How To Read The Fine Print


Some insurers call it the Description of Coverage, some call it the Evidence of Coverage, some call it the Certificate of Coverage and some may use any of these terms depending on your state of residence.  But whatever they call it it's the fine print. We're going to call it the Description of Coverage or DOC.

A very important concept to keep in mind is that travel insurance differs from the other insurance products you may have in place in one often overlooked way. Your car insurance and your homeowner's insurance typically have a "comprehensive coverage" feature. For example, your car insurance policy may not explicitly state that you're covered if your car is destroyed because it got hit by an asteroid but the "comprehensive coverage" feature will protect you anyway. Travel insurance is different. It's a "defined hazard" type of plan which means that unless a specific risk or hazard is specifically listed as a covered event, you're not covered. Many, if not most disputes arise because a traveler assumes that since the policy covers X, then they should cover Y and Z also. This type of reasoning will cause you nothing but grief at claim time. You have to read and understand the DOC and know that if some event is not listed as being covered, it's not. There's no "comprehensive coverage" feature to bail you out. Even the Cancel For Any Reasons usually have a time window in which the coverage will not apply.

These things are written by lawyers who are apparently not paid to format their output in a manner that's easily navigated and understood. The following is ONE sentence:
 

"Travel Delay: Benefits will be paid for reasonable accommodation, meal, and local transportation expenses incurred by You, up to the Maximum Benefit Amount shown in the Schedule of Benefits, if You are delayed for 8 hours or more while en route to or from, or during a Trip, due to: a) any delay of a Common Carrier (the delay must be certified by the Common Carrier); b) a traffic accident in which You or Your Traveling Companion are not directly involved (must be substantiated by a police report); c) lost or stolen passports, travel documents or money (must be substantiated by a police report); d) quarantine, hijacking, Strike, natural disaster, terrorism or riot; e) a documented weather condition preventing You from getting to the point of departure. "

 

Whew! Any other person would split up this same information something like this:
 

"Travel Delay: Benefits will be paid for reasonable accommodation, meal, and local transportation expenses incurred by You, up to the Maximum Benefit Amount shown in the Schedule of Benefits, if You are delayed for 8 hours or more while en route to or from, or during a Trip, due to:

a) any delay of a Common Carrier (the delay must be certified by the Common Carrier);

b) a traffic accident in which You or Your Traveling Companion are not directly involved (must be substantiated by a police report);

c) lost or stolen passports, travel documents or money (must be substantiated by a police report);

d) quarantine, hijacking, Strike, natural disaster, terrorism or riot;

e) a documented weather condition preventing You from getting to the point of departure."

 

That's much easier to comprehend. Don't be intimidated by the way the document is laid out. When reading the information minimize your confusion by splitting up these long sentences into more easily understood segments, either in your head or do what we did above -- copy and paste the information into a word processing document and add line/paragraph breaks.

There are some conventions that are common to almost all of these documents. In the example above you'll note some unusual capitalizations where there normally wouldn't be any in the middle of a sentence (some plans might bold these words or both). "You" and "Trip" and "Traveling Companion" and "Strike" and so forth. This is the lawyer waving a flag to tell you that those words have a specific meaning that can be found in the Definitions portion of the document. And that meaning may not match what you presume the meaning to be. Be sure to look up every one of these definitions to be sure. And don't assume that when you look at the next plan it will have the same definitions for those same words. Let's look at just one of those terms as defined by three different insurers:
 

"Traveling Companion" means a person or persons with whom You have coordinated Travel Arrangements and intend to travel with during the Trip."

"Traveling Companion : means person(s) booked to accompany You on Your Trip (to a maximum or four (4) persons including You). Note, a group or tour leader is not considered a Traveling Companion unless You are sharing room accommodations with the group or tour leader."

"Traveling Companion : means a person who accompanies You and shares accommodations with you on a Covered Trip."

 

 

How can this small variation in the definition affect you? Say are there six otherwise unrelated couples going on a cruise together. If one person in the group gets sick and has to cancel they all want the ability to cancel also. All three plans they're looking at allow the insured to cancel if a Traveling Companion becomes ill. If the traveler didn't check the definition of "Traveling Companion" when he reads the fine print and didn't notice that term was capitalized OR if he did read the definition for plan #1 and thought it would be the same for plan #2 and plan #3 he's in trouble.

Only the first example shown above will allow ALL of the six couples to cancel if someone gets sick. Plan #2 limits it to only four out of the twelve travelers in the group. Plan #3 doesn't let anyone but the sick person and his wife cancel because they're not sharing accommodations with the other ten.

Again, when you come across some non-standard capitalization or bolding of a term be sure to look up the plan's definition and when you start to research another plan be sure to do it again from scratch.

The DOC is generally going to be laid out to include the following for each specific plan benefit. For any specific coverage you're looking at you'll need to follow these steps

  • Read the coverage summary to find out what is covered.
  • Locate any words or terms that have specific definitions and find those definitions.
  • See if there are any exclusions listed for this specific plan benefit.
  • Read the General Exclusions that might apply to that coverage.
  • See if the plan has any state-specific exceptions that might apply.

