Clark Twiddy is the President of Twiddy & Company, a hospitality and asset management firm along North Carolina's Outer Banks.
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It comes as little surprise to know that the pandemic’s lengthening impact on global travel patterns has changed travel thinking in ways well beyond the actual shadow of the virus’ reach. While many travel-and-tourism indicators continue to lag in performance, there are also significant bright spots particularly in the drive-to domestic market. As these bright spots continue to gain traction in the minds of travelers, one feature of this type of travel has also changed and rental property owners and operators should take note. This feature is travel insurance.
For many years, vacationing travelers viewed the purchase of travel insurance as an afterthought – in many cases, it wasn’t widely understood in terms of coverage and its purchase was considered by some with a level of suspicion around what value it actually provided.
Enter the pandemic – as the uncertainty of travel grew in vast proportion to the questions around the coronavirus, consumers have also quietly become much more knowledgeable about what good travel coverage is and when they should be using it. As a result, they’re buying it at a greater rate than ever before as this chart shows – the trend is specific to the Outer Banks areas but similar trends have been anecdotally shared across other drive-to destinations. As an industry, travel insurance is also growing with one projection putting the market size at $45 billion by 2027.
In essence, more people are buying travel insurance right now than at any other time and it’s a great chance to pause for a moment as rental property owners and operators to understand how consumers are thinking about coverage, how they are not thinking about it and what this trend means for traveling in the future – beyond the pandemic.
How Consumers Are Thinking About It Now
The purchase of any kind of insurance is essentially a decision to not only anticipate inherent risk but also transfer it – no surprise there. For travel insurance in particular, many consumers are finding it’s worth the time to understand coverages and benefits for not only the purchaser but the traveling party as well. The fine print in the purchase takes only a few minutes to either read or to call for specific questions. In a busy world, it’s easy to spend those minutes elsewhere, but remember an ounce of prevention is always worth a pound of cure. Consumers are thinking about it, in many ways, as an owner’s manual for their trip.
How Consumers Are Not Thinking About It
In making a decision to purchase travel insurance, it’s important to mention that transferring some risk does not mean transferring all risks. Many observers around recent financial headlines cautiously remark that low risk is very different from no risk. Many of those same “afterthought” insurance purchasers are caught off guard – put mildly – when a given situation isn’t actually covered in the policy. For example, many of the largest travel insurance providers in the world didn’t actually cover a pandemic due to inherent uncertainty of the pandemic itself. Those same providers are, of course, evolving their products to meet the needs of their customers today, but it is important to reflect on what insurance doesn’t cover in the event of a purchase. Sometimes, it’s easy to simply ask that question. Smart consumers are not thinking about it as a blanket trip coverage – like a roof for a building, they are thinking about what the roof covers and what it doesn’t.
What It Means For The Travelling Future
It will take some time for a return to any kind of normalcy in global travel patterns, and we would all agree that when this normalcy returns, travelers will have to be informed on topics like safety, health care and risks in a way they seldom have before. This means not only will travel insurance be more popular, as this trend below from the Outer Banks of North Carolina shows, but at the same time buyers will have to be more knowledgeable as they ever have before to understand what’s covered and what’s not.
For the owners of vacation rental properties, this is an interesting trend as well in that it means your guests are more educated than ever on risks and coverages. It makes clear sense to ensure you as the homeowner are fluent in terms of what your guests are reading and deciding upon. It also means that vacations are getting more expensive as travelers add coverages but, in turn, have more peace of mind around risks such as hurricanes and many other disruptive instances. All in all, the availability of your guests to purchase travel insurance is a good thing. In an uncertain world, the more certainty you can offer around your home, the more attractive it is to potential guests.
In short, travel insurance is more popular in travel channels now as a reflection of the larger uncertainty in travel confidence. It’s worth the time to purchase it, should consumers choose, not as an afterthought but as part of a larger commitment to stay safe, avoid risks and simply to have more peace-of-mind fun. Owners and operators of vacation rental properties should pay attention to this trend and understand the impact it can have on travel in an uncertain world. For consumers and owners, it’s important to understand when traveling in the face of remarkable uncertainty, knowledge is power and ignorance is in fact not bliss at all.
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