Is this fair? They saved $74, but they lost $10,074

They missed Italy and lost their vacation. / Photo by Ryan Wood - Flickr.
Question: I’m writing on behalf of two friends who booked a trip of a lifetime to Italy recently. They also purchased trip insurance through Access America. A couple days after paying for the insurance, they found out that the husband had to have hip replacement surgery. It was a situation that became chronic within a couple of days.

The entire cost of the trip was $10,074. However, they didn’t read all of the fine print in the terms and conditions and didn’t realize that no refund would be available to them for cancellation due to a pre-existing condition because they didn’t purchase insurance on the full cost of the trip — only $10,000 of the trip.

I find it very disturbing that a couple who has worked so hard for their money, and purchased a trip in good faith, along with travel insurance, could find themselves in this predicament. Not all consumers are as computer savvy as others and they would never have purchased insurance for less than the full amount of the trip if they knew it voided the provisions for cancellation due to a pre-existing condition.

They saved $74, but they lost more than $10,000.

Personally, as a consumer, I find this practice revolting and would appreciate any suggestions you could offer. — Jennifer Chilton, High Point, NC

Answer: You’re right, this is a frustrating case, and I can certainly understand your anger. Basically, Access America is denying your friends’ coverage because they didn’t insure the full value of their trip.

I had a lengthy conversation with the company about your friends. According to the terms of their coverage, they had to buy their insurance within 14 days of making their first trip payment or deposit and had to purchase trip cancellation coverage for the full cost of their nonrefundable trip arrangements. In addition, they had to be a U.S. resident and medically able to travel on the day they purchased their insurance.

Your friends met all but one of those criteria: They failed to insure the full cost of their nonrefundable trip arrangements.

“It’s important for customers who need existing medical condition coverage to understand and meet the terms for this very valuable benefit,” a company spokesman told me.

Would an insurance company deny you $10,074 in coverage because you tried to save a buck or two on your policy? You bet. Is it ridiculous? If you’re a traveler, you bet. If you’re an insurance underwriter, maybe not.

Look, at the risk of repeating myself, you need to read the fine print carefully when you book travel — but especially when you buy travel insurance. I understand when you say not all consumers are as computer savvy, but if you’re not sure of something, you need to find a travel agent to help you or ask a family member who is computer savvy to review the fine print online.

Access America decided to “make a consideration in this case” and will honor your friends’ claim.

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  • Sadie_Cee

    Reading, yes, but understanding?  I wonder.  Reading and comprehension are two separate and distinct skills.  There is absolutely no guarantee that a person having read the insurance contract will understand the import of all the terms and conditions.  Adults who know their limitations should not be ashamed to seek help.

  • 46Shasta19

    I am very impressed with Access America!  They did not have to cover this couple…

  • 46Shasta19

    I also wonder if ‘Obama Care’ will include travel insurance companies? I sure hope so!

  • http://pulse.yahoo.com/_OEPJGQPIEB75YYDE5CJY6R3VFE Carver Clark Farrow II

    If insurance has to be booked in $500 increments then the additional $74 would cost approximately $30.  Still a pittance

  • http://pulse.yahoo.com/_OEPJGQPIEB75YYDE5CJY6R3VFE Carver Clark Farrow II

    I agree.  I see no reason to require an intangible product such as insurance to be purchased in lots except as a money grab by the insurance companies.  Perhaps someone can shed some light on that.

  • http://pulse.yahoo.com/_OEPJGQPIEB75YYDE5CJY6R3VFE Carver Clark Farrow II

    You need to read the article carefully, especially if you throw around words like stupid.   Had they insured the for the full $10074, they would have been covered for the pre-existing condition.

  • cahdot

    all of these insurances are scams… all u need is insurance for trip disruption because of illness or death  as the airlines take care of flight mishaps.//lost luggage etc and so coverage is not needed for those other issues but u must buy it alll that sucks

  • bodega3

    Or you don’t buy it at all.

    Distruption isn’t the same as canceling prior to departure.  Understanding the terminology is important.  I am not a fan of insureance of any kind as it bases the purchase on fear of something happening.  However, it you take out any insurance, do your homework, by reading, calling, researching the company.  Base you decision on more than just price.

  • Jeanne_in_NE

    Sorry, your analogy to full replacement cost insurance coverage/premiums  on home insurance isn’t quite correct.  You have to insure to full value in order for replacement cost to work properly.  There should be a section in your policy on “How we settle a property loss” or similar wording.  Claims are paid at Actual Cash Value (read the definition of ACV early on in the policy) unless actually repaired or replaced (in one paragraph) AND you have insured “your dwelling to 100% of its replacement cost based on the accuracy of the information you furnished in the completion of our home replacement cost estimator” (in another paragraph).  Wording is from my policy, but is very similar on all standard home insurance policies.  On standard policies, the amount paid will be a % of what you insured your home for compared to the amount you should have insured your home.  High end policies often waive that penalty, but limit your recovery to ACV, not replacement cost.

    In Nebraska and some other states, if you have a total loss by fire, wind, tornado, hailstorm or lightning, you get the face value of the policy, no ifs, ands nor buts.  Of course, what you consider a total loss and what the insurance company considers a total loss are two different things . . .

    I used to sell and service property and casualty insurance for 20 years and received industry accreditation, so I’m pretty knowlegeable on this topic.  The weird wording in travel insurance isn’t my forte.  That’s why these articles by Chris have caught my attention. 

  • Rosered7033

    Hence the problem, Sadie…some don’t KNOW they don’t know.

  • jackfile

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  • http://pulse.yahoo.com/_HMW3OTJSBDWWRKIEKEKWWM7BEA bc

    Thanks for sharing!

  • http://www.toptraveldestinationdeals.com/ subra mani

     Its very unfair that they saved only small amount and lost huge amount

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