Eye on Travel Insurance » Q&A

by Wayne Wirtanen

Following are some ITN readers’ letters and inquiries that I have received recently regarding travel insurance. The first came from Judie Kesson of Coronado, California:

“As longtime subscribers and sometime contributors, my husband, Ken, and I want to report back on our very positive experience with Divers Alert Network, or DAN (Durham, NC; 800/446-2671, www.diversalert network.org), insurance.

“With the increasingly high premiums for travel insurance, and with age restrictions, which apply to us, we were very interested when DAN was described in an article several years ago. Neither of us is a diver (I won’t even put my face underwater), but after carefully reviewing the information ourselves and with our savvy friend, Nell McCombs, another ITN reader, we decided to buy the Membership and Preferred Plan dive insurance family package for less than $200 per year.

“We were covered for emergency medical evacuation and for $10,000 nondive accident and injury coverage outside of our home country.

“One hopes to never ‘test’ insurance; however, we found ourselves in that unfortunate situation while on a trip to Myanmar and then Bangkok, Feb. 25-March 25, 2007. When Ken was hospitalized in Bangkok on the 24th (en route from Myanmar), our trip was extended to April 12.

“DAN provided great moral support, paid for the residence/hotel attached to the hospital where we had to stay for an additional 10 days before the doctors would okay Ken for travel, paid the difference in our flights home (business class) and paid for our transportation from Los Angeles to our home in Vista (San Diego County).

“The policy actually states that they would pay ‘$200 per day, up to $3,000,’ for accommodations for an interrupted trip. Had it been a diving injury, they would have paid for the hospital bills.

“The bottom line is that DAN did all that they promised and, more importantly, gave personal, caring attention when Ken was hospitalized in Bangkok. They even called after we returned home.

“By the way, hospitalization in Bangkok at Bumrungrad International Hospital was an incredibly positive experience, with well-trained medical staff and reasonable costs, but that’s another story.

“DAN does not pay nondiver-related medical bills for illness but will get you to the nearest medical facility and, in some cases (as in ours), home. It will also help you defray costs of an extended stay beyond your original ticketing. We are very impressed still.”

In addition to the option utilized by the Kessons (DAN covered their evacuation services but not the nonaccident medical expenses, which were considerable), here are four more options for travelers who are on Medicare or do not have medical coverage overseas. These options cover not only accidents but all medical emergencies.

1) “Medigap” policies, supplied by any insurance company, are required to have near-identical features and coverages. Designated by letters (A, B, C, D, E, etc.), those policies have increasing coverages and higher costs as the designations go up the alphabetical ladder. From the letter F and up, those policies will pay for overseas medical expenses on the following schedule.

After a calendar year’s deductible of $250, they will pay “80% of the billed charges or Medicare Eligible Expenses”; “Medically necessary Emergency Care must occur during the first sixty (60) consecutive days of each trip outside the United States,” and “The lifetime maximum payment is $50,000.”

This type of coverage does not include emergency medical evacuation services, but it does prevent medical expenses from becoming catastrophic. If you have this level of Medigap coverage, add DAN’s evacuation-only service (as I do — one year’s protection for a family is only $44) and you will be pretty well covered for overseas medical emergencies.

2) For those who travel overseas frequently, there is an annual policy called Travelgap Multi-trip offered by HTH Worldwide (available from Dan Drennan; 866/979-6753 or 402/343-3621, dan@travelinsurance center.com). This policy offers generous accident and medical benefits and also emergency medical evacuation services. The costs start at $259 for a family age 50 and under and $279 for a family 51 to 84. You can read the fine print on the website www.world travelcenter.com/eng/library/tg_multi/HTH_MT_Gpld.pdf.

This policy does not exclude preexisting conditions. This policy is not available to residents of the following states: CO, ID, LA, MD, MA, MN, NH, NY, OR or SD.

