Why Travelers Often Misunderstand What Travel Insurance Really Covers: Scambusters #1,209
You've planned your trip and paid for your flight. Then, you see a pop-up asking if you want to “protect your travel.” This small choice can cause a lot of confusion later. Travel and flight insurance are real products, but unclear wording, fine print, and hurried decisions often make people feel tricked and defrauded. Knowing what these policies cover, and what they don’t, can help you figure out if travel insurance is a good safety net or just an extra cost.
Travel Insurance: A Scam or Smart Protection?
Planning a trip is exciting. Whether you’re booking a dream vacation to Europe or a quick getaway within the country, you probably don’t want to worry about losing your money. However, unexpected events can happen. Flights can get canceled, luggage can get lost, and medical emergencies can occur while traveling. This is where travel insurance comes in handy. But while travelers seek protection, scammers look for ways to take advantage of that need.
Travel insurance scams are real and can leave you without the coverage you need when it matters most. It’s important to know how to tell the difference between real policies and scams. This article explains what travel insurance is, the risks of buying it, and how to avoid falling for a scam.
Travel Insurance vs. Travel Protection – Is There a Difference?
The terms “travel insurance” and “travel protection” are often used as if they mean the same thing, but they can have different legal and financial meanings.
Travel insurance is a type of insurance that is regulated by the government. An insurance company underwrites it and follows strict rules from state and federal laws. When you purchase a policy, you enter a legal agreement that provides specific coverage for certain events, like medical evacuations or trip cancellations, in exchange for a premium. If the insurance company goes bankrupt, there are usually state funds that protect policyholders.
Travel Protection Plans are often unregulated waivers. These plans are usually sold by travel agencies, tour operators, or cruise lines. While they may provide some benefits like canceling for any reason, they are not always supported by an insurance company. If the tour operator goes out of business, your “protection” might disappear with them.
Understanding this difference helps you avoid problems later. Always check who is responsible for the plan.
What Does Travel Insurance Generally Cover?
Travel insurance policies cover certain financial risks. While each policy is different, most offer standard coverage that includes:
- Trip Cancellation/Interruption – You can get reimbursement for non-refundable expenses if you cancel for covered reasons, such as illness, a death in the family, or jury duty.
- Medical Emergencies – Coverage for hospital visits, doctor fees, and medication while you travel.
- Emergency Evacuation – The cost of taking you to a hospital or bringing you back home during an emergency.
- Baggage Loss/Delay – Compensation for luggage that is lost, stolen, or delayed.
- Flight Delays – You can get reimbursed for meals and accommodation if your flight is delayed for a certain number of hours.
Why Buying Coverage is Becoming Risky
In today's digital world, buying travel insurance mostly happens online. While this is convenient, it has led to an increase in fraud and scams.
The main issue is the growth of fake websites and phishing emails. Scammers create websites that look like major insurance companies or travel booking sites. They use pressure tactics, like “limited-time offers” or claims of “instant approval,” to rush travelers into buying without reading the details.
Also, the rise of robocalls and unsolicited emails promoting “comprehensive travel protection” at low prices has caused many people to buy useless policies. The anonymity of the internet allows these scammers to vanish once they collect your payment.
Reports of Travel Insurance Scams
Travel insurance scams have become more common in recent years. These scams usually follow certain patterns:
- The Fake Policy – The consumer pays for a policy and gets a confirmation email. However, when they try to file a claim, they find out that the policy number does not exist or that the company is not legitimate.
- The “Free” Vacation – Scammers promise a free trip but require the victim to buy a specific and costly travel insurance policy to claim the prize. The trip never happens.
- Medical Insurance Fraud – Travelers buy policies that promise to cover medical bills when they are outside the US. However, these policies often provide no coverage at all, leaving travelers to pay huge hospital bills themselves.
Do Airlines Offer Travel Insurance?
Most major airlines offer travel insurance as an option when you buy your ticket. However, these plans are often basic and may not meet your specific needs, like covering preexisting medical conditions or allowing you to cancel for any reason. It's usually cheaper and more effective to buy a comprehensive policy from a third-party provider instead of relying on the airline's add-on.
