Angela Borden | Sep 2, 2020
When you buy trip insurance* you will be asked to provide your trip cost, and that amount will be used to calculate the cost of the plan.
To ensure you have the amount of coverage you need, It’s important to understand what to include when you calculate the trip cost you provide to the insurance company. This amount is your insurable trip cost. Depending on your situation, it may not be correct to include every single dollar you spent as part of your insurable trip cost.
Typical trip expenses may include airfare, the cost of a cruise, hotel cost, entertainment and excursions, rental of a house or condo, and other similar items.
To know what expenses to include as your insurable trip cost, you first need to understand a little about how trip insurance works.
Trip insurance is designed to reimburse you for the amount of published penalties and unused nonrefundable prepaid payments or deposits you paid for your trip.
This means that if part of your trip cost is refundable if you need to cancel, interrupt, or delay your trip, you do not need to buy trip insurance coverage for it.
Why? Because another party (your airline, cruise line, hotel, excursion provider) is going to refund you the money you spent (according to their stated refund guidelines, which you should review), so there is no need to insure that amount with trip insurance.
Dave is planning a trip to Bermuda. Here are his expenses:
Hotel $2,000 ($200 is refundable if he needs to cancel.)
Total expenses $3,300
What is Dave’s insurable trip cost?
This represents the total expenses of $3,300 minus the $200 refundable amount for his hotel. He should not buy coverage for trip expenses that are refundable.
What about Free Items?
The same idea applies to free items. If you receive a part of your trip for free (maybe an excursion was thrown in for free as part of your booking), then don’t include it as part of your insurable trip cost. Why? If you must cancel, delay, or interrupt your trip and miss the excursion, you are not out any money, so that item is not insurable.
Trip insurance usually provides limited coverage for the cost of airline-imposed fees to re-bank frequent flyer miles for air flights. For example, our RoundTrip plans provide coverage to re-bank frequent flyer miles.
The best way to ensure you buy the correct amount of trip insurance is to calculate the cost of the trip for each person according to what he or she paid.
Remember: Each traveler is covered up to the lesser of their insurable trip cost listed on the insurance plan or their nonrefundable, unused trip costs.
Bob and Tom are taking a trip, and they are buying one trip insurance plan for both of them. Bob paid $1,000 and Tom paid $2,000. When they buy their trip insurance plan, Bob should provide $1,000 as his insurable trip cost, and Tom should provide $2,000 as his insurable trip cost.
What about Shared Reservations?
An example of a shared booking is a rental house because there is one fee for the entire group.
It’s up to the travelers to decide how to split up the expense to pay for it. If the group shared equally in paying for the booking, then the amount should be divided between the group equally.
Example 1: If the house rental fee is $1,000, and there are five people going, and each of them paid $200, they should each list $200 as their insurable trip cost. If each person is not named on the booking, they may need to provide proof they paid the $200.
Example 2: If the rental fee is $1,000, and there are five people going, but one person (Sue) paid the full $1,000, then Sue should buy a trip insurance plan and provide $1,000 as her insurable trip cost.
If you buy excursions or add additional travel to your trip after your initial trip purchase, this could increase your insurable trip cost. In this case, you should let the insurance company know so you have proper coverage. Contact them and provide additional expenses to them.
This is very important if you purchased Cancel for Any Reason (CFAR) or if you wish to have coverage for pre-existing conditions.**
Cancel for any Reason
CFAR requires you to insure your prepaid, nonrefundable trip expenses. Terms and conditions apply, so please read the plan document for full details.
Keep a record of each trip expense payment you make, because you will likely be asked to produce proof of payment if you file a claim.
Correctly calculating our insurable trip cost is important. If you have any questions, contact your agent or our inside sale team. They can help you sort through detailed expenses so you buy the correct amount of trip insurance.
Email firstname.lastname@example.org or call the numbers below.
Toll free 1-800-335-0611
*Trip insurance is included as part of a travel protection plan, which consists of insurance coverages underwritten by United States Fire Insurance Company as well as non-insurance assistance services provided by Seven Corners. Insurance coverages are subject to the terms, limitations and exclusions in the plan, including an exclusion for pre-existing conditions.
**Pre-existing Conditions : Losses resulting from pre-existing conditions are normally excluded from coverage. However, such losses are covered on the same basis as losses from all other sicknesses and injuries if you meet the requirements for the Pre-Existing Medical Condition Exclusion Waiver. This waiver requires you to insure all of your prepaid, nonrefundable trip costs. Additional terms and conditions apply, so please read the plan document for full details.
Important Information from the United States Fire Insurance Company
Angela Borden has been a member of the Seven Corners team since 2007. She originally joined as an underwriter, later transitioning to marketing to explore her passion for making all things insurance less confusing and more fun. (Is that possible?) When she's not working, Angela loves traveling and spending time with her family, including her two adorable dogs.
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