To celebrate her 60th birthday, Andrea Shelly booked a trip to Tanzania and Rwanda through Butterfield & Robinson, a luxury tour operator. She planned to bring her adult children on the two-week adventure. But with a $130,000 price tag, Shelly knew that ordinary travel insurance wouldn't do -- and she was right.
A few months before her planned departure, one of Shelly's sons got a promotion and the family decided to postpone their African safari.
"It didn’t feel like it was appropriate to take so much time off as a newly-minted associate," explains Shelly, a real estate investor from Irvine, Calif.
Had Shelly bought a garden-variety travel insurance policy with named perils, she'd be out of luck. A work promotion isn't covered by most travel insurance policies. She'd be on the hook for tens of thousands of dollars in nonrefundable charges.
Fortunately, she'd purchased insurance through a specialty provider called Cavalry Elite Travel Insurance. It's cancel-for-any-reason trip protection that pays 75 percent of your trip, no questions asked. Cavalry quickly cut Shelly a check for $19,000, the portion of her deposit and nonrefundable airfare due under the policy.
Travel insurance is diversifying. While standard travel insurance can cover most normal vacation trips, there are outliers including luxury vacations, corporate travel, and adventure vacations that demand special coverage. These newer types of policies match the unique nature of the trips to the coverage, building on a portfolio of niche insurance products that already exist. All told, they offer travelers more choices when they're looking for insurance.
Travel insurance isn't a one-size-fits-all product
"We believe travel insurance is not a one-size-fits-all product," says Tom Bochnowski, a vice president for Redpoint Resolutions, which provides evacuation, travel assistance, and non-insurance services, and which owns Cavalry Elite Travel Insurance. "What you need for a family trip to Disney World is a lot different than what you need for climbing Everest. And what you need for climbing Everest is much different than what you need for a luxury tour of Europe."
Tour operators feel that way, too. Simon Elliott, director of industry partners at Butterfield & Robinson, says his customers needed more than regular trip protection because of the specialized nature of their tours.
"We're looking for a change from the standard wholesale insurance product we had been offering for many years," he says. "It really was one-size-fits-all with everyone paying the same rate irrespective of their age and it was not flexible in the ways we needed it to be to reflect our evolving business."
Redpoint developed the Cavalry Elite Travel Insurance product based on market demand from upscale tour operators like Butterfield & Robinson to include features luxury travelers needed. Those include evacuation services home when you’re hospitalized or trapped in a dangerous security situation, and primary medical expense, emergency dental coverage, and baggage loss.
Building on a niche travel insurance product portfolio
Specialty travel insurance isn't new, but it's been something of a cottage industry until now. For example, the Divers Alert Network offers members special coverage underwritten by AIG, as well as coverage for dive equipment, cameras, housings, lenses and strobes. You can also buy mountain climbing insurance, underwritten by Lloyd's, through sites like VisitorsCoverage.
But as travel becomes more diversified, with multiple components, travelers can end up with coverage they don't need or insurance that doesn't adequately cover them. And that's where I come in. I run the travel industry's unofficial complaints department, and I receive dozens of travel insurance grievances a week from tourists with rejected insurance claims.
The travel insurance industry seems to be just as unhappy with these complaints as its customers are, and has been working on a fix. But it's not as simple as it sounds. Most travel insurance companies work with a separate company called an underwriter, assessing risk and ensuring that the cost of the coverage is proportional to the risks faced by the individual policyholder. Each new product must be carefully evaluated to ensure its feasibility, and then approved. That can take time, and the answer is sometimes "no."
In other words, a solution like the safari coverage purchased by Shelly doesn't happen overnight, and it may not happen at all. The Cavalry product used by Butterfield & Robinson was developed over a six-month period, says Elliott, the Butterfield & Robinson representative.
Offering travelers more flexibility
The problem with existing policies is their lack of flexibility, according to Redpoint. Say you're going on a climbing trip. You'll need a travel insurance policy that includes medical expense coverage for illness or injury incurred above a certain altitude.
"A policy that has mountain climbing exclusions or excludes any injuries at the altitude you’ll be climbing isn’t the right policy," explains Bochnowski. "You'll also want to be sure that there is a rescue component and one that doesn’t require hospitalization or an attending physician to approve the helicopter evacuation."
Redpoint also offers another product, Ripcord Rescue Travel Insurance, which covers mountain climbing at any altitude and includes search and rescue services from the traveler’s point of injury or illness.
To travelers like Shelly, these products with special coverage are perfect for their adventurous itineraries. She says she's grateful that Cavalry came to the rescue when she had to cancel her safari -- so much so that she bought another policy for an upcoming mountaineering trip to Ecuador.
"As it happens," she adds, "I will have to cancel that trip too. So I'm happy to have travel insurance."
Christopher Elliott is the founder of Elliott Advocacy, a 501(c)(3) nonprofit organization that empowers consumers to solve their problems and helps those who can't. He's the author of numerous books on consumer advocacy and writes weekly columns for King Features Syndicate, USA Today, and the Washington Post. If you have a consumer problem you can't solve, contact him directly through his advocacy website. You can also follow him on Twitter, Facebook, and LinkedIn, or sign up for his daily newsletter.
