|Figuring out your insurable trip cost can be complicated. Here are four of my (Steve) many helpful blog posts:
What are Prepaid, Non-refundable Trip Costs?
Your insurable trip costs are your prepaid, non-refundable costs. “How much money would you lose cancelling your trip if you got hit by a cement truck at the last minute?”
Here are some common non-refundable costs you will forfeit if you were forced to cancel your trip at the last minute:
- All payments, including deposits, for your travel arrangements
- Pre-arranged transportation (ever tried getting to JFK?)
- Non-Credit Tuition for a class you’re taking (e.g., a cooking class in France). The cost of tuition if taken for college credit and / or part of a Study Abroad program is not insurable.
- The rent on the property you’re staying in (e.g., the Italian villa or Florida condo). It doesn’t matter if you are renting from a private party or a business. What does matter is that the rental agreement must have a penalty schedule showing your cancellation penalties.
- Theater tickets, event tickets, Disneyworld passes, etc.
- Non-refundable airline tickets
More about airline tickets: Changeable does not equal refundable. Refundable means that if you cancel you will get 100% of your money back in cash – not credits or vouchers.
Q. Can you just divide your total trip cost by the number of travelers and use the average trip cost to price the travel insurance and still be fully covered for all prepaid trip costs if you have to make a claim?
A. With four exceptions, CSA Freestyle, Freestyle Luxe, CSA Custom and CSA Custom Luxe, the answer is “No”. All other plans use a per person trip cost to price their plans. If you under-insure your trip costs you will end up getting a lot less than you expect when you have a claim. Plus, you will probably unintentionally void your Pre-Existing Medical Conditions and Cancel For Any Reason coverage.
Adding to the confusion, CSA Freestyle & CSA Freestyle Luxe plans let you buy their plan based on the average per person trip cost (Total Trip cost divided by the number of travelers) even though they use the per person trip costs to arrive at their price.
Q. Why is it important to know changeable does not equal refundable?
A. Because if you are thinking you’ll just insure the change fee and not the entire cost you paid for the ticket, you may forfeit any plan benefits associated with having to insure the full non-refundable prepaid trip cost. The main impact would be to the Trip Cancellation / Interruption Benefits of the Waiver of the Pre Existing Medical Condition Exclusion and the Cancel For Any Reason option.
With many plans, if they say that you must insure all non-refundable travel arrangements that are subject to penalties they mean just that: non-refundable or subject to penalties. It makes no difference even if the ticket is changeable with a fee. It’s still non-refundable and it must be insured.
Q. Are Frequent Flyer Miles, Credit Card Rewards and Other Free Travel Awards Covered?
A. Since this is a complicated answer, click here to see all the details.
Q. Do Cruise Line Port Charges or Taxes need to be insured?
A. I myself (Steve) started a thread on Cruise Critic in January 2010 asking specifically if cruise lines’ Port Charges or Taxes are refundable. I received dozens of responses. The majority were “No, they aren’t refundable”. However, I also got responses saying “Yes, they are refundable”. It seems to vary from cruise line to cruise line.
So, should you insure Port Charges or Taxes? I don’t know. If you choose not to insure Port Charges or Taxes, I suggest you get, in writing, from the cruise line that they are fully refundable if you cancel at the last minute. Your risk is that if you don’t insure the full non-refundable prepaid trip cost, you may forfeit any plan benefit associated with having to insure the full non-refundable prepaid trip cost including, but not limited to, obtaining the Waiver of the Pre-Existing Medical Condition Exclusion and the Cancel For Any Reason option.
Q. Are all First or Business Class tickets refundable?
A. No, they used to be fully refundable, but now many have a non-refundable fee and you get the rest of the money back if you cancel the ticket. In this case, you are just obligated to insure the non-refundable fee. See Steve’s blog post “How Do I Insure Business Class Airline Tickets?” for a more detailed discussion.
Here’s what are typically not prepaid, non-refundable trip costs:
- Lodging costs that you pay after you arrive. See Steve’s blog post “Don’t Waste $429 on Un-Needed Trip Cancellation Insurance” or What Does Prepaid Mean? for a more detailed discussion.
- The cost of meals
- The cost of Trip /Travel Insurance itself
- Day trips, excursions and other side trips you arrange after your trip’s departure
- The cost of souvenirs, gifts or other items you expect to buy on your trip
- Passports (some plans will provide coverage for replacement if lost or stolen during your trip.)
Also, Frequent Flyer tickets have a $0 trip cost.
Why is Your Trip Cost Important?
The cost of a travel insurance plan is usually based on three factors:
- Your age(s)
- Your per person prepaid, non-refundable trip cost
- The length of your trip (from the day you leave to the day you return)
Insuring your full prepaid non-refundable trip cost is very important when you want to cover Pre-Existing Medical Conditions. There are 4 rules to keep in mind when you want to cover Pre-Existing Medical Conditions:
- With the exception of the Global Alert, MH Ross, TravelSafe Classic, Travelex Select and Travelex Max plans, if you want the pre-existing conditions exclusion waiver, you have to insure at least your trip’s full prepaid, non-refundable cost (you can’t round it down). If you don’t know your final trip cost, estimate it high to be safe. You can always lower it to the correct trip cost prior to your departure date. and
- The person with the medical condition must be medically stable when you get your insurance and
- You must get your travel insurance within the first 14, 15, 21 or 30 days after your first trip payment date or by your final trip payment date and
- You have to insure your trip’s full length
If you’re flying, taking a tour, cruise, etc. your initial trip deposit date is the first date you made any payment – including a refundable deposit.
If you’re driving, you can establish an initial trip deposit date by prepaying a trip cost (ie – hotel reservation) before you leave. You have to actually prepay it – booking a room on Priceline, Expedia or Orbitz is best.
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