It all started by the poolside bar, when a young guest who was traveling with her elderly grandmother tilted back on her bar stool and fell backward – crashing her head on the deck. Since she was semi-conscious and unable to stand, the ship’s captain requested an emergency evacuation from Australia’s Great Barrier Reef, through which the ship was sailing.
A small powerboat from one of the Aussie’s famed Sea-Rescue Squadrons met the ship within hours, and the woman was evacuated to a hospital ashore. The woman did not do well, and a few days later, the captain of the ship asked the grandmother for permission to have the hospital do brain surgery. The grandmother collapsed with a stroke and had to be evacuated from the ship by helicopter. When both were stabilized, the grandmother and the granddaughter had to be evacuated to the United States by private jet and transferred to local hospitals.
Talk about a vacation gone wrong! While both recovered, the bills could have totaled more than $100,000.
Now fast-forward to next year. Imagine that a cluster of COVID-19 breaks out on a ship, despite the fact that most passengers are vaccinated. The guests include a family of six, all of whom are really sick. The latest CDC protocols require the ship to return to the departure port. There, the host nation will probably insist that the ill patients leave the county as soon as possible, so that they won’t infect residents. If they return to the U.S. for treatment, CDC now requires that it be on private planes so as not to endanger other airline passengers.
If this was to happen, the family could face fees for medical treatments, hospitalizations, and air evacuations that could cost a million dollars. Also, all the other passengers would have their vacations cut short. Many would probably seek compensation from the cruise line, which would likely give them Onboard Cruise Credits (OBCs) they could use on a future voyage on the same cruise line. Or if they have their own travel insurance, their “trip interruption” coverage can cover their costs up to $100,000.
There’s a simple answer to scenarios such as these:
DON’T BOOK A TRIP WITHOUT INSURANCE THAT COVERS PRE-EXISTING CONDITIONS, AIR EVACUATIONS, TRIP INTERRUPTIONS, AND COVID-19 INCIDENTS.
Buying the Right Kind of Insurance and Making It Affordable
In today’s world, nearly every illness can be blamed on “pre-existing conditions.” Unless you buy insurance that contains a waiver that says that a claim cannot be disputed by the insurance company on the basis of pre-existing conditions, the policy is essentially worthless. Most insurance policies that contain such a waiver must be purchased within 15 or 21 days of making the first deposit on a cruise, tour, or resort. The number of days depends on the policy you have bought.
Also, the insurance must be sufficient to cover all the non-refundable costs made for the vacation. In most cases, this includes the cruise fares, airfare, hotels and shore excursions. Thus, if you want a waiver for pre-existing conditions, you no longer can determine how little insurance you can buy.
Most important, many insurance policies sold in the last few years excludes coverage for events rising out of pandemics, considering them as “known events” or “foreseen events.” Be very careful that any insurance that you buy doesn’t include such an exclusion and/or that the marketing materials lists COVID-19 events as being included within the coverage.
Let’s assume that you decide to book one of the Australian small-ship cruises I described in last week’s column: “Australia Will Be the Cruising Mecca a Year from Now.” For any of those cruises, the costs for the cruise fares, air reservations, insurance, and hotels and will likely be around $20,000 for two persons. However, the deposit is only about 10% of the cruise fare: $1,680 for the cruise I booked. This is all I have to pay until August 2021. Then I’ll have to pay the balance to the cruise line and pay for my air, shore excursions, hotels and the additional insurance.
Since insurance policies average about 11% of the full amount ($2,200 for $20,000 of coverage I’ll probably need), I will be in the position of having to buy a nonrefundable insurance policy that costs more than the deposit I put down on the cruise! That’s one reason why so many people mistakenly avoid buying insurance at the time they make their deposit, or don’t buy insurance at all.
I discussed this with two insurance company representatives, and they recommended a way around this situation: Make your first insurance payment based only on the deposit you have placed. You can do this since this is the only cost you have incurred. Then, you have 15 or 21 days after you make any other payments to increase the amount of insurance that you are required to have.
