessarily give them what they would have received in the past. Airlines and hotels are likely to dial back service and amenities given health concerns for the foreseeable future. No amount of insurance is going to fix that..This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners..Alexis Leondis is a Bloomberg Opinion columnist covering personal finance. Previously, she wrote about personal finance, asset management and mortgages, and oversaw tax coverage for Bloomberg News. .©2020 Bloomberg L.P.

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Ready For a Vacation? Don’t Bank on Travel Insurance

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