Let's look at one plan and its Trip Cancellation coverage. You've booked the whole family into a Caribbean resort for a week. The problem is that your daughter has injured her leg during her high school soccer match just before you leave and the doctor says  you have to cancel the trip. Are you covered?

First you look at the Trip Cancellation benefit:

Trip Cancellation : Benefits will be paid, up to the Maximum Benefit Amount shown in the Schedule of Benefits, to cover You for the unused non-refundable prepaid expenses for Travel Arrangements, including up to $150 for the cost of airline-imposed fees to rebank frequent flyer miles for air flights to join Your Trip when You are prevented from taking Your Trip due to:

1. Death involving You or Your Traveling Companion or Your or Your Traveling Companion's Business Partner or Your Family Member;

2. A covered Sickness or Injury involving You, Your Traveling Companion or Business Partner, or Your Family Member which necessitates Medical Treatment at the time of cancellation and results in medically imposed restrictions, as certified by a Legally Qualified Physician, which prevents Your participation in the Trip; or

3. For the Other Covered Reasons listed below; provided such circumstances occurred after Your Effective Date.

 

Note the "Other Covered Reasons" (capitalized and bolded). They're telling you that you need to go to the plan's Definitions section to find out what else is covered by the Trip Cancellation benefit. But let's assume that at this point you're only worried about cancellations caused  by injury.

It looks like it's covered under (2) above.

But now you have to check for any exclusions that might apply and find this:

SECTION IV. General Limitations and Exclusions

Benefits are not payable for any loss due to, arising or resulting from:

1. suicide, attempted suicide or any intentionally self-inflicted injury while sane or insane (in Missouri, sane only);

2. an act of declared or undeclared war;

3. participating in maneuvers or training exercises of an armed service;

4. riding, driving or participating in races, or speed or endurance contests;

5. mountaineering (engaging in the sport of scaling mountains generally requiring the use of picks, ropes, or other special equipment);

6. participating as a member of a team in an organized sporting competition;

 

Now it looks like it's not covered. The policy (and thus these exclusions) went into effect months ago when you bought the policy so this exclusion applies.

State Exceptions

When an insurer develops a new plan it has to present the full plan document to each state's department of insurance for review and approval. If a state requests changes the insurer has three choices -- apply the necessary changes to purchasers from that state only, apply the changes to clients from every state, or simply refuse to accept clients from that state. It's uncommon that you'll see a plan available to residents of 49 states only but it does happen. The normal course of action is to amend the plan only for the residents of that one state and note these exceptions at the end of the DOC.

Let's look at one plan and its covered reasons for trip cancellation:

Trip Cancellation : Benefits will be paid, up to the Maximum Benefit Amount shown in the Schedule of Benefits, to cover You for the unused non-refundable prepaid expenses for Travel Arrangements, including up to $150 for the cost of airline-imposed fees to rebank frequent flyer miles for air flights to join Your Trip when You are prevented from taking Your Trip due to:

1. Death involving You or Your Traveling Companion or Your or Your Traveling Companion's Business Partner or Your Family Member;

2. A covered Sickness or Injury involving You, Your Traveling Companion or Business Partner, or Your Family Member which necessitates Medical Treatment at the time of cancellation and results in medically imposed restrictions, as certified by a Legally Qualified Physician, which prevents Your participation in the Trip; or

3. For the Other Covered Reasons listed below; provided such circumstances occurred after Your Effective Date.

Other Covered Reasons means :

a) You or Your Traveling Companion being hijacked, quarantined, required to serve on a jury (notice of jury duty must be received after Your Effective Date) served with a court order to appear as a witness in a legal action in which You or Your Traveling Companion is not a party (except law enforcement officers);

b) Your or Your Traveling Companion's principal place of residence or destination being rendered uninhabitable by fire, flood, burglary or other natural disaster within 10 days of departure;

c) Your or Your Traveling Companion's place of employment is rendered unsuitable for business due to fire, flood, burglary or other natural disaster and You and/or Your Traveling Companion are required to work as a result;

d) a documented theft of passports or visas;

e) a permanent transfer of employment of 250 miles or more;

f) You or Your Traveling Companion being directly involved in a traffic accident, which must be substantiated by a police report, while en route to Your scheduled point of departure;

g) unannounced Strike that causes complete cessation of services of Your Common Carrier for at least 12 consecutive hours;

h) Inclement Weather that causes complete cessation of services of Your Common Carrier for at least 12 consecutive hours;

i) mechanical breakdown that causes complete cessation of services of Your Common Carrier for at least 12 consecutive hours;

j) You or Your Traveling Companion is in the Military and called to emergency duty for a national disaster other than war;

k) involuntary employer termination or layoff affecting You or a person(s) sharing the same room with You during Your Trip. Employment must have been with the same employer for at least 1 continuous year;

l) a Terrorist Incident that occurs in a city listed on the itinerary of Your Trip and within 30 days prior to Your Scheduled Departure Date. Benefits are not provided if the Travel Supplier offers a substitute itinerary;