For instance, if you pay for the airfare before you pay the remainder of the cruise line bill, you’ll have to raise your insurance on the trip to cover the insurance on the airfare. Then, raise it again when you pay the rest of the expenses. They told me that you can do this as many times as you like.
In my case, since I paid the deposit of $1,680 on my cruise on December 9, 2020, I paid the amount due on the insurance on December 18, well within the 21-day limit for my policy. The cost was $296, initially, for the insurance policy that included the pre-conditions waiver, insurance against any supplier going broke, $100,000 of medical coverage, $100,000 in trip interruption insurance, $1 million in air evacuation costs, and the language that assures coverage for any COVID-19 events.
The only “gotcha” is that I only have 15 or 21 days to increase the insurance amount when I pay for any other expenses. If I don’t add to the insurance policy within that time, the pre-existing conditions waiver, and the coverage against suppliers going broke, become null-and-void. If you’re acting as your own travel agent, be sure your travel companion reminds you to increase your travel insurance. Also place an entry into your appointment book reminding you to increase your insurance whenever you any payments are due.
Beware of Buying the Cruise Line’s Insurance
Cruise line insurance has always been a great buy since the cost of coverage usually doesn’t increase as you age. Also, it’s easy to buy since you just add it to your cruise fare, and you don’t have to complete a separate application.
This is fine, except that many cruise line’s insurance policies haven’t been updated yet to include coverage for COVID-19 incidents or medical expenses. This makes them worthless to me.
During the next month or so, I hope that all the cruise lines will upgrade their insurance policies to include COVID-19 provisions, waivers for pre-existing conditions, and air evacuation expenses. Some may even follow the lead of Japan Airlines and make COVID-19 policies free. Others may follow MSC’s lead and provide the needed COVID-19 coverage for less than $25 a day. That will permit them to sell their normal insurance packages, most of which already contain a waiver for pre-existing conditions – if they’re purchased within 15 or 21 days of placing the deposit.
Avoiding Expensive Mistakes
Let’s finish up with some rules that can keep you out of trouble when you’re buying travel insurance for yourself or clients.
- Compare at least two coronavirus-friendly policies from different companies. Travel advisors and company representative should be willing to provide, explain, and compare quotes. You can buy travel insurance from any licensed travel advisor who sells the policies in which you’re interested. Also, you can buy policies from the insurance companies via their “800” lines or websites.
- Only buy travel insurance from companies that are likely to deliver the service you may need. Check the customer rating given by previous buyers. The Signature Travel Network ($8 billion-annual sales; 7,000 travel advisors worldwide) only partners with AIG, Allianz, and Travelux. They, and the companies that partner with Virtuoso and Ensemble, may be the companies you consider first.
- Don’t buy any travel insurance that doesn’t include COVID-19 coverage, air evacuation expenses, and a waiver for pre-existing conditions.
As an example of what “coronavirus-friendly travel insurance” looks like, I’ll send you a copy of the policy, I bought for my December 2021 Australia Cruise. Email me at firstname.lastname@example.org and list the subject of the email as “Coronavirus- Friendly Travel Insurance.” I’ll also send you the specific verbiage you can look for in other policies for Covered Medical Conditions and Pre-existing Medical Conditions.
Dr Steve Frankel and his wife have sailed on most of the Seabourn, Silversea, Crystal, Azamara, Oceania, Regent, and Windstar ships on more than 40 cruises. For the past six months, he has been writing a weekly column, Point-to-Point, for Travel Research Online (TRO) that’s shared with more than 70,000 travel advisors and industry leaders. Steve is the CEO of two companies: Travel Intelligence Associates (TIA), and Cruises & Cameras, LLC (C&C). TIA provides writing, consulting and White Box services. C&C specializes in small ship cruises and is associated with LUXE Travel (a FROSCH company) and the Signature Travel Network. Steve has a doctorate in Educational Research and Marketing from Indiana University, He is one of the first travel advisors to complete a five- course sequence of courses in epidemiology from Johns Hopkins University. In his former life, he was the director of several organizations specializing in public policy studies. He’s the author of 13 books and a former Contributing Editor of The Washingtonian magazine. His email address is Steve@CruisesAndCameras.com.