No one should buy an expensive home here in California without strongly considering both fire and earthquake insurance. Likewise, your clients shouldn’t book an international cruise or any other form of vacation without travel insurance. This has been especially true since COVID has ravaged the world. Hospital costs for treating the coronavirus and complications can easily exceed $100,000. Medicare and most private insurance are null-and-void when you leave the United States.
Medical evacuations to hospitals in the United States can also cost more than $100,000—especially if they involve private jets and nurses. Care in hospitals abroad can be expensive, if you’re not part of that nation’s health plan.
Here are some pitfalls of which you need to be aware.
Travel Insurance Sold by Most Top Cruise Lines Doesn’t Include Coverage for Covid-19
When you’re discussing insurance policies with clients, you need to review the wording in the brochures to be sure that that they don’t list known hazards as an exclusion for medical and other claims. The pandemic is a known hazard, and it can take insurance companies completely off the hook and possibly leave you—the advisor—holding the bag if the clients relied on you for expert advice. Look for policies that protect clients against all illnesses, or specifically say that coverage for COVID-19 is included.
Policies That Don’t Include A Waiver for Pre-Existing Conditions Can Easily Be Disputed
A pre-existing condition is an ailment or illness that began before a travel insurance policy was purchased. If your client has recovered from a heart attack, or has been treated for pulmonary problems, claims for new illnesses can be disputed—if the company claims that the previous illnesses have made the client more susceptible to a new illness or has worsened the outcomes.
A waiver for pre-existing conditions prevents this from happening, so long as the client isn’t traveling against medical advice or the problem didn’t arise a stipulated number of days before the trip. Many companies permit you to secure the waiver by simply ensuring the deposit within the deadline (typically 15 days after paying the deposit). You keep the waiver when you make other payments on the trip by paying the additional premium within the time limit. Be sure to check on how this strategy is implemented, since it’s often not described in many company brochures.
Don’t Rely on the “10-Day Lookback Privilege” to Review the Insurance
I’ve sold or have “courtesy holds” on 10 luxury small-ship cruises during the past few months, for which I’ve shopped for insurance. I’ve found that whenever you pose tough questions about an insurance policy to a cruise line or insurance company representative, the stock answer is, “Don’t worry about it; you have a 10-day lookback period to get a refund.” That’s really a disingenuous answer. Since, by the time you cancel the first policy and buy another, you’ve probably exceeded the 2–3-week window you have (from the date you made the trip deposit) to qualify for the pre-existing conditions waiver. This is a Catch-22 situation: Do you keep the policy you no longer want after learning more about it? Or do you buy a new policy without the pre-existing conditions coverage?
Be Sure Quarantine Costs Are Covered, Even If the Policyholder Tests Negative
Many policies only cover quarantine costs, which may be $300+ a day, if the traveler tests positive for COVID. With these policies, you may end up paying if an illness breaks out on a ship or in a resort and everyone is quarantined. Be sure to check with the policy brochure or the insurance company rep to see if this is the fact. The total cost of the quarantine, including changes in air reservations, missing parts of the cruise, and paying for additional care for children, is nothing to sneeze at. You want to be protected if at all possible.
Even if Covid Costs are Covered, the Reimbursements May Be Below What Your Clients Spend
Travel insurance brokers that sell policies from more than a dozen different companies often recommend that, what I call, Covid-Compliant Travel Insurance have the following minimum payout limits:
- At least $100,000 for medical expenses; more, if the guests have serious ailments or are elderly.
- At least $250,000 for emergency medical evacuations; more, if they’re going to remote locations.
Getting back to the insurance offered by the cruise lines, most of their policies—even if they’re COVID-compliant—don’t approach these limits. This keeps their costs low, but the amounts may not be sufficient if problems arise.
Cancel for Any Reason (CFAR) Policies Aren’t Always Worth It
Cancel for Any Reason (CFAR) travel insurance permits clients to cancel their cruise up until a few days before the ship sails. These policies formerly were used if clients had work demands, frail parents, child care issues, or other problems that couldn’t be anticipated. Lately, the policies with CFAR have been used to cancel bookings if clients feel that coronavirus or political problems make going on vacation unwise.
With the benefit of hindsight, most travelers were better off this year if they waited for the cruise line to cancel a cruise, accepted the 125% cruise credit for booking another cruise, and had the insurance charge “rolled over” to another trip on the same cruise line.
How Can I Learn All This Stuff?
The federal Travel Insurance Model Act has been passed in nearly every state. It permits travel agents to offer travel insurance in all states in which it has been adopted. It makes the travel insurance companies responsible for the “supervisory, education and policing roles” that states used to have when they licensed travel agents to sell insurance. Travel agents cannot “sell” travel insurance in most states.
They can only offer it as informational materials and policies provided by the travel insurance companies, and explain the features and benefits using the materials provided by the insurers. They can’t evaluate or interpret the technical terms, benefits, and conditions of the travel insurance coverage.
As long as you stick to the companies’ brochures, and the wording of the actual policies, and call the helplines if you’re unsure of anything—you’ll do just fine. If a company rep provides interpretations that seem questionable, have them send you a note telling you where their information is written.
Choose two or three policies that meet your clients’ needs at different price points. All of them should be “COVID-compliant,” and their firms should offer you training or advice in selling them. Have the insurance company reps’ phone number on speed dial. Also, let your clients know that they may even have to do without some amenities, such as a stateroom on the concierge deck,rather than skimp or fail to buy travel insurance.
Also, remember the strategy (if the insurance company permits it) of buying insurance that covers the deposit first, and then going back to purchase the full coverage immediately after paying for any non-refundable items. This qualifies your clients for coverage of pre-existing conditions, if they buy within the time limit, and also reduces the financial hit for them considerably.
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 year, he writes a weekly column, Point-to-Point, for Travel Research Online (TRO) that’s read more than 80,000 travel advisors and industry leaders. Steve is the founder of Cruises & Cameras Travel Services and a Signature Select Travel Expert. Steve also provides writing and consulting services. He specializes in small-ship cruises and COVID-19 mitigation strategies. Steve has a doctorate in Educational Research and Marketing from Indiana University. He is one of the first travel advisors in the nation to earn a certificate in Epidemiology in Public Health Practice from Johns Hopkins University. Before his involvement in the travel industry, Dr. Frankel 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, and he welcomes suggestions and inquiries about what he writes. He usually will reply within 24 hours.