Is travel insurance a ripoff? U.S. senator’s report says flyers should beware.
Too many airlines and online booking companies push air travelers into buying travel insurance that often fails to provide the promised coverage, according to a new report released by a member of Congress.The report, released Tuesday by Sen. Edward J. Markey (D-Mass.), says airlines such as American, Delta and JetBlue, along with online booking websites such as Travelocity and Orbitz, use aggressive and deceptive pitches to persuade travelers to buy policies that often have so many fine-print exceptions that they’re of little value to anyone except the airlines and the insurers.
These policies add as much as 7.5 percent to the cost of a domestic ticket and more for some international tickets, according to “Flyer Beware: Is Travel Insurance Worth It?”
[Senator suggests travel insurance is ripping off consumers. But this firm offers to help people get compensated for disruptions]
As airline travel has boomed, so has the travel insurance business. But the report is critical of the way that online ticketing agencies and airlines market the insurance. While many of their websites allow consumers to breeze past other add-on options such as early boarding, it says, those same websites generally require the consumer to purchase or decline travel insurance before going to the checkout — and, in some cases, not without seeing an ominous warning about the risks of going without. And the pitches work: About 82 percent of air travelers sign up for the policies.
The report says CheapTickets.com’s “Total Protection Plan” is anything but. It also says United Airlines peddles a policy to cover electronic devices such as laptops that will only pay $500 for the first bag lost, $250 for additional bags, up to a total of $500 for everything. United’s policy also requires the original receipt before it will reimburse travelers for an item that cost more than $150. Other policies make it difficult for travelers to make a successful claim if their flights were canceled or interrupted because of illness or injuries, the report says. One anonymous traveler quoted in the report filed a claim with the Better Business Bureau, complaining about having purchased a $65 travel insurance policy for a trip to Puerto Rico that paid zero after the trip had to be canceled because of hurricanes.
At least some of the airlines and booking websites receive a cut from each policy sold, the report says. The senator is seeking additional financial information from AIG Travel Guard and Allianz Global Assistance, which write policies for travelers of more than a dozen airlines or booking sites.
Airlines for America, the industry’s lobbing arm, couldn’t speak to the specifics of various travel insurance options, a spokeswoman said. But she added that many airlines do offer fully refundable ticket options for passengers who are concerned they will need to make last-minute changes.
The report — which was compiled using publicly available information — can be found here.
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