Most travel insurance providers require that you buy their policy in an amount that will cover all nonrefundable travel expenses. My question goes to how or when do you include hotel or resort charges where the hotel charge can be cancelled up to a few days in advance of the arrival dates, e.g., 1, 3 or 5 days before arrival.
Since the hotel booking is refundable (up to a point), it doesn’t make sense to include the expense of part of your covered travel policy. But when it does become nonrefundable a few days before your arrival, it seem it should then be added. And since many trips are cancelled within a few days of starting the trip, it would seem you would want the hotel charge to be covered by the policy.
Any thoughts or experiences would be appreciated.
There are practical and pragmatic considerations here. For the relatively modest cost of travel insurance, keeping it simple makes sense, hence the approach of having a single figure for the amount covered for cancellation fees. Higher value insurance products can cater for such variations, but it’s simply not worth the insurance company’s efforts to do it for a few dollars difference.
It’s thus your decision. Do you take the safe option of including the hotel fees in the total coverage (even if you would not be able to claim for this, because the hotel would refund), or accept a modest amount of risk on yourself by excluding them. Absolutely your choice, and your financial situation / appetite for risk are influences to that decision.
You can always ask your insurer / agent, whether you’d be disallowed from claiming against a refundable deposit. I suspect they would not allow this, but in some spheres they also apply pragmatic simplicity in the customer’s favour.
I include everything. Even most hotel bookings will have a deadline. If an issue occurs the same day you are to arrive, it is no longer refundable. If you have something happen during your trip, say you are two days into a 14 day trip, the remaining 12 days are non-refundable. The difference in cost is usually minimal. If you want to be sure, have them price it both ways.
It doesn’t only matter what you include in the declared amount. What also matters is the definition of covered damages.
Covered damages in all the policies I’ve seen do not cover hotel penalties assessed after cancellation. Only prepaid amounts ( like lost deposits or, if 100% prepaid, everything)
This makes it useless for most of my trips.
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I have to say, that’s **shady practice from the insurer. Such penalties are a genuine customer loss on the risk you’re insuring. Excluding them is IMO unreasonable. A customer can reasonably expect to be put into a ‘no loss’ situation by the insurance.
In that situation, it would make practical sense for a customer to voluntarily pay the remainder of the whole bill, a day before the penalty charges would kick in. That would close the loophole, because that payment would now be non-refundable. Our ombudsman would I’m sure take a dim view of an insurer trying to fight their corner in such an nstance. Not sure if you have similar independent consumer protection in the US.
** Disclaimer
Summary
I used to work in insurance, so don’t subscribe to the stereotypes about small print con artists. However there are always areas where the industry could and should do better.