6 tips to avoid travel insurance scams
Insurance or not, how do you avoid buying a policy that can’t — or won’t — cover you? Here are six questions to ask before signing on the dotted line.
1. What do they call it?
The name of the plan can be a giveaway. Is it a “protection” plan or a “travel insurance” plan? There’s an important difference. Insurance is regulated by your state, according to Steve Dasseos, president of TripInsuranceStore. Trip protection isn’t. A clever travel agent may refer to a protection policy as “insurance” but the contract will tell you otherwise. “The phrase ‘travel insurance’ is tossed around, making it sound like every type of protection plan is a real insurance plan,” he says. It isn’t.
2. Is it backed by a legitimate underwriter?
Real travel insurance companies are backed by one or more regulated underwriters that are insured and financially healthy, says Bob Chambers, the director of operations for CSA Travel Protection. “Check the A.M. Best Website to see current ratings for a provider.” (A.M. Best (http://www.ambest.com/) is a worldwide insurance rating and information agency, and any reputable travel insurance underwriter will be rated by it. (If it’s not, walk away.)
Also, check the U.S. Travel Insurance Association Web (http://www.ustia.org/) site to see if the company is a member. USTIA has strict legal and ethical standards of conduct.
3. Have you shopped around?
Don’t take the first policy that’s offered. And that’s particularly true of the one-click come-ons that you’ll find when you book a trip online.
Instead, take the time to thoroughly review your options and consult with someone you trust. “In my opinion, it is always best to work with a travel professional — and you should seek and respect that person’s opinion,” says Guido Adelfio, president of Bethesda Travel Center, a travel agency in Bethesda, Maryland. In other words, do your due diligence on the agent you’re working with, too.
4. Is it being sold by a licensed agent?
It isn’t just important for your insurance policy to be legitimate, but also your travel agent. “If you’re unsure about the agent you’re working with, stop before signing any paperwork or writing a check,” says Michael McRaith, the property and casualty committee chairman for the National Association of Insurance Commissioners. “Call your state insurance department, which is easily reached by phone, and confirm the agent is legitimate and licensed to do business in your state.” You can get more information on reaching your state insurance commissioner at the NAIC Website.
5. Did you read the policy?
Review the policy carefully before you buy. Don’t take someone else’s word for what’s in it. When it’s time to make a claim, verbal promises are meaningless. “Most travel insurance policies provide a grace period during which you can review and return for a refund if you choose to cancel the policy,” says Bradley Finkle, past president of the U.S. Travel Insurance Association. “If you have questions, travel insurance companies typically offer a customer service number to help answer questions.”
6. Are you aware of any tricky clauses?
Even if your license is backed by a quality underwriter and checks out, it may still be worthless to you. Why? Because of the clauses in your contract that are easily glossed over when you’re buying. The biggest snag is for pre-existing medical conditions. “If you have a pre-existing condition or health problem of any sort, make sure the policy covers you for that condition,” says John Wagner, the director of products and services management for Blue Cross Blue Shield of Florida. “No insurance policy will cover you for all possible events and eventualities,” he adds.
What if it’s too late and you’re stuck with a fake policy? You have a few options. Mark Cipolletti, a vice president at insurance provider Mondial Assistance, says you should contact authorities immediately. “Call the Department of Insurance in your home state to report the problem,” he says.
If you bought your policy through an agent, report it to the appropriate state regulatory agency. Let the Federal Trade Commission (http://www.ftc.gov/) know about your problem, too. You can file a report online, by e-mailing crcmessages(at)ftc.gov or by phoning (877) FTC-HELP.
A dispute of your credit card charges or a trip to small claims court could help recover some or all of your money, but that’s not an ideal solution. “It is much better to check everything up front than to try to untangle problems after the fact,” says Bill Hardy, director of AAA Insurance Services.