The U.S. State Department closed more than two dozen embassies and legations in much of Africa and the Middle East—some for just a few days, others remain closed. You don't have to ask why; just check the headlines. These recent events certainly give pause to many travelers headed into the identified "risk" areas that include such (sort-of) popular destinations as Dubai, Egypt, Jordan, and Qatar. And the obvious travel question arises: If this type of problem happens again, and we have prepaid travel plans or nonrefundable tickets to one of the affected areas, can we expect refunds? Or will trip-cancellation insurance cover us?"
The short answer is an unequivocal "maybe." Although different suppliers and insurance policies react differently, they all tend to avoid giving refunds or payouts to the maximum extent they can.
Airlines, when faced with imminent cancellations, immediately offer to reschedule ticket holders on alternate flights, with no exchange fees on refundable tickets and no increase in fare or, alternatively, to provide full refunds. But the no-charge exchange offers generally apply only for flights over a short period of time and may provide no relief for travelers who decide they just don't want to travel. Moreover, the time window to take the alternate flight is often short—a week or so—and not a help for anyone who wants to make a more extensive change.
Cruise lines have wide latitude to substitute itineraries and ports if bad weather or local unrest requires that the ship skip a scheduled port. Often, cruise passengers have no right to demand refunds as long as the cruise line operates something resembling the original cruise—and that resemblance can be pretty remote. Lines may offer optional no-fee cancellations and refunds, but the "refunds" are generally in the form of credit toward a future cruise rather than cash. And that credit may have a time window as short as six months.
Tour operators do about the same as cruise lines although, as far as I can tell, they're a bit less likely to substitute an unacceptable no-refund alternative. And, again, you may be faced with a future credit rather than a full refund.
Trip-cancellation insurance is quite iffy. The one thing you know is that if the reason you want to or have to cancel is not a specified "covered reason" or "named peril" in the contract, you aren't likely to collect anything. My go-to source for the realities of travel insurance, QuoteWright's John W. Cook, notes some of the limitations:
- Although most trip-cancellation policies include "terrorism" as a named peril, they generally limit coverage to an actual terrorist act in your destination city. General unrest and riots are not included; although "strikes" may be covered, you might have a tough time differentiating a strike from a riot.
- Even within that narrow definition, different policies vary in the time window covered: Some allow cancellation for an event within 30 days of your scheduled arrival, others within just seven days of your departure date. Some kick in if the State Department issues an official "warning," others do not; moreover, most won't cover you if you buy your tickets within six months after an event or warning.
- No named-peril policy would have covered anyone who wanted to cancel because of the State Department's recent round of legation closures. Ditto sit-ins and other forms of civil unrest. To paraphrase a slogan, the rule is, "No harm, no payout."
All in all, the question of named perils and covered reasons is a minefield. That's why, for some time, I've advocated that if you want cancellation insurance, you should buy a "cancel for any reason" policy. Typically, the any-reason option is in addition to the more normal list of named perils and covered reasons; payouts may be more limited, and costs are usually higher. But when you might want to cancel, you're much better off if you make the decision, not some actuarial bean counter who's paid to deny claims.
Ed Perkins Seniors on the Go is copyright (c) 2012 Tribune Media Services, Inc.
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