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Carnival Cruise Debacle Drives Home Importance of Trip Insurance

By Adam Kosloff

The widely publicized ordeal of passengers on Carnival Cruise Lines’ Splendor ship vividly reminded travelers how carefully planned vacations can go awry. All 4,500 passengers stranded on the Splendor without power, hot water or air conditioning will get a complete refund and a 25 percent discount on a future cruise, according to a Carnival news release.

Unfortunately, for many travelers, ruined vacations go entirely uncompensated. How can consumers protect themselves against last-minute cancellations, illnesses, loss of accommodations, emergency treatment and evacuation?

Trip insurance, also called travel insurance, can be a solution.

According to the U.S. Travel Insurance Association (USTIA), about 120 million Americans bought travel insurance in 2008. All told, they spent $1.6 billion, the lion’s share 90 percent) going to cancellation-interruption insurance. Medical and medical evacuation coverage got 5.5 percent of the U.S. travel insurance budget.

USTIA President Mike Ambrose discussed the benefits of trip insurance in a 2009 news release.

“Just like buying a plane ticket, purchasing travel insurance for protection and peace of mind should become second nature when you make your travel plans,” he said.

So where can you get adequate protection for a fair price? USTIA recommends buying only from reputable companies, such as insurers who boast good ratings from A.M. Best and the Better Business Bureau. Members of USTIA must adhere to strict legal and ethical guidelines. The American Society of Travel Associates ASTA) also maintains a list of credible agents who can help you explore options.

What coverage should you buy? The answer depends on myriad factors, from the nature of your trip, to potential medical needs, to your own risk sensitivities. USTIA advises travelers to avoid relying solely on extended protection from home insurance policies which sometimes cover theft during travel) or credit card protection.

Read your policy carefully, and be mindful of distinctions. For instance, a so-called “travel waiver” is not the same thing as “travel insurance.” A waiver simply guarantees that a company will credit you in the event of a problem, such as a cruise cancellation. Travel insurance, on the other hand, is coverage that a legitimate insurer underwrites and that is regulated by the state where you buy it.

To assess your trip insurance needs, ask questions such as:

  • What scenarios could throw my travel plans off track?
  • Will I or my traveling companion potentially need medical help?
  • Am I traveling to a dangerous area?
  • Am I bringing valuable belongings, such as expensive jewelry?
  • If I get sick, will I need to cancel the trip?

Restrictions apply to these policies, so read the fine print and talk to your travel agent. For example, if a natural disaster such as an earthquake or typhoon strikes while you’re abroad, will your insurance provide coverage? Or will you get compensated only if your travel company is at fault for a cancellation or shortening of the trip?

Do you do have a pre-existing medical condition? Some insurers will provide coverage. But your medical problem may make policy-buying more complicated, so give yourself extra time to investigate options.

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