Squaremouth in the News

MSN, March 3 2019 – Travel insurance: ‘Beware’ doesn’t mean ‘don’t buy’

MSN, March 3 2019 – Travel insurance: ‘Beware’ doesn’t mean ‘don’t buy’

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“Flyer Beware” is the heading of a new report on travel insurance, not “Don’t Buy.” Although some writers have picked up on the report as a recommendation to avoid travel insurance, generally, that really isn’t the case. Instead, the report focuses on the insurance policies that airlines and online travel agencies (OTA) offer automatically during the buying process for air tickets. The report was compiled by the office of Sen. Edward J. Markey (D-MA), and what it really says is that those policies, typically offered as an “opt in, opt out” choice after you’ve selected a flight, may not be a good buy: They are often overpriced, more restrictive, or both, than the traditional travel insurance you can buy through a third-party insurance agency.

The Markey report notes that the typical airline and OTA booking system is strongly biased to encourage travelers to buy the insurance offered as part of the booking process. You’ve seen those pages as you scroll through the process: In effect, they say “you really should buy this insurance” and “you take a big risk by declining it.”

Among 16 largest U.S. airlines and OTAs, only Southwest does not offer such insurance. Presumably, that’s because Southwest travelers don’t need it: Southwest travelers can cancel or change a ticket without paying the punitive fees the other airlines charge.

Among the other 15 outlets, 14 sell similar policies from either Allianz or AIG insurance. Typically, those policies are more-or-less standard trip-cancellation, trip-interruption bundled policies that also include limited medical and other miscellaneous benefits. Typical policy prices average about 6 1/2 percent of the ticket price for domestic trips and 7 percent for international trips. Those typical policies are very restrictive in the range of “covered reasons” included, meaning that claims have a high likelihood of denial.

The report clearly states its reason for the “Beware” heading. It notes, “A search of third-party travel insurance comparison websites such as Squaremouth.com or Insuremytrip.com shows the wide availability of similarly priced policies with more robust and flexible coverage.” The idea of insurance isn’t a “beware” situation, it’s the price and coverage of the policies the airlines and OTAs sell.

Read the full MSN article online here: https://www.msn.com/en-us/travel/tips/travel-insurance-beware-doesnt-mean-dont-buy/ar-BBUj6Tg