Money Clip: Man Down
Jack Callahan and his friends planned an epic golf trip for last May, a journey through the northeast of Scotland that had them playing seven courses in five days, including stops at Royal Aberdeen and Cruden Bay.
Yet by early April, Callahan started to wonder if he would be able to go. He'd gone to hit balls at a range near his home in Boston and felt a sharp pain with each swing. Sure enough, a couple of doctor visits later, he was scheduled to have his arthritic left hip replaced. His buddies would have to carry on without him.
Happily for Callahan, 55, he'd bought trip insurance--a popular way for travelers to cover their expenses should something go wrong, especially on big-budget trips. Purchased when he booked the trip in the fall of 2011, the policy cost him 6 percent of his trip's cost, or $330. In the end, he got reimbursed for 100 percent of his pre-paid expenses.
Perry Golf, the tour operator that booked his trip, figures about 40 percent of its customers buy trip insurance these days. "We've seen an uptick in recent years," says Gordon Dalgleish, Perry Golf's president. "It might be a function of the economy. Before, people were maybe a little more glib about it." The U.S. Travel Insurance Association reports Americans spent almost $1.8 billion on trip insurance in 2010, the latest figure available. That's an increase of more than a third since 2006.
Among Perry Golf customers buying a policy, Dalgleish estimates fewer than one in 20 ever need to file a claim. "But those who do," he adds, "are really thankful."
How do you decide whether to insure your trip? Total up your nonrefundable pre-payments--which, on a high-season trip to Scotland or Ireland might be nearly the entire cost--and imagine losing that sum. "If you can hear that you just lost the cost of your trip, then roll over and go back to sleep, you probably don't need insurance," Dalgleish says.
Trip-insurance policies come in many shapes and sizes. Some cover limited expenses (airfare, say), and others reimburse for lodging, lost or delayed golf clubs, tee times that go unused if a trip is interrupted or canceled, even emergency medical transportation.
The most expensive policies, selling for about 15 percent of a trip's cost, offer reimbursement when you cancel "for any reason." In other words, "I didn't feel like going" is a valid excuse to file a claim. More typically, trip-insurance policies have a finite, carefully worded list of "covered reasons" for trip cancellation or interruption.
Allianz's "Sporting Protector" policy, sold by some trip operators for 7 percent of a trip's cost, lists about 20 items, from illness, injury and death to jury duty. Yet it specifically excludes coverage for "expected or reasonably foreseeable events or problems." This mainly comes into play when people claim medical problems kept them from taking or completing a trip, says Daniel Durazo, an Allianz spokesman. So if you had an existing medical condition, you will probably get some resistance from your insurer if you claim it kept you from traveling.
A careful reading of the fine print, however painful it might be, will save you a lot of teeth-gnashing in the end. "These policies are not commodities," says Sam Baker, founder and CEO of tour operator Haversham & Baker Golfing Expeditions. He recalls some customers who had trouble getting refunds after September 11, even though planes around the world were grounded. More recently, "a number of people were mad as hell about not getting their money back after the volcano eruptions in Iceland."
Looking back on his reimbursement experience, "I wouldn't say it was easy," recalls Jack Callahan. In addition to filling out a handful of claims forms, he had to have his doctor attest that he was, in fact, injured. He figures the process took him eight to 10 weeks from beginning to end. But he's not complaining. The insurance company he used, Allianz, "was very good," he says. "They understood there was an injury and wanted to help. For a trip that cost that much, I would definitely do it again."
The price of a policy generally depends on how much coverage you want--and your age. Using the handy site InsureMyTrip.com, which carries insurance from 24 companies, I priced a cancellation/interruption policy from CSA Travel Protection (one of the bigger outfits) on a $5,000 trip to the United Kingdom. For a 33-year-old, it would cost $187. The same policy for a 63-year-old: $293.