Pointers to take note of before buying a travel policy

 

By Genevieve Cua
The Business Times (Singapore)
Saturday, Oct 01, 2011

Here are some scenarios to illustrate what would be or won't be covered in a typical travel policy. There will be differences in the scope of coverage among different insurers. You will have to peruse your policy documents carefully.

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Travel delay
Not all types of delay will be covered by a travel plan. Most policies will specify that cover will kick in if the delay exceeds a minimum specified time - usually six hours.
These are some common causes of delay provided for in policies: a strike, riot, civil commotion or industrial action, natural disaster, adverse weather, or mechanical breakdown of the public transport. Also included are epidemics or outbreak of contagious disease.

Scenario 1: You were scheduled to fly from New York to Singapore but the flight was delayed due to a severe snowstorm.

If the delay exceeds the minimum specified number of hours, you will be able to claim for delay benefits. Most policies will pay a cash benefit up to a maximum limit but some will pay on a reimbursement basis for 'reasonable' expenses.

Scenario 2: You were scheduled to fly from New York to Singapore but the flight was delayed due to issues relating to the airline's business operations.

Operational issues such as crew rotation to meet statutory regulations, rescheduling of flights to suit capacity demands or the airline's failure to prepare the aircraft on time for the departure are considered business risks and are not covered.

Scenario 3: You were supposed to board a train from Frankfurt to Rome. You waited at a platform for three hours but then discovered that you were on the wrong platform. You missed the train and had to wait 12 hours for the next train.

As the delay was caused by your mistake, rather than any of the covered events listed in the policy, you will not be able to claim. There was in fact no delay as your scheduled train did leave on time.

Trip cancellation or curtailment
Scenario 1: You booked a trip to China but you had to cancel it as your son fell and fractured his leg prior to departure.

Most policies will cover trip cancellation, subject to certain conditions and named events. These events include a serious illness or accident to you or your travel companions or specified family members; or the unexpected outbreak of a strike or riot.

There may be a specified time frame prior to departure during which the named event must occur, usually 30 days.

Some policies will specify that no benefit will be paid if the policy was bought after you became aware of any circumstance that may lead to the disruption of the trip.

Scenario 2: You were travelling in China when you were informed that your mother had fallen seriously ill and was in hospital. As you are the primary caregiver for your mother, you had to rush home to take care of her.

As you could not amend your air ticket, you had to purchase a new one to fly home urgently. You also had to forfeit the rest of your tour.

Most travel policies' curtailment benefits will reimburse you for travel costs which you pre-paid in advance for which you are unable to get a refund. You can also claim for the additional travel cost to return home subject to a maximum limit.

Once again, the curtailment must be due to a named event, such as serious illness. You may have to provide supporting documents to verify that the event that caused the trip to be cut short did take place. In this scenario, these include documents that attest to your mother's medical condition.

Scenario 3: You were in London and planned to travel to Germany for two days before returning to London to fly back to Singapore. But due to severe weather conditions, you were unable to fly to Germany. You remained in London and flew home to Singapore as originally planned.

This case was not a cancellation or curtailment. You did not cut short your trip to return home, but merely changed your plans and stayed in London.

Some insurers do cover for curtailment due to adverse weather, hijacking of an aircraft in which the insured is a passenger, and natural disaster, among other conditions.

Scenario 4: The volcanic eruption in Iceland caused the spread of volcanic ash all over Europe. You had to cancel your trip to Europe as flights were cancelled due to the closure of airspace.

If your policy does specify natural disaster as part of its coverage, such as volcanic eruption, then you will be covered under the trip cancellation benefit.

You will be covered if you bought your policy before the disaster - in this case, a volcanic eruption - and/or if you purchased the plan before any travel advisory had been issued by the Ministry of Foreign Affairs.
Scenario 5: In about two months, you will travel to the Maldives for your honeymoon. But prior to the trip, your travel agency became insolvent. You had paid $5,000 for your tour package upfront.

Cancellation due to insolvency is a covered event. But you should read the fine print in your policy. You may not get a payout if the petition for winding up or bankruptcy was made before you bought the cover, for instance.

Accident
Scenario: During a family ski holiday in Korea, your spouse collided with another skier and suffered a severe leg injury. Your spouse had to be evacuated from the ski resort to the hospital and then flown back to Singapore.

According to the General Insurance Association of Singapore (GIA), your expenses could run up to $90,000 - including the cost of evacuation, medical fees, accommodation, and transport for family and repatriation costs.

Depending on your plan, you could claim a benefit of up to $500,000 for medical cover and up to $500,000 for the cost of evacuation. For cost of accommodation and travel, the policy could pay between $3,000 and $25,000 per person. The indicative premium for seven days for a family policy is between $120 and $165.

Theft
Scenario: You are visiting the majestic pyramids in Egypt when you felt a little tug. You then discovered that your wallet and passport, which were in a little bag, had been stolen.

You had to make your way to the Singapore embassy to report your passport loss and make alternative arrangements to draw cash, such as a credit card advance. Your total loss, including cash stolen, was $5,000.

Your travel plan is likely to pay a benefit of $3,000 to $5,000 for your travel and hotel expenses and to pay for a replacement passport. You may also receive $300 to $500 for the loss of your cash. The indicative premium for a travel policy for seven days for two people is between $140 and $180.

Post-trip
You dined on fresh oysters at a fancy restaurant in Melbourne Airport just before boarding the plane for home.

You suffered a stomach upset during the flight and had to seek medical treatment at the airport upon return, as well as follow-up treatment. The cost of the two rounds of medical treatment was $250. Your travel policy is able to pay a benefit of between $12,000 and $30,000 for medical expenses on return to Singapore.

The indicative premium for a travel policy for a five-day trip to Australia is between $40 and $60.