Cruise tragedy raises questions about trip insurance, p. 2

We are talking about the cruise liner that crashed and foundered off the coast of Italy. The story of the wreck may well become legend — the captain faces criminal charges — but our focus is the role of insurance in helping the survivors and the families of the dead and missing to rebuild their lives.

Many will turn to the cruise line for relief. The cruise line will then turn to its insurance company for reimbursement. Without knowing the particulars of the policy, it’s hard to know if the claim will be denied. Can a company indemnify against the (alleged) recklessness of an employee?

A vacation like this would be expensive, and consumers like to protect their investments. Many, then, could have purchased trip insurance. Most policies cover trip “interruption” and cancellation for illness or a weather event, like a hurricane. Most policies will not cover a mere change of mind.

In the days after the accident, it’s impossible to imagine that people booked on future cruises didn’t reconsider their plans. A typical trip insurance policy would not cover a cancellation.

This isn’t to say they are without options. There is Cancel for Any Reason coverage that will cover a change of mind. One policy reimburses up to 75 percent of the trip’s cost.

Again, these policies vary in coverage and in price. It’s not a very large market, but it is possible to shop around. A policy typically costs 5-7 percent of the trip cost.

An agent with one travel insurance company explained one of the perks of having a policy through them. Insureds on the Concordia received assistance immediately from the insurance rep. The insurance company got messages to family members, replaced travel documents (including passports) and made arrangements for their customers to fly home as quickly as possible.

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

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