Why no refund before final payment?

[Admin]

I'm sorry if this has been asked and answered many times. Can someone tell me why travel insurance is not refundable up until final payment. The policy isn't in effect until after final payment so why isn't it refundable? One of my friends asked me and I have no idea! I've never canceled a cruise before or after final payment.

 

Her situation is she booked a cruise and purchased insurance on the day of booking to cover pre existing conditions. She had to cancel this week because of a scheduling conflict and the cruise line refunded her entire deposit but not the insurance. She called the insurance provider to ask them what the reason is and they said, that's just how it is. She asked a few questions about under what circumstances the insurance would actually be used and they said the policy isn't even valid until final payment because you can cancel before final payment with no penalty. So does anyone know the real reason they don't refund travel insurance that was never even valid? Thanks!

[Rancher Dave]

Actually insurance is generally in effect as soon as you buy it (Travel Insurnace that is...my life and health clients have various effective dates) so just because you choose during a refundable time to cancel the cruise you can't just give back the unused insurance policy. Most policies (not all) require you to buy the coverage within a few days of deposit to have pre-existing condition coverage in place.

 

If you know the right policy you can wait and get it the day before/of your final payment.

 

Of course if you book nref air then you would have wanted the insurance to cover that... Lots of variables involved.

[Admin]

Actually insurance is generally in effect as soon as you buy it (Travel Insurnace that is...my life and health clients have various effective dates) so just because you choose during a refundable time to cancel the cruise you can't just give back the unused insurance policy. Most policies (not all) require you to buy the coverage within a few days of deposit to have pre-existing condition coverage in place.

 

If you know the right policy you can wait and get it the day before/of your final payment.

 

Of course if you book nref air then you would have wanted the insurance to cover that... Lots of variables involved.

Thanks for your information. When my friend called the insurance company, they told her that the policy would not be available to be used until after final payment because anytime before that, she could cancel and insurance would never have to be used. I've always heard that insurance is non refundable. They just don't have a reason why for it in this case. I told her this will teach her to cancel a cruise. :D But she has to and now can't get an answer from the insurance company as to why the insurance is non refundable except to say, that's just how it is.

 

The plan is underwritten by Arch Insurance Company. No idea who that is but it was sold to her by the TA she used. Travel Insured International is where you send claims.

 

Again, I know these insurance companies have to have themselves covered. You'd just think they could tell her why it's not refundable.

[cruiseco]

The policy isn't in effect until after final payment so why isn't it refundable?

 

There's your error -- if the plan includes cancellation coverage the coverage is basically in effect immediately.

 

But, you say, there's no penalty if you cancel the cruise before the final payment. But what if the cruise line goes bankrupt before you make the final payment? You'll certainly be filing a claim to cover your deposit amount so the insurer is exposed to a risk of loss right off the bat.

 

Risk = fully-earned premium.

[Rancher Dave]

Thanks for your information. When my friend called the insurance company, they told her that the policy would not be available to be used until after final payment because anytime before that, she could cancel and insurance would never have to be used. I've always heard that insurance is non refundable. They just don't have a reason why for it in this case. I told her this will teach her to cancel a cruise. :D But she has to and now can't get an answer from the insurance company as to why the insurance is non refundable except to say, that's just how it is.

 

The plan is underwritten by Arch Insurance Company. No idea who that is but it was sold to her by the TA she used. Travel Insured International is where you send claims.

 

Again, I know these insurance companies have to have themselves covered. You'd just think they could tell her why it's not refundable.

 

I'd think when given a choice I'd pick a policy from a known insurnace company. Lots of small companies out there who sell travel policies but not enough to offer all the perks and security of the more financially secure larger companies.

[Admin]

There's your error -- if the plan includes cancellation coverage the coverage is basically in effect immediately.

 

But, you say, there's no penalty if you cancel the cruise before the final payment. But what if the cruise line goes bankrupt before you make the final payment? You'll certainly be filing a claim to cover your deposit amount so the insurer is exposed to a risk of loss right off the bat.

 

Risk = fully-earned premium.

Yeah, I know they have to be covered for why they say they keep the premium even if final payment hasn't happened yet. Of course, I don't think I understand it completely. LOL

 

I'd think when given a choice I'd pick a policy from a known insurnace company. Lots of small companies out there who sell travel policies but not enough to offer all the perks and security of the more financially secure larger companies.

Very good advice! I, personally, have never sought outside insurance and have usually gone with what the TA or cruiseline offered. I will do more research for my own cruises.

 

Meanwhile, my girlfriend is all fired up! She says she's going to dispute the charge with her credit card and the insurance cimpany can come after her and they probably wouldn't waste their time for $300. I didn't have the heart to tell her that I think she's wasting time on this but it's her time to waste. She's already paid the money so it's not like she can withhold the payment.

 

Thanks again for the feedback.

[cindiedee]

I think I have to disagree with this (if I am reading it correctly). DH and I were booked to sail 3/26/2011 - I had to cancel the cruise on the day final payment was due (due to a medical problem). I had purchased the travel insurance through the TA at the time of booking because we have pre-existing conditions and this way, should we have to cancel............

 

Anyway - final payment was not made and the cost of the insurance was credited back to our credit card - we had used FCC's as our deposit so there was no $ refund there and our FCC's just went back in the pot to be used next time.

 

They kept no $ - the entire cost of the insurance for both of us was refunded.

 

So, perhaps I have read this wrong?

 

Cindiedee

[cruiseco]

I think I have to disagree with this (if I am reading it correctly). DH and I were booked to sail 3/26/2011 - I had to cancel the cruise on the day final payment was due (due to a medical problem). I had purchased the travel insurance through the TA at the time of booking because we have pre-existing conditions and this way, should we have to cancel............

 

Anyway - final payment was not made and the cost of the insurance was credited back to our credit card - we had used FCC's as our deposit so there was no $ refund there and our FCC's just went back in the pot to be used next time.

 

They kept no $ - the entire cost of the insurance for both of us was refunded.

 

So, perhaps I have read this wrong?

 

Cindiedee

 

Did you have the cruise line's plan? If that's the case it's very possible that the premium was refunded. If it was a third-party plan that would be very unusual.

[6rugrats]

Meanwhile, my girlfriend is all fired up! She says she's going to dispute the charge with her credit card and the insurance cimpany can come after her and they probably wouldn't waste their time for $300. I didn't have the heart to tell her that I think she's wasting time on this but it's her time to waste. She's already paid the money so it's not like she can withhold the payment.

 

Most people have absolutely no idea how insurance works. As pointed out, she has been insured since the date she purchased this policy.

 

I am assuming she agreed to the terms of this policy (no refund until the date of the final payment). She hasn't been "ripped off", she just needs to wait to receive a refund. She can file whatever she likes with her credit card company, but there's nothing to dispute. She received something (an insurance policy), and she has to comply with the terms, which apparently state, no refund until the date of the final payment. She'll just have to wait. I assume she is really all "fired up" because she's disappointed about having to cancel the cruise.