I’ve been a long-time opponent of buying travel insurance for small dollar trips. I wrote about the tricks insurers use to get out of paying claims as far back as 2007. And a decade ago I explained why it’s usually a bad deal.
Reader Tom F. writes,
Would you please consider writing more articles on travel insurance, particularly airline website point-of-sale transactions for flight insurance and credit card travel delay benefits?
It seems to me that Allianz is the primary provider … I find it exceptionally difficult to get Allianz to pay the benefit when we have had a travel delay. It seems the Allianz corporate policy is “Just Say No”.
As an example, we had a flight delay in August, 2018 out of [Albuquerque] on American which caused us to miss a connecting flight in DFW. Our flight into DFW was held on the tarmac for almost an hour after arrival, awaiting a gate assignment.
When we pulled into the gate, we waited almost another hour for a gate agent while planes arriving after ours were gated and off-loaded before our flight. Then American closed their customer service desk which necessitated passengers individually securing meals and a hotel room and paying out of pocket. Allianz has repeatedly refused to pay the benefits of the policy.
Tom hit the nail on the head regarding the transaction costs in dealing with travel insurance. It’s one of the reasons that I’ve long been a lonely voice recommending against purchase of travel insurance for relatively small dollar trips.
The cost of travel insurance isn’t just the purchase price of the policy, it’s the time and effort to get the policy to pay. (The key to a successful claim is persistence.) There’s a reason I’ve been offered 50% commissions if I’d recommend travel insurance. These are big profit engines for the offering companies.
Some companies are easier to work with on claims than others, anecdotally I’ve heard of better experiences with Travel Guard. And I do think it’s important to consider medical coverage for some destinations. Does your health insurance fully cover you when you travel abroad? Are you somewhere that the medical care may be insufficient, and you need medical evacuation coverage?
But that’s really a subset of the larger point that it’s worthwhile to insure (with the right company) against catastrophic losses. Is it a once in a lifetime trip where you couldn’t manage a do-over if something happened? In my view you want to self-insure against manageable losses.
Too often travel agents recommend insurance to protect themselves rather than their clients. If something goes wrong and a client loses their investment the agent can say, well I told you to buy insurance, I warned you, not my fault.
However with credit card coverage there’s often relatively little trade-off. It’s always important to know your coverage (what’s covered and what isn’t) and consider using a card with the richest coverages to purchase your trip.
- Trip delay. If you are delayed and have to pick up costs like hotel room and meals (document the delay, save your receipts) you’ll often be eligible for up to $500.
- Baggage dalay. This will often pay out $100 a day up to 5 days to reimburse expenses when you’re without luggage.
- Trip cancellation. Always know what the covered reasons are here.
A Reader’s Father Being Transferred from Gulfstream to Ambulance at Atlanta Peachtree-Dekalb Airport
In general American Express doesn’t provide trip delay and baggage delay, but can be amazing for medical evacuation.