Offers of “Protection” May Not Provide Insurance Coverage for Your Travel Investment

If you had a recent trip cancelled due to snow or bad weather, you may be considering travel insurance for your spring getaway. But beware – every offer you get for travel “protection” may not be travel insurance coverage. In a bad economy, insurance fraud can be costly to uninformed consumers hoping for better protection of their investment. So, before your buy travel “protection,” the National Association of Insurance Commissioners (NAIC) offers these tips and considerations you should review.

Do I Need Travel Insurance?

Travel insurance may not be appropriate for all trips and you may have some coverage from policies you already have – such as a life, health or homeowners/renter’s policy. Read your policy or speak with your insurance agent or company to find out more about what personal property and medical coverage you already have that could provide protection while you’re traveling.
Some credit card companies also offer travel insurance if you pay for the reservation with your card. When making your decision, check to see if your company offers those benefits.

After finding out what coverage you already have, ask yourself the following questions to help decide if you will benefit from the added cost:

  • Do I really need the coverage?
  • What could go wrong before or during the trip? Can I cover those costs on my own?
  • Will the coverage apply if I have a family emergency affecting someone other than myself (the traveler), or does the coverage only apply to personal emergencies (like if I get sick)?

All companies and agents selling travel insurance must be licensed in the state where you are purchasing the policy. While considering whether you will benefit from the insurance, also stop to investigate where you are considering buying the policy.

Marketing and sales material for fraudulent coverage is often difficult to distinguish from real insurance coverage. So, to protect yourself – STOP before you write a check for the premium or sign the application and CALL your state insurance department to CONFIRM that the agent and company are licensed in your state. Many insurance departments also make this information available online. Find a link to your state insurance department here.

What Are the Major Types of Travel Insurance?

There are two main types of travel insurance. The first type, commonly called trip cancellation insurance, protects against the loss of non-refundable travel costs – like airfare, hotel or tour expenses. So if you’re making a deposit on a cruise or have non-refundable airline tickets, this would be the type of coverage you’d consider.

The other type of travel insurance offers protection against loss due to medical emergencies, damage to personal property or death that occurs while you are traveling.

Trip Cancellation/Delay/Interruption Insurance

Travel insurance generally covers a very specific list of reasons for cancellation, delay or interruption. Before you buy a policy make sure you’ve reviewed these situations carefully.

  • Trip Cancellation – Reimburses pre-paid travel expenses if you aren’t able to take your trip because you become ill or die.
  • Travel Delay – Reimburses pre-paid expenses if you aren’t able to take your trip because of a travel delay, such as a flight delay or cancellation.
  • Trip Interruption – Reimburses pre-paid expenses if your trip is cut short because you become ill or die, or because of any other misfortune listed in policy. Covered reasons might include bad weather, airline strikes, terrorism, bankruptcy, jury duty, or fire or flood damage to your home.

Medical/Accidental Death Insurance

When considering a medical or accidental death travel policy, ask about pre-existing conditions and age limits. How companies deal with pre-existing conditions can vary widely. Read the terms of coverage carefully if you have a pre-existing condition and be prepared to pay a higher premium to cover them. Some insurers also charge more for older travelers.
American health insurance is generally not accepted outside of the United States. To find out more about the extent of your coverage, speak with your insurance agent or company before you leave home.

  • Medical/Health – Reimburses medical and emergency dental expenses that you incur because of an illness or injury while you’re traveling.
  • Medical Evacuation – Provides emergency transportation to either a hospital in the geographic region where you are and/or transportation back to a hospital near your home.
  • Accidental Death – This coverage is usually split into three parts:
    1. Air Flight Accident – Covers death or dismemberment during flight only.
    2. Common Carrier – Covers death or dismemberment while traveling on public transportation such as a plane, ferry, train, bus or taxi.
    3. Accidental Death – Covers death or dismemberment at any time during a trip.

Baggage/Rental Car Damage Insurance

Homeowners or renter’s insurance may cover baggage or personal property damage when you’re traveling and your auto insurance may extend to a rental car, but you should always check the terms of your current policy or ask your insurance agent or company.

  • Baggage Loss – Reimburses for lost, stolen or damaged personal items. This usually doesn’t cover personal items lost or damaged by an airline. If you buy baggage insurance, be sure to review the policy for the list of property that is not covered and the value limits associated with the property.
  • Rental Car Damage – Reimburses for damage or loss to a rental vehicle. If you purchase this coverage you can decline the rental car company’s “collision damage waiver.” This coverage doesn’t provide liability protection. Find out more about your rental car insurance choices here.   

Is a Waiver the Same as Insurance?

Cruise and tour operators may offer Cancellation Waivers. Keep in mind that waivers are not insurance policies and are not regulated by the state, and therefore do not have the same consumer protection as a travel insurance policy.  Read all of the restrictions before you buy a Cancellation Waiver.

What Red Flags Should I Watch For?

Here are some warnings against possible fraudulent policies:

  • The insurance is advertised through blast faxes, spam e-mails, Internet pop-ups or signs posted on telephone poles.
  • The company claims you can save a considerable amount on travel insurance.
  • The company uses high-pressure marketing and an extreme sense of urgency, telling you that you “must act now” or “this one-time offer.”

Just remember, if it seems too good to be true, it probably is!

What Should I Check Before I Buy?

  • Are the company and the person I am buying the policy from licensed by the state where I live to sell insurance?
  • What is the refund policy on prepaid expenses? How long in advance do I have to cancel to get a refund?
  • Other than a full refund, what benefits will the insurance company offer? Will they rebook a flight or help me find a new hotel room?
  • Read the policy to see if the coverage applies only to the traveler, or if an illness or emergency with a family member will also trigger the coverage.
  • If you’re working with a travel agent you trust, ask about his or her experiences with any recommended travel insurance companies. Have their customers filed claims? Were those claims paid?
  • If you’re planning an adventurous vacation (i.e. skydiving, scuba diving), ask if the insurance will cover those activities.
  • You don’t have to buy travel insurance from the travel agent booking your trip. You may get a better deal if you work directly with the travel insurance company. Just make sure the quotes you’re comparing are for the same coverages.
  • If you buy from your travel agent, ask to speak with the licensed insurance agent in their office, and check with your state insurance department to make sure that person’s license is up to date.

More Information

If you have questions about your insurance coverage, contact your state insurance department. Visit for contact information and Web links to your state insurance department.

Get smart about your insurance needs! For more information about auto, home, life and health insurance options – as well as tips for choosing the coverage that is right for you and your family – visit

March 2010

About the NAIC

Formed in 1871, the National Association of Insurance Commissioners (NAIC) is a voluntary organization of the chief insurance regulatory officials of the 50 states, the District of Columbia and five U.S. territories. The NAIC has three offices: Executive Office, Washington, D.C.; Central Office, Kansas City, Mo.; and Securities Valuation Office, New York City. The NAIC serves the needs of consumers and the industry, with an overriding objective of supporting state insurance regulators as they protect consumers and maintain the financial stability of the insurance marketplace. For more consumer information, visit

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