Don’t Let a Vacation Headache Turn Into a Financial Nightmare

Posted July 7, 2009 in Insurance Law by Jennifer King
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Yesterday marked the start of the nine-day San Fermin Festival in Pamplona, Spain, which is best known for the Running of the Bulls. If you’ve never seen pictures from this event, it features hordes of people who try to outrun a dozen bulls charging down a narrow Spanish street. A few hundred participants are hurt each year, and one seems to die every decade or two, though arguably the bulls suffer a worse fate. They’re destined to die at a bullfight held later in the day.

Reading about the Running of the Bulls made me think: I hope the American tourists who participate are carrying cash or credit cards! I imagine that bull-inflicted injuries can be painful and expensive, and in doing some digging, I discovered that travel insurance probably wouldn’t pay for a bull-inflicted injury.

Even if you’re taking decidedly less risky trips, you should consider trip insurance, particularly if you’re spending a substantial amount of money on a vacation. Travel insurance may cover:

  • Trip interruption and cancellation, which reimburses you if you can’t go on or finish your planned trip due to illness or unexpected circumstances
  • The cost of food and accommodations if your flight is delayed or canceled
  • Rental car damage
  • Money to buy new clothes and gear if your baggage is lost or delayed
  • Emergency medical costs in a foreign country, including a medical evacuation to your home

In addition, you can purchase travel insurance for a single trip, multiple trips over the course of a year, and extended-stay trips.

A comprehensive travel insurance policy can add another 4 to 6 percent to the cost of your trip, so it pays to do your homework before you buy. Make sure you’re buying insurance that is appropriate to your kind of trip, and read the fine print.

Check Your Existing Policies First

It’s possible that some of the events you want to insure against are already covered by existing insurance. For example:

  • Your auto insurance may cover you and your family members driving rental cars for short periods of time
  • Your life insurance probably covers death in an airline crash or cruise boat accident
  • Your health insurance may cover at least a portion of the costs of injuries in foreign countries
  • Your homeowner’s or renter’s insurance probably covers the cost of lost luggage and personal belongings

Many airlines will allow you to change your tickets–for a fee! If you’re considering flight-cancellation coverage, compare the cost of changing a ticket to the cost of insurance.

It’s also possible that paying for a rental car with your credit card may make you eligible for limited rental car coverage through your rental car company. But don’t automatically assume you’ll be covered. A friend of mine recently rented a car in Italy and had barely driven off before he was hit by another car that spun out of control. Confident that his credit card insurance covered rental-car accidents, he didn’t give it a second thought until he got back to the U.S. and notified his credit card. It was only then that he learned the credit card typically covered rental-car accidents–except in Italy!

What To Watch Out For

Don’t expect your travel insurance policy to cover:

  • Terrorist attacks, unless you want to pay enormous coverage costs
  • Contagious disease outbreaks such as Swine Flu
  • Pre-existing health conditions, such as chronic illnesses or reoccurrences of old injuries
  • Injuries from extreme sports, such as sky-diving, bungee-jumping or running through the streets of Spain in front of an angry bull

In comparing travel insurance policies, you’ll want to ask if a particular policy covers:

  • An airline declaring bankruptcy
  • "Supplier default" if the company you book a tour with goes out of business
  • Alternative travel costs, if you need to book different flights or other transportation home due to illness or catastrophe
  • Emergency evacuation costs, if you’re planning to visit remote areas
  • Tropical weather conditions such as hurricanes, floods and typhoons (usually excluded by insurance companies as "acts of God")
  • Fires and earthquakes
  • Car accidents
  • Just you, or other family members or planned traveling companions
  • Reimbursement of prepaid trip expenses, such as nonrefundable deposits on cruises or tours

It’s also important to find out whether the plan has deductibles, or only covers medical expenses for certain preferred provider physicians and hospitals.

It’s a delicate balance to weigh the cost of protection against the likelihood that a specific problem will strike during your particular trip.

Buying appropriate travel insurance before your holiday starts will hopefully make your vacation less stressful and more enjoyable. Now if you could just do something about the long lines at the airport!

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Jennifer E. King