Cruise tragedy raises questions about trip insurance

After the cruise ship accident off the coast of Italy last week, many of us will look a little differently at the ships docked at the Port of Miami. In the insurance business, it is hard not to wonder if cruising has become so mundane that travelers forget the risks involved. Granted, the situation with the Costa Concordia was unusual. But the question lingers: Are passengers assuming that the cruise line will take care of everything in an emergency, or have they protected their own interests by purchasing trip insurance?

Generally, travel professionals offer trip insurance to vacationers when they book the cruise. The cruise line may offer its own coverage or have a relationship with an insurance company. The terms are fairly standard from policy to policy.

For instance, policies usually include baggage protection. The insurer will also reimburse an injured policyholder for medical expenses and will cover an emergency evacuation. There is usually a death (or dismemberment) benefit, too, that will cover the cost of sending a body home.

The most common reason travelers purchase trip insurance is the cancellation coverage. If the policyholder becomes ill and cannot make the trip, the insurance will reimburse a portion of the cost. If the weather interferes with the trip, the coverage will kick in.

Typically, a policy will limit the cancellation coverage to specific types of events, like sickness or weather. Travelers who changed their minds about cruising after watching the coverage of the Costa Concordia wreck, though, will probably not be covered under a standard policy.

Continued in our next post.

Source: USA Today, “Does travel insurance cover disasters such as Concordia?” Fran Golden, Jan. 19, 2012

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