Nonrefundable fares vs. trip insurance
If you look at the many consumer complaints about the travel industry, one issue clearly rises to the top: nonrefundability. In exchange for giving you a price break, airlines, hotels, car rental companies, tour operators and others make your payment nonrefundable.
Airlines allow you to alter a nonrefundable ticket, but only after a very stiff change fee, and only by spending the remainder with the airline. And other nonrefundable services are completely nonrefundable: You can cancel, but you get nothing back.
Requests to refund nonrefundable prepayments are sometimes wrenching: A spouse dies, a parent develops cancer. Consumers often think, “Yes, I know it’s nonrefundable, but in this special case, the supplier should obviously take pity and refund my payment.” And then they condemn the supplier as being heartless for not bending.
What options do you have?
Legally, when a supplier says “nonrefundable,” it is on firm ground when it refuses to refund your payment: The contract you accept when you buy clearly specifies the nonrefundability and the penalties.
The suppliers’ position is straightforward: If you don’t like the idea of nonrefundability and penalties, don’t buy nonrefundable, or buy insurance. And those are exactly your options.
Overall, my primary rule is to avoid nonrefundables whenever you can. When you book a hotel on a site such as Booking.com, for example, you often get to choose either a nonrefundable rate or a slightly higher refundable rate that you can cancel up to 24 hours in advance without penalty.
In my trip planning, I always take the refundable option. Yes, it costs more, but it leaves me free to change either my itinerary or my choice of hotels.
But not all travel arrangements are as easy as hotels. With airfares, a fully refundable fare can be more than double the nonrefundable rate. Cruises and vacation rentals are often totally or at least partially nonrefundable, no matter what. In those cases, I buy insurance.
Buying travel insurance
My position on travel insurance has remained consistent ever since I’ve been doing this: If you have more money at risk in nonrefundables or cancellation penalties than you are willing to walk away from if something happens, buy trip-cancellation/interruption insurance (TCI). It costs 5 to 10 percent of what you have at risk, and it usually includes medical and other benefits, as well.
TCI is a “named peril” form of insurance: Each policy specifies what contingencies it covers as a “named reason” — and it won’t cover anything else.
Most TCI is very good about all sorts of sudden sickness or accident, not only if something happens to you as a traveler but also to your travel companion. And it usually covers you if something happens to a close family member, or even to a business partner at home who isn’t even traveling.
It typically also covers a laundry list of other contingencies, such as being called to jury duty or to active duty in the armed forces, or damage to your home, or a natural disaster at your destination. And, these days, most policies allow you to cancel if your destination area suffers a terrorist attack.
TCI isn’t perfect, and I’ve seen cases where an insurer has denied what looks like a legitimate claim. But for the most part, it’s a good protection for money you have at risk.
I recommend buying from an independent third-party travel insurance agency such as g1g.com, insuremytrip.com, quotewright.com, squaremouth.com, totaltravelinsurance.com, travelinsurancecenter.com and tripinsurancestore.com.
You should avoid any “insurance” that is really just a supplier’s waiver of its own cancellation policies. Those waivers offer a lot less protection, and, in some cases, the benefit is limited to a credit toward future travel rather than a cash refund. My suggestion is to bypass the supplier’s link and buy from an independent insurance agency.
Send e-mail to Ed Perkins at firstname.lastname@example.org. Also, check out Ed’s new rail travel website at www.rail-guru.com.
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