3) Travelex Insurance Services still offers the waiver of preexisting conditions for individual trips if you buy the insurance within 21 days of making your first trip payment. A $500,000 maximum medical coverage plan would cost a couple ages 71 to 75 $140 for a 31-day trip. The Internet link is www.world travelcenter.com/eng/information/cm_quote.cfm?line=tx_travel.

The little-known (and acceptable) trick is, when asked to indicate the cost of the trip, type in “0” (zero). That way, you will have eliminated the relatively expensive cost of cancellation/interruption coverage and you will retain the remaining coverages such as medical expenses, evacuation, etc.

4) STA Travel (7970 S. Hardy St., Ste. 110, Tempe, AZ 85284; 800/777-0112, www.statravel) offers an inexpensive, good-quality, full-coverage (including trip cancellation/interruption) travel insurance policy. There’s no upper age limit and no preexisting-condition clause.

For a trip lasting 16 to 21 days, the cost is only $100. Check out their website or see my April 2006 article on page 52 (note contact info correction, June ’06, pg. 90) or send $2 to me at 4341 Shangri-la, Placerville, CA 95667, for a photocopy.

The next two letters are related in topic, so my comments follow the second letter. First comes this one from Nancy Leake of Bella Vista, Arkansas:

“We are scheduled to be on a Grand Circle Travel barge trip in France this fall. We have their insurance for that trip, however we are going to do a ‘break away’ with them, which means when our tour ends in Paris we will travel on our own, returning up to 30 days from the time our trip started, and we must leave from Paris. The total length of our trip will be 30 days.

“Here is the question. Our plan for the ‘break away’ is to spend seven days in a flat in London and then seven days in a flat in Paris, then return home. The flats are expensive, around $4,000 each per week. If for some reason we are not able to use the flats, there is nothing refunded. Would there be any type of travel insurance we might use to cover this risk?”

And from Pat Kane of Kentfield, California. . .

“I have a problem which doesn’t seem to be addressed in any article. It’s about house rentals. I am renting a house in Kauai through what I hope is a reputable agency. They do not accept charge cards, only checks. I had to put a rather large deposit down a year ahead of time, with the balance due 60 days before arrival.

“I have always been able to pay for such rentals with charge cards and I feel very vulnerable paying by check. Is there any insurance company or insurance that covers a vacation rental rather than a cruise, tour, etc? I will look further into the company when I get there, but in the meantime they could go bankrupt or whatever and I would have no recourse except small-claims court. The rental payment was hefty, for me, $5,000.”

For both Nancy Leake and Pat Kane there is a travel insurance solution. The following two hazards, faced by Nancy and Pat, are the ones most likely to cause anyone a loss of prepaid vacation rental accommodation costs.

1) Bankruptcy of a supplier. Travel insurance will protect you from loss due to bankruptcy if you are renting vacation accommodations through an agent but not if you are dealing with an owner renting the accommodations to you directly.

Plans offered by the travel insurance companies Travel Guard and Travelex offer full cancellation benefits for this type of hazard. These standard travel insurance policies would cover both Nancy Leake’s and Pat Kane’s situations. If you need this type of protection, contact Dan Drennan (see above) for access to an appropriate policy.

2) Health-related problems. If you have to cancel because of some illness of yours or an immediate family member or because of one of the other designated “causes for cancellation” that are spelled out in a travel insurance policy, you will be covered for your loss. (That is, you will be covered if you do not run afoul of a preexisting-condition clause. Preexisting-condition clauses are generally waived only if the insurance is purchased in a specific period, typically within 14 days of the first deposit on a trip.)

The above travel insurance coverages should give some economical peace of mind in situations such as the two described above.

Elise and Bernard Zazula of New Fairfield, Connecticut, sent in the following:

“I would take exception to your statement (April ’07, pg. 52) that it is not necessary to read the fine print of a travel insurance policy if it is purchased from a reputable provider. There are two items that must be checked: 1) When do the various provisions of the policy become effective? 2) Are preexisting conditions covered and how are they defined? These items vary even among reputable providers and could be important to travelers with chronic medical problems or who have family members with medical problems.”

