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Understanding Travel Insurance Coverage for Terrorist Events

Jul 11, 2016

With the recent terrorist events across the globe, security and safety issues are on everyone’s minds, especially anyone who is traveling or planning to do so. We want to help you and your clients by explaining benefits and services clearly, ensuring everyone understands how and when coverage for terrorism is provided.     

The good news is Americans are still traveling and not letting fears prevent them from doing things they want to do. In June 2016, AAA released details for the summer’s travel bookings. Interestingly, European destinations remain popular with American travelers, with Rome and London in first and second place respectively for 2016, compared with Cancun and Punta Cana which were the two most popular international destinations in 2015.  Other favored European destinations include Paris and Dublin. “Europe remains very popular with American travelers despite recent terrorism concerns,” said Bill Sutherland, AAA senior vice president of travel and publishing. “A strong dollar, discounted pricing and a continued sense of resilience are motivating millions of Americans to venture across the pond for their summer vacations this year.”

Are you or your clients confused about how terrorist events are covered by travel insurance plans?

We have coverage options for terrorist related expenses included in our trip cancellation and travel medical plans. The coverage functions differently based on the intent of the plan.

Trip Cancellation Coverage  

As you know, trip cancellation policies cover an assortment of benefits:

  • Reimbursement for nonrefundable trip costs if you cancel, interrupt, or delay your trip
  • Medical expenses if you become sick or hurt while traveling
  • Loss, theft, and damage to personal effects and baggage accompanying you on your trip

With regard to terrorist activity, most travelers today want to know two things:

  • Can they cancel their trip and get their money back if they are planning to visit a city where a terrorist incident has occurred since they booked their trip?
  • I'm afraid to travel because of recent terrorist events. Can I cancel or interrupt my trip?

Most trip cancellation plans have some type of coverage for a terrorist incident, provided the act of terrorism occurs in the traveler’s destination city within a certain number of days of his or her scheduled arrival. This time limit usually ranges from 7 to 30 days, but you and your clients should read the small print to be certain.

Seven Corners Plans
Both RoundTrip Economy and RoundTrip Elite allow you to cancel if a terrorist incident (as defined in the policy) occurs within 30 days of your departure date in a city listed on your trip itinerary if that city did not have a terrorist incident within 90 days of the incident that is causing you to cancel your trip.

Pro Tip #1:  Again, read the fine print and make sure there’s a clear understanding regarding the possible coverage limits for locations and events. 

Pro Tip #2:  In most cases, in order for a terrorist event to be covered, the U.S. Government must declare that the incident is an act of terrorism. The insurance company cannot follow an individual traveler’s idea of what a terrorist event is.  

Pro Tip #3:  Once the occurrence meets the definition of terrorist incident, your client will not have coverage for cancellation if he or she buys the plan after the date that the event is declared a terrorist incident. Why? Because at that point, it is a known peril. The easiest way to explain this is with the wrecked-car story. You can’t buy car insurance for your car once it’s been wrecked. You must have the coverage in place before the accident occurs.     

Pro Tip #4:  If your clients want to make sure they can cancel for a terrorist event and do not want to worry about the fine print, they can buy a plan with an optional Cancel for any Reason (CFAR) benefit. With it, they can cancel their trip for literally any reason. Here are a few important points about CFAR your clients need to know:

  • You must buy CFAR within a specified timeframe of paying your trip deposit (Roundtrip Elite allows up to 20 days).
  • You must buy coverage for 100% of your prepaid trip costs and any subsequent travel arrangements added to your trip.
  • You must cancel the trip within the required time limit (RoundTrip Elite requires you to cancel 2 days or more before the scheduled departure date).
  • You will not be reimbursed for 100% of your nonrefundable trip deposits but will instead receive a stated percentage, which typically varies from 50% to 80% (RoundTrip Elite pays 75%).
  • You will have to pay extra for this benefit, but it’s worth it if you truly want the option of cancelling your trip for absolutely any reason.   

What about Medical Expenses? Trip cancellation plans typically cover medical expenses due to an accidental injury first occurring during your trip, so if you were hurt in a terrorist attack, it would be covered.

Travel Medical Coverage

A travel medical policy is designed to cover medical expenses and ensure you receive appropriate medical care for injuries or illnesses that occur during your policy period. All of our travel medical plans cover eligible medical expenses due to terrorist activity, as defined in the plan language.

  • Liaison Continent and Liaison Majestic provide coverage up to the chosen medical maximum.
  • Liaison International and Wander Frequent Traveler have a $50,000 limit.

All four plans require that these conditions be met in order for a terrorist event to be covered:    

  1. The Insured Person must have no direct or indirect involvement in the Terrorist Activity.
  2. The Terrorist Activity cannot be in a country or location where the U.S. government issued a travel warning that has been in effect within six months prior to the Insured Person’s arrival in the country or location. 
  3. The Insured Person has not unreasonably failed or refused to depart a country or location following the date a warning to leave that country or location is issued by the U.S. government.

What does this mean? The first and third points are self-explanatory. To understand the second, it’s important to know what a travel warning is. Travel warnings are issued by the U.S. Department of State (DOS) when they want travelers to think very carefully about visiting a country and understand the risks, which could include events such as a civil war or frequent terrorist attacks. Warnings can be effective for a long period of time. A Travel Alert is issued for short-term events. According to the DOS, alerts are for events such as strikes, health alerts, or concern for an elevated risk of terrorist attacks. When the short-term event is over, the alert is canceled.    

The DOS issued a travel alert for Europe (not a warning) on May 31, 2016, so if your clients go to Europe this summer and are injured due to terrorist activity, they are covered unless the DOS changes the alert to a warning at some point. The alert is currently expected to expire on August 31, 2016.

Many travel medical plans currently on the market contain requirements similar to the three listed above and also limit coverage to $50,000. The good news is that Liaison Continent and Liaison Majestic provide your clients with the option of choosing a medical maximum up to $1,000,000, which will cover terrorist activity within the requirements stated in the policy. For a serious injury, $50,000 may not go far, so this would provide them with extra protection if they are concerned about traveling.   

As always, if you or your clients have questions about benefits and how they work, please feel free to contact our Customer Service department. They’ll be happy to help.  

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