CSA Travel Protection’s Web site promises that its policyholders can “travel with confidence,” so when Norma Tarrow’s flight from New York to San Francisco was canceled after the recent Asiana Airlines crash landing, she felt protected, she says.
But she wasn’t, at least not in the way she thought. When she filed a claim for the $565 she had to pay for a new flight when her trip was interrupted, her insurance company turned her down, saying that the flight cancellation wasn’t a “covered reason” under her policy.
Her request didn’t seem unreasonable to Tarrow. She was in a wheelchair recovering from surgery when the aviation disaster left her stranded in a JFK terminal. Her airline told her that the soonest it could fly her home was two days later, so she asked her son to book a ticket to San Jose on another airline. If ever there were a time to invoke insurance, it was then.
“They weaseled out of paying a claim,” says Tarrow, a retired college professor who lives in San Mateo, Calif.
A new study by the Washington-based advocacy group National Consumers League (NCL) suggests that the travel insurance industry profits from customers like Tarrow by using misleading language to lure them into buying a policy, including making broad promises of traveling with “peace of mind,” but denying too many claims based on the fine print.
It’s particularly critical of the airline industry, which it claims enjoys a symbiotic relationship with travel insurers, making hefty commissions on the sale of useless policies. “Gouging consumers whose plans change because of a family illness or other unforeseen events is not a good business model,” says Sally Greenberg, NCL’s executive director.
CSA said that it didn’t do that when it denied Tarrow’s claim. In a letter explaining its decision, it said that her $788 policy, which had insured a European riverboat cruise she’d just taken, “only provides benefits if your loss is caused by an event listed in your description of coverage,” which included cancellations resulting from inclement weather, a labor strike or the mechanical breakdown of an aircraft on which the insured is scheduled to travel. “The reason for your loss does not meet the terms of the policy,” a representative noted.
This gap between a traveler’s expectation and the realities of travel insurance is hardly new. But the NCL’s conclusion that the chasm appears to be widening at the expense of the traveler is noteworthy.
The study says that while overall travel insurance sales are rising, surging 46 percent between 2006 and 2012 to $1.9 billion, so are airline change fees. The domestic airline industry collected more than $2.5 billion in cancellation and change fees last year, up 176 percent from 2007, according to the Department of Transportation.
Air travelers are left with two options to avoid a $200 ticket change fee: book a refundable ticket (the cheapest costs 350 percent more on average than the cheapest nonrefundable ticket, according to NCL’s research) or buy travel insurance. These policies are often sold online under high-pressure conditions, at the conclusion of an airline reservation and without adequate notification of the coverage terms, according to NCL. As a result, complaints about denied insurance claims for airline tickets are common, it says.