The article of mine referred to by the Zazulas did not say that “. . . it is not necessary to read the fine print of a travel insurance policy if it is purchased from a reputable provider.” The article said, “If you choose to not read the fine print of a travel insurance policy, make sure that you are buying it from a reputable travel insurance provider.”

I always urge travelers to read the fine print of their policies, especially if there is a health-related issue that might affect a trip. The primary message of the article was how to avoid a troubled travel insurance provider such as Trip Assured.

Linden N. Cole of Wheaton, Illinois, had these questions for me:

“I appreciate your excellent column on travel insurance. Forgive me for pointing out a mistake in the April 2007 edition (pg. 51). Emergency medical evacuation coverage, contrary to your statement, is definitely insurance. The facts that the coverage provides only transportation and that it may not be subject to regulation are irrelevant as to whether or not it is insurance.

“What makes something insurance? It happens when a risk pool is created to cover the cost of an event which might or might not happen to any individual but which will cause a lot of expense if it does happen. A lot of people each chip in a small amount into the risk pool, and the risk pool covers the heavy cost for those few people who get hit by the event.

“Is emergency medical evacuation coverage insurance? Of course, it is! Medical evacuation is a very expensive proposition. It is not likely to be needed by the vast majority of us travelers, but there is always the small possibility of one of us needing it after all. That’s what ‘insurance’ is all about.”

I agree with Mr. Cole completely regarding the generally accepted definition of insurance as sharing risk through the use of risk pools and, of course, sharing the benefits of those risk pools. The reasons for my defining individual suppliers of emergency medical evacuation as supplying a service, rather than insurance, were twofold.

1) State insurance regulatory agencies have strict rules defining “insurance” and strict rules that control the providing and selling of insurance to the public. These state agencies universally (as far as I am aware) do not define companies that provide emergency medical evacuations as insurance companies/providers.

2) Companies that provide emergency medical evacuations choose to describe themselves as providing a service (rather than insurance), probably to avoid regulations that would apply to insurance providers.

Some final remarks

Let me reemphasize the advantage of getting travel insurance coverage that does not have preexisting-medical-condition exclusions or that will waive them if the insurance is purchased within a designated number of days after making the first trip deposit.

Following is advice from travel insurance broker Dan Drennen: “If you are considering an international medical insurance plan such as the ones offered by International Medical Group (IMG), Seven Corners (formerly SRI) or Multi National Underwriters (MNUI), all very reputable international providers, just be aware that these plans do have limited benefits for U.S. citizens in the event of an acute onset of a preexisting condition. The policy benefit promised may be $50,000 to $1,000,000 of medical insurance coverage, but the preexisting-conditions benefit may be as little as $2,500 to $25,000 or, in some cases, $0.00 if your age is 70 or older.”

“Many international medical insurance plans have a 2- to 3-year look-back period for preexisting conditions. Anything a person may be taking as a maintenance drug, like hypertension medication, is considered to be preexisting. . . so be aware that, if you have a heart attack during your trip (God forbid), your coverage with those types of plans is very limited.

“Even if you had a heart attack 10 years ago and only take one aspirin per day per doctor’s orders, it is considered treatment. If preexisting conditions are of concern to you, you will be better served by a Travel Protection Package that offers a waiver of preexisting conditions and does not limit the stated medical insurance, should something occur. Also, claims for reimbursement of travel losses are much easier and faster to process if the paperwork required by a preexisting condition does not have to be dealt with.”

Wayne’s recommended minimum for overseas travelers

The minimum that I recommend for being prepared for medical emergencies overseas is to have health/accident coverage and emergency medical evacuation coverage plus a generous stash of cash in money belts and two credit cards with large available balances.

(I recommend taking two credit cards if you intend to rent a car overseas. Some rental companies will put a hold on your credit card for the full value of the car, in case of serious damage or complete loss. Not knowing this, you could charge something that would exceed your card’s limit. Charging beyond your card’s limit is a criminal offense in some countries!)

Happy trails!