By Kelli B. Grant
A century after the Titanic, ships still aren’t unsinkable. But travelers now have new ways of protecting themselves from icebergs or their equivalents – at least financially.
Travel insurance dates back to at least 1864, when Hartford, Conn.-based Travelers Insurance Company opened its doors promising financial protection from “loss of life or personal injury while journeying by railway or steamboat.” (A Travelers spokeswoman says the company does not currently offer travelers insurance. No word on what a Titanic-era insurance policy cost or covered.) Industry experts say attention and interest didn’t really pick up, however, until after the September 11th terrorist attacks. (Travelers did not immediately respond to a request for comment about what a Titanic-era insurance policy cost or covered.)
These days, such policies cover cancellation, medical costs and medical evacuation, as well as accidental death or dismemberment. Insurers typically also pledge to offer round-the-clock assistance in an emergency, helping travelers find doctors, replace passports, contact family members, and make new travel arrangements, says Linda Kundell, spokeswoman for the U.S. Travel Insurance Association, a trade group. The average price tag for a policy: 4% to 7% of the cost of the trip. Some accidental death and dismemberment benefits also come standard with premium credit cards – although ironically, it should be noted, the cards often cover flight disasters only, not cruises.
Worried travelers should also know that travel insurance policies vary widely in what they cover, experts say. For example, coverage for accidental death or to be reimbursed for personal items lost in an emergency situation isn’t always included, says Michael Barry, a spokesman for the Insurance Information Institute. Medical insurance and medical evacuation may be capped at $50,000 or $100,000, which may not be enough for say, an airlift out of a remote region or recovery from a serious injury or illness. (In either case, extra coverage is often available for a fee, he says.) And those who want the option to cancel a trip because they’re afraid something might happen will need to pay for a more expensive “cancel for any reason” policy that can add 50% to premium costs, says Kundell. Experts suggest comparing the prices and terms of several policies to find the right combination.
That extra coverage isn’t necessarily worth the price, either, says Barry. Consumers who already have a life insurance policy probably wouldn’t see any extra payout from a travel insurance policy’s accidental death coverage. “That would be duplicative,” he says. And consumers may find that free credit card benefits cover similar territory. Visa Signature, for example, offers cardholders $250,000 in accidental death and dismemberment payouts for travel arrangements paid for with the card. World MasterCard covers medical expenses and evacuation up to $25,000, and some Discover cards will reimburse travelers for up to $2,500 in personal effects from a lost bag. Like insurers, most credit card issuers also offer 24-hour hotlines for assistance in an emergency.
Of course, travel insurance wouldn’t have prevented the Titanic’s fateful iceberg brush any more than it prevented more modern disasters such as the 2010 volcanic eruptions in Iceland and the Costa Concordia shipwreck earlier this year. “Having the right coverage can help out, when things go wrong,” says Barry.