Terrorism Insurance 101

Insurance, Other Insurance

The strong dollar is making a foreign vacation look attractive, but recent terror attacks in Nice, Paris, Brussels, and other parts of the world can make travelers understandably nervous about committing thousands of dollars in tickets, reservations, and deposits to head overseas. If you do end up canceling a planned trip because of safety concerns, you don’t necessarily have to worry about losing your money, thanks to terrorism trip insurance.

In the past, basic travel insurance policies either didn’t specifically cover terror attacks or made them an exception to coverage, but policies have evolved and now offer several options for travelers who want to protect their investment in a planned excursion. However, as with any insurance, conditions and restrictions apply, so look over any policy carefully before you buy to be sure it covers your concerns.

If a policy offers trip cancellation insurance, check that terrorism isn’t excluded as a condition. Even then, however, there still can be plenty of exclusions. For example, you may consider a “travel alert” or “travel warning” from the U.S. Department of State a sufficient reason to cancel a trip to Burundi or Algeria, or even Europe, which was the subject of a three-month warning after the bombings at the Brussels airport. Your travel insurance provider won’t pay off under that scenario.

Instead, if your policy covers terror-related trip cancellations and interruptions, the government must deem that an attack has occurred at your destination, usually within thirty days of your arrival and happened after the effective date of your coverage. Rumors, warnings, and general fears aren’t enough to trigger a payout. Your trip has to be set for the destination where the attack occurred, not just in the same region. Although, according to some policies, if you must pass through an airport or other facility that had been a recent target of attacks, the policy might cover you. Those considerations are handled on a case-by-case basis.

If the terror attack in question took place before you booked the trip or bought travel insurance, then it’s considered a “known peril,” meaning you knew the danger beforehand, and won’t be covered either. Many policies will also distinguish between terrorism and an “act of war” or “civil disorder or riot,” which aren’t covered. Policies that include evacuation from a trouble spot, however, may cover getting you out if the situation turns dangerous.

Even when a policy covers terrorism (or a mandatory evacuation order by the government) that may not be enough to qualify for trip cancellation benefits. Instead, some policies will consider attacks and evacuations as legitimate reasons that qualify for reimbursement as missed connections or travel delays, but not outright trip cancellation.

Likewise, medical coverage on a travel insurance policy may only cover moving you to the nearest appropriate medical facility, which could be overwhelmed by victims of the attack, instead of guaranteeing you’ll be evacuated to the United States.

The first step to get around these issues is to make sure you buy a policy from a good, financially established independent insurer. Policies issued by a cruise line or tour packager can be undependable, especially if the operator goes out of business. Before you purchase a policy, be sure to check the exclusions as well as the coverage.

If you want expanded protection, consider upgrading to insurance that allows you to “cancel for any reason,” whether that’s a bombing near your destination that makes you nervous or just a flat tire on the way to the airport. Some polices offer the so-called “CFAR” coverage as an upgrade, or you can buy a separate policy, but expect to pay at least 25% more for coverage up to about 75% of your trip costs.

For guaranteed medical evacuation to the United States, consider separate medical evacuation coverage from companies such as Global Rescue and MedjetAssist.

Finally, make sure any travel insurance includes coverage inside our own borders and not just overseas. Sadly, the United States isn’t immune to terrorism; the September 2001 attacks shut down all flights in the country for days.

Photo ©iStock.com/gustavofrazao

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