Who Sells Legitimate Insurance?
Many people believe they can only buy travel insurance from a travel agent. While agents do offer policies, there are other valid ways to purchase coverage.
- Third-Party Insurance Companies – Allianz, Travel Guard, and Seven Corners offer travel insurance.
- Insurance Aggregators – Websites like SquareMouth and InsureMyTrip help you compare insurance policies from different approved providers.
- Credit Card Companies – Many premium credit cards include travel protections, but the coverage limits are often lower than those of separate insurance policies.
- Airlines and Cruise Lines – These often provide extra protection during checkout.
Strict Stipulations and Claims
Buying travel insurance doesn't guarantee you will get paid. Insurance companies have specific rules about when you can make a claim.
For instance, many policies include a “look-back period” for preexisting medical conditions. If you saw a doctor for a health issue in the 60 to 180 days before you bought the policy, they may not cover that condition unless you got a special waiver.
Also, “Trip Cancellation” doesn't mean you can cancel just because you changed your mind. You need to provide proof, like a doctor’s note, a death certificate, or a jury summons, to show that something serious happened. If you can't provide this proof, your claim may be denied. This is standard practice in the industry. It is not always a scam, but it can feel that way for travelers who aren't prepared.
Real-Life Example – How a Plan Works vs. a Scam
To understand the difference, let's look at two scenarios involving a broken leg before a trip and food poisoning on a trip.
Scenario A – The Legitimate Plan
- Sarah buys a travel insurance policy from a well-known company for her trip to Italy. Three days before she leaves, she breaks her leg and needs surgery. She calls her insurance company, and they send her a claim form. Sarah fills out the form and includes her doctor's report along with receipts for her non-refundable flights and hotels. After reviewing her documents, the insurance company reimbursed her for the trip costs she lost.
Scenario B – The Scam
- Mark received an unwanted robocall about “Premium Global Travel Protection” for $50. He bought it over the phone for his trip to Thailand. While in Bangkok, he got food poisoning and went to a clinic. He tried to call the number on his “policy card” to authorize payment, but the number was disconnected. He ended up paying the bill out of his own pocket. When he got home, he checked the website on his receipt, but the domain had expired. Mark lost his money and had no coverage.
Protecting Yourself – Red Flags to Watch For
You can protect yourself from scams by being vigilant and looking for these red flags:
- Unsolicited Offers – Be careful with cold calls or emails that sell insurance. Trustworthy insurance companies rarely use this method to sell their products.
- Price is Too Low – If a policy promises million-dollar medical coverage for a $20 premium, it is likely not real.
- No Underwriter Listed – A good policy will clearly say which insurance company provides it, like “Underwritten by Nationwide.” If this information is not included, do not buy the policy.
- Vague Contact Information – If a website does not have a physical address or a working customer service number, avoid it.
- Refusal to Provide a Copy of the Policy – You have the right to see the full policy document before you buy. If they won’t show it to you, leave.
What to Do If You Suspect a Scam
If you suspect you have purchased a fraudulent policy or are dealing with a scammer:
- Contact Your Bank Immediately – If you paid by credit card, dispute the charge. Report the transaction as fraud.
- File a Complaint – Report the company to your state’s Department of Insurance. Insurance is state-regulated, and they have the power to investigate.
- Report to Federal Agencies – File a report with the Federal Trade Commission (FTC).
- Check Your Policy Status – If you bought a policy through a third party (like a travel agent), call the insurance carrier directly to verify that a policy exists in your name.
Summary
Not all travel insurance is a scam, but many travelers feel confused or taken advantage of due to misleading marketing and some outright fraud. It’s important to know the difference between real travel insurance and unregulated “travel protection” plans. This understanding can help you spot common scam tactics. You should also know what real policies cover and what they do not. By understanding how travel insurance works, you can make better decisions and avoid costly mistakes.
Remember, Stay Alert and Stay Informed!