m) revocation of Your previously granted leave or re-assignment due to war. Official written revocation/re-assignment by a supervisor or commanding officer of the appropriate branch of service will be required;

n) Bankruptcy or Default of an airline, cruise line, tour operator or travel supplier (other than the tour operator or travel agency from whom You purchased Your Travel Arrangements) causing a complete cessation of travel services more than 14 days following Your Effective Date. Benefits will be paid due to Bankruptcy or Default of an airline only if no alternate transportation is available. If alternate transportation is available, benefits will be limited to the change fee charged to allow You to transfer to another airline in order to get to Your intended destination. This benefit only applies if the policy has been purchased within 21 days of Your initial payment for the Trip and for the full cost of the Trip;

o) Your family or friends living abroad with whom You were planning to stay are unable to provide accommodations due to life threatening illness, life threatening injury or death of one of them;

p) You or Your Traveling Companion are required to work during the Trip. A written statement by a company officer and/or the Human Resources department demonstrating revocation of previously approved time off will be required;

q) mandatory evacuation or public official evacuation advisements where there is no mandatory evacuation issued by local government authorities at Your destination due to adverse weather or natural disaster. In order to cancel Your Trip, You must have 4 days or 50% of Your total Trip length or less remaining on Your Trip at the time the mandatory evacuation ends;

r) felonious assault of You or Your Traveling Companion within 10 days of the Scheduled Departure Date;

s) You or Your Traveling Companion are directly involved in the merger of Your employer or the acquisition of Your employer by another company;

t) a cancellation of Your Trip within 24 hours of Your Scheduled Departure Date and time if Your Trip destination is under a hurricane warning issued by the NOAA National Hurricane Center, provided the cancellation of Your Trip occurs more than 15 days following Your Effective Date of coverage for the Trip Cancellation Benefits;

u) a cancellation of Your Trip if Your arrival on the Trip is delayed and causes You to lose 50% or more of the scheduled Trip duration due to the reasons covered under the Missed Connection Benefit.

 

You're a California resident and go online, read through these covered reasons and buy your policy. Your covered reasons for trip cancellation will be exactly as listed above. But what if you're a resident of the State of Washington and you didn't take the time to also review the WA State exceptions tucked in at the bottom of the plan document? You could have a real shock if you have to cancel your trip. Here's some of the WA State exceptions:

 

Under Trip Cancellation & Trip Interruption, the following Other Covered Reasons are deleted:

c. You or Your Traveling Companion's place of employment is rendered unsuitable for business due to fire, flood, burglary or other natural disaster and You or Your Traveling Companion is required to work as a result; d. a documented theft of passports or visas;

e. a permanent transfer of employment of 250 miles or more;

i. mechanical breakdown that causes complete cessation of services of Your Common Carrier for at least 12 consecutive hours;

m. Revocation of Your previously granted leave or reassignment due to war. Official written revocation/reassignment by a supervisor or commanding officer of the appropriate branch of service will be required;

n. Your family or friends living abroad with whom You were planning to stay are unable to provide accommodations due to life threatening illness, life threatening injury or death of one of them.

 

The state of Washington has decided that those six coverage are to be deleted and they will not apply to residents of that state. Not only that, for these coverages
 

h) Inclement Weather that causes complete cessation of services of Your Common Carrier for at least 12 consecutive hours;

i) mechanical breakdown that causes complete cessation of services of Your Common Carrier for at least 12 consecutive hours;

 

the times needed to qualify for the benefit are changed from 12 hours to 48 hours -- a much less consumer-friendly time frame.

Under the Missed Connection coverage section c) is entirely removed.

Missed Connection: If You miss Your cruise or tour departure because Your arrival at Your Trip destination is delayed for 3 or more hours, benefits will be paid, on a one-time basis, up to the Maximum Benefit Amount, for a) the Additional Transportation Cost to join the Trip and b) the unused portion of the prepaid expenses for land or water Travel Arrangements, due to:

a) any delay of a Common Carrier (the delay must be certified by the Common Carrier);

b) a documented weather condition preventing You from getting to the point of departure;

c) quarantine, hijacking, Strike, natural disaster, terrorism or riot.

 

Plus, the "look back period" for the pre-existing medical condition exclusion is extended from 60 days to 180 days -- again, much less consumer-friendly.

The State of Washington has also decided that:

"Under Medical Evacuation and Return of Mortal Remains, the following sections are deleted in their entirety: Section 2. For Non-Emergency Medical Evacuation; and Hospital of Choice. "

 

So no more "non-emergency medical evacuation" benefit and no more "hospital of choice" benefit.

This plan has been gutted of many important coverages. And a traveler who didn't take the time to read the FULL description of coverage may find he's out of luck later on when it's time to file a claim. Not only that, he didn't even get a break on the premium -- he's paying the same as that traveler from California who's getting all of the benefits the insurer has intended.

If you do not read ALL of the information available to you prior to purchasing your policy you're rolling the dice on your coverage. This means reading and understanding the summary of coverages, the plan definitions, general and specific exclusions, and any additional exclusions or changes that might be buried in the state exceptions. You only chance to get this right is before you buy.



travel insurance basics