Increasing Coverage

[jc719]

I booked a Celebrity cruise and made the deposit. Also (thru Celebrity CruiseAir), purchased the necessary Air travel (non-refundable). And, within the required period, purchased insurance (thru the TA because it was a marginally better deal for us than insuremytrip), so pre-existing condition exclusion is waived. Final payment is several months away. The insurance trip cost at this point covers just the cruise cost, not the air, but I'm covered for my exposure at this time (essentially the non-ref air and air$ < cruise$).

 

Now we have a new medical condition that may (not for sure) require cancellation, perhaps before the final payment is due, or maybe between the final payment and departure date, or could result in (now forseeable) medical expenses during the trip, or everything could be fine.

 

Can I, at this point or closer to the final payment date, increase coverage to cover the full non-ref trip cost (air + cruise) and not exclude the new medical condition?

 

If I leave the covered amount the same (=cruise cost and some, but not all, of the air cost) and needed to cancel after final pmt but before departure (assume 100% cancel penalty) for this condition, could I get the insured amount (so I'd lose cruise+air-insured trip cost)?

[PartyAllDaTyme]

Depending on the language in the description of coverage, pre-existing conditions are defined as those existing prior to the initial purchase of the policy. Since questions regarding when and if you increase your trip cost are generally related to keeping the pre-ex waiver in place, it would have no bearing on the new condition-- it is not, by definition, a pre-existing condition, even if it occurs prior to increasing trip cost. If you need to cancel at any point, and assuming it meets the conditions of the "sickness, injury or death" part of the trip cancellation/interruption reasons, you should have no problem recovering what you're out, assuming you included at least that amount of your trip cost and paid any additional premium.

 

Of course, you may very well want to keep the pre-ex waiver in place for any pre-existing condition you (or a family member or traveling companion) may have, so if that causes you to cancel, you're covered for that. To do that, you typically need to cover all nonrefundable costs within a set number of days (same as the grace period you had to purchase the policy) of when they are incurred to keep the pre-ex waiver.

[jc719]

So let me make this a bit more concrete so that I understand...

 

Cruise $3900 per person (deposited, final due 5/26, variable cancellation penalty up to departure)

Cruise Taxes $110 per person (refundable)

Air $1360 per person (paid, non-refundable)

Air Taxes $130 per person (paid, refundable)

Cruise Deposit $250 per person (paid, refundable until 5/26)

 

Insured Trip cost $4500 per person

 

At this time (Feb 1), non-refundable exposure is $1360.

 

After Final payment (5/26), we start into the penalty period. If we get close to the departure date (100% penalty), non-ref exposure would be $5260 (cruise + air). So I'd be underinsured by $760.

 

Two scenarios (assume no dispute over the reason for cancellation and it is not due to pre-ex condition at the time the trip was initially booked):

 

1. Cancel before final payment. Non-refundable loss $1360. Should I expect to receive $1360 in this case?

 

2. Cancel between final payment and departure (let's assume 100% cruise penalty). Non-refundable loss $5260. If the insured trip cost remains $4500, should I expect to receive $4500?

 

And should I be able to increase the coverage to the full non-refundable trip cost before (or concurrent with) final payment? Is there any reason to increase the coverage BEFORE final payment?

[PartyAllDaTyme]

1. Yes. You've insured the trip cost at $4500, you've actually paid $1490 for air (but $130 is refundable) plus $250 for deposit on the cruise (which is refundable). You took out a policy, then came down with a medical condition (unrelated to any pre-existing condition) for which the doctor imposes medical restrictions, so you cancel. You'd be out $1360, so you can get that back.

 

2. Yes. You failed to cover the additional $760, so you lose your pre-ex waiver, but that's not why you're cancelling. You get back 100% (or a better way to put it is up to 100%) of the insured trip cost, which is $4500.

 

Yes, you would be able to increase the trip coverage by the extra $760 concurrent with (or shortly thereafter, depending on the policy language), and you should. If you don't, if your new condition doesn't cause you to cancel but then the pre-existing condition recurs or worsens, causing you to cancel, you get nothing because the pre-ex waiver is gone.

 

No, there's no reason to cover the additional amount before you make final payment, except to have the peace of mind that comes with knowing that it's taken care of. With the additional trip cost comes an increase in the premium, and why pay it before you're committed to the additional amount? If you increase the trip cost, pay the additional premium, then cancel before you make the final payment, you just paid an additional premium for nothing.

 

If you weren't concerned about the pre-ex waiver, you still wouldn't have to insure the full cost of the cruise as you make final payment, just 50% once the penalty becomes 50%, increase it to cover 75% when the penalty reaches 75%, and 100% once the penalty reaches 100%. But to keep the pre-ex waiver, the trip cost on the policy must be increased within a certain time of its being paid, whether it's refundable in all or in part at the time. If it becomes nonrefundable, it must be covered when it's paid.

 

Disclaimer-- this information is based on the policies I'm familiar with. Your language may differ. I work for one of the large travel insurance providers, so I probably have a higher than average understanding of how policies work, but I have known to be wrong.:o

[sirwired]

The "simple" rule with most policies is: "Insure any payments as you make them if you want to keep your pre-ex waiver." (An exception would be fully-refundable airline bookings, but that won't be an issue for pretty much anyone taking a vacation.)

 

For instance:

- You haven't paid your final payment yet. No money is at risk, and therefore no insurance is required on it. The second you click "submit" on the final payment (or it's withdrawn from your account), call the insurance company and request a policy increase, and pay the premium as necessary.

