Travel Alerts and Travel Insurance

By John W. Cook, CLU
john.cook@quotewright.com

 On August 2, 2013, the United States Department of State issued a Travel Alert for “the continued potential for terrorist attacks, particularly in the Middle East and North Africa, and possibly occurring in or emanating from the Arabian Peninsula.”

Since the alert several articles have been written concerning what is covered by travel insurance. Most of the articles are off target and might add to the confusion as to what will be covered by available travel insurance plans. Here is what you need to know:

1. Most, but not all, basic trip cancellation and trip interruption coverage provides coverage for terrorism; however, it is limited to an actual terrorist event which happens in a city on the traveler’s itinerary within 30 days of the traveler’s scheduled arrival. Most policies will cover both domestic and foreign events.
2. Some policies limit coverage to an actual terrorist event which happens in a city on the traveler’s itinerary within 7 days of the traveler’s departure date.
3. Some policies may exclude coverage if a terrorist event has occurred within the city or country within the prior 6 months or if a Travel Warning has been issued for travel to that country or region.
4. “Terrorist Event” is defined differently by travel insurance policies however; civil disorder, riots, and war are not covered.

Trip cancellation and trip interruption coverage is a “named peril” coverage that relies on the covered reason, policy definitions, and exclusions to determine coverage. Contrary to some reports an elevation of the travel alert to a travel warning will not trigger coverage nor can insurance companies reinterpret their policy language without approval from various State regulators . As a whole, travel insurance policies require an actual terrorist event to occur in order for coverage to apply so even if the Department of State elevates the alert to a warning coverage will not apply without an actual event occurring and then only if it complies with the policy provisions. It may, however, affect future coverage since some policies exclude travel to an area where a Travel Warning has been issued.

Bottom line is that consumers should carefully read and understand coverage before purchasing and when in doubt they should talk with a travel insurance specialist.