- You book a hotel. Most hotels charge you for a night if you don't cancel before a certain time. You don't need to insure this, as it's not a pre-payment. Of course you can't claim it if it isn't included in your limit, but it won't affect your pre-ex waiver.

- You book a discount hotel reservation that is pre-paid and non-refundable. Insure this right away.

 

Important note: Despite the fact that a booking deposit is fully refundable up until final payment, since it eventually becomes non-refundable, you'd be playing with fire by not insuring it as soon as you book. Likewise, don't insure your final payment in 25% steps as you go through the penalty period. That'd be a battle over policy language I'd never look forward to, and it saves very little money. (I know you didn't mention doing this, but I thought I'd mention it.)

[jc719]

An additional wrinkle...

 

I purchased air for this trip using United MP points. The taxes were paid in cash, but refundable. I changed the air to a similar, but different, shorter, trip later this year (not in support of a cruise, just a land trip). There was a $200 (total) charge to re-deposit the points, which were then re-issued for a new itinerary. Kept the same PNR with UA. I'll get some $ back as the taxes on the new itinerary are less than the original.

 

I think the $200 re-deposit fee should be covered under the cancellation provision. Agree?

[sirwired]

I don't think you need to insure the re-deposit fee, as it was a one-time service fee and wasn't applied to your fare. Your ticket was paid for with FF miles (and a little bit of cash for taxes/fees.)

 

Let me put it this way; if you were to cancel, I don't think insurance would let you recover that re-deposit fee you paid as part of your initial reservation. If you can't file a claim to get it paid, you don't need to insure it.

 

(As a side-note, if you must pay a re-deposit fee as part of a cancellation (vs. as part of your initial reservation), some policies will cover that.)

[PartyAllDaTyme]

Important note: Despite the fact that a booking deposit is fully refundable up until final payment, since it eventually becomes non-refundable, you'd be playing with fire by not insuring it as soon as you book. Likewise, don't insure your final payment in 25% steps as you go through the penalty period. That'd be a battle over policy language I'd never look forward to, and it saves very little money. (I know you didn't mention doing this, but I thought I'd mention it.)

 

Absolutely, insure your final payment in full right after you make it if you want to keep the pre-ex waiver in place. If it becomes non-refundable, you can't wait on it until it actually is nonrefundable, it's based on when it's paid. But for someone who doesn't need pre-ex or maybe has cancel for any reason coverage, there is generally no need to bump the coverage up in full immediately. If someone has an expensive cruise, say $20,000, and would only be out $10,000 if they cancelled right after the final payment, they might pay a $1000 premium if they covered the full amount when a $500 premium is all that would be needed to protect the $10,000.

[PartyAllDaTyme]

An additional wrinkle...

 

I purchased air for this trip using United MP points. The taxes were paid in cash, but refundable. I changed the air to a similar, but different, shorter, trip later this year (not in support of a cruise, just a land trip). There was a $200 (total) charge to re-deposit the points, which were then re-issued for a new itinerary. Kept the same PNR with UA. I'll get some $ back as the taxes on the new itinerary are less than the original.

 

I think the $200 re-deposit fee should be covered under the cancellation provision. Agree?

 

Disagree. If you want to spend extra money to re-deposit the points, and then, I presume, to make alternate arrangements for the cruise, that's your choice. But it would be similar to the situation of someone who just decides they want to fly out a day early and expects the insurance to cover their change fee. Unless it's done for a covered reason, such as sickness, it wouldn't be applicable under trip cancellation.

 

Edit-- I think I misunderstood. If you're asking if you need to include the $200 to re-deposit the points as part of the trip cost, no. You wouldn't be able to claim it, as I explained, so no need to cover it. The $200 is unrelated to this trip.

Edited February 4, 2014 by PartyAllDaTyme
Oh, duh, he meant "does he have to cover it?"

[PartyAllDaTyme]

(As a side-note, if you must pay a re-deposit fee as part of a cancellation (vs. as part of your initial reservation), some policies will cover that.)

 

Correct. While most policies cannot insure the value of the miles, they can insure any money actually paid or might be paid. It may seem counter-intuitive to include the cost of re-depositing the points if you don't need to pay that cost if you don't cancel. But since the schedule of benefits would be "100% of the insured trip cost" and if the re-deposit fee is not included, there's no basis for paying it out.

[jc719]

I don't know if the re-deposit fee is covered or not, but I think it should be.

 

The policy says

"Benefits will be paid up to the Maximum Benefit Amount purchased to cover You for the Published Penalties and unused non-refundable prepaid expenses for Travel Arrangements as well as airfare cancellation charges for flights commencing within one week of the Covered Trip when You are prevented from taking your Covered Trip due to ... [covered events]"

 

My loss for (published cruise line penalties + published TA penalty + air miles redeposit fee) are < Max Benefit amt.

 

One issue might be that I'm not cancelling the air, but changing it to another unrelated trip later in the year (so not cancelling). I could have cancelled completely and later purchased a new air trip, but the charge would have been $400 for cancelling vs. $200 for changing. I was just mitigating the loss.

 

Am I wrong thinking that these air miles change fee would be covered?

[klfrodo]

 

Am I wrong thinking that these air miles change fee would be covered?

 

I'd say yes, your thinking is wrong.

The air miles reimbursement charge is no longer part of the covered event. You changed that. The air miles are now part of a different travel that is not part of the original event.

Had no changes been made, then the charges would have been covered.

 

Then again,,, I have been wrong before. Just ask my wife. :D