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Why You Should Buy Insurance Before Your Next Cruise

It's not difficult to imagine all of the things that could go wrong on a cruise: hurricanes, political upheaval and a sudden illness are just some of the snafus. On the other hand, how many times to things actually go wrong? Hardly ever.

It's not difficult to imagine all of the things that could go wrong on a cruise. Terrorist attacks, hurricanes, political upheaval, war, broken down ships, new ships not finished on time, cruise lines going out of business, or a sudden illness are just some of the snafus that could get in the way of you and the cruise of your dreams. Or maybe it's as simple as a flat tire on the way to the airport that causes you to miss your flight to the ship. Who knows?

On the other hand, how many times to things actually go wrong? Hardly ever.

It's that "what if" obsession that drives some of us to buy a piece of paper indemnifying us against the unknown. But is travel insurance really necessary?

"Insurance was sure a big help to those who bought it for cruises during the 2004 and 2005 hurricane season, but for 2006 it was a waste of money because there weren't any hurricanes," says Cruise Week editor Mike Driscoll.

In today's hyper-sensitive, CNN-will-find-out world, cruise lines have been making extraordinary efforts to appease disappointed passengers when something happens that effects the whole ship, whether they bought insurance or not. Typically, a line will reschedule a canceled cruise because of mechanical problems or a major itinerary change, for example, and offer passengers big discounts on future cruises. After all, they don't want the bad press they'd get if they cheated hundreds or thousands of people. Still, keep in mind that there are no set rules on how a line will compensate you, over and above a refund, in the event of a cancellation.

Now, if you personally need to cancel your own cruise for some reason, most lines give you every cent back if you cancel at least two to three months before your departure date, although details vary from line to line. If you cancel closer to departure, you'll usually get a partial refund up until about 15 to 30 days before the cruise. If you cancel the whole thing just a few days beforehand, you'll be out the entire cost of the trip.

"You buy insurance if you're concerned about medical issues or work commitments possibly preventing you from taking a cruise at the last minute," adds Driscoll. "If you're just worried about missing a flight and not getting to the ship on time, go a day early and spend your money on a hotel and nice dinner instead," he says.

If you're anxious about potential medical problems occurring during your trip, then travel insurance may be vital to you. Except for the very smallest ships, most cruise ships have an infirmary staffed by a doctor and a nurse or two; but in the event of a dire illness, the ship's medical staff can only do so much. Therefore, you may want a policy that covers emergency medical evacuation and, if your regular insurance doesn't cover it, the potential cost of major medical treatment while away from home.

There are policies sold through the cruise lines (with details varying from line to line) and others sold independently. Both sources have pros and cons.

A good travel agent can tell you about policies sold through the cruise lines and ones sold independently of the lines. No matter which you choose, it's absolutely crucial to read the fine print because terms vary from policy to policy.

Both kinds typically reimburse you in some way when your trip is affected by unexpected events (such as canceled flights, plane crashes, dockworkers' strikes, or the illness or death of a loved one, as late as the day before or day of departure) but not by "acts of God," such as hurricanes and earthquakes (the exception being if your home is made uninhabitable, putting you in no mood to continue with your cruise plans). Both also typically cover cancellation of the cruise for medical reasons (yours or a family member's); medical emergencies during the cruise, including evacuation from the ship; lost or damaged luggage; and a cruise missed due to airline delays (though some only cover delays over 3 hours). Neither kind of policy will reimburse you if your travel agent goes bankrupt, so using a travel agency you're very familiar with or who has been recommended to you is the safest precaution you can take. (And, of course, always use a credit card, never a check. If a corrupt travel agent cashes it, or a decent one just goes out of business, then you could get screwed.) Most cancellation policies also do not cover cancellations due to work requirements.

Ins and Outs of Third-Party Coverage

Even though travel agents get a commission for selling both cruise line policies and independent policies, most agents and industry insiders believe that non-cruise line policies are the best bet because some, such as Access America (tel. 866/807-3982;, will issue insurance to those with preexisting medical conditions if the condition is stable when purchasing the insurance (a doctor would have to verify this if you ever made a claim) and if you purchase the policy within 14 days of your initial deposit on the cruise. Reputable insurers like Access America and Travel Guard International (tel. 800/826-4919; offer supplier-default coverage that kicks in if a cruise line goes bankrupt, which a handful did between 2000 and 2003. Both of these companies' websites maintain lists of the lines they cover (or no longer cover), which is helpful in figuring out which lines may be considered financially shaky. Further, a well-connected, respectable travel agent should see the writing on the wall months before a cruise line fails -- commissions will slow or stop being paid, phone calls won't be returned, and industry trade publications will report on any problems. "Personally, I recommend a third-party insurer such as Travel Insured or Travel Guard as they provide greater benefits and value than the cruise lines' protection," says Sherry L. Kennedy, owner of Vacation Shoppe in Satellite Beach, FL. The less customer-service-driven cruise sellers may not stop pushing a troubled cruise line, however, and may continue selling these lines up to the very last minute.

According to the Fair Credit Billing Act, if you paid by credit card (and again, you should always pay with a credit card), you'll generally get your money back if you dispute the charge within 60 days of the date the charge first appears. Also, while many lines post a multimillion-dollar bond with the Federal Maritime Commission, creating a fund from which they can reimburse creditors should they fail financially, it's no guarantee you'll get all or any of your money back. Technically, the bond covers cruise payments for all passengers embarking from U.S. ports, but because the line would have banks or other vendors to pay off first, you'd likely get only pennies on the dollar, if that. Still, it's better that a cruise line have a bond than not -- and if you learn that a line is having trouble making bond payments, it may be a sign of serious financial woes.

The Ups and Downs of Cruise Line Coverage

Cruise lines offer their own policies, many of them administered by New York-based BerkelyCare (tel. 800/797-4514). If you opt for this type of policy out of sheer convenience (the cost is added right onto your cruise fare), keep in mind they do not cover you in the event of a cruise line bankruptcy (though using a credit card can save you here; see above) or for cancellation of your cruise due to preexisting medical conditions, which is usually defined as an unstable condition existing within 60 days of your buying the insurance. Some lines' policies will issue a cruise credit for the penalty amount if a medical claim is deemed preexisting, and issue you cash if you cancel for a covered reason. Generally, the cancellation penalty imposed by the cruise line would be 100% of the cruise fare, for example, if you cancel a few days before the cruise (assuming you've paid in full), or it could be just $300 if you cancel right after making the initial deposit months before departure. Be sure the coverage offered is truly an insurance policy. In some cases, the coverage is really a cancellation waiver that provides a credit for a future cruise under limited conditions.

Sounds like the third-party policies win hands down, right? Well, to make it just a little more complicated, a handful of cruise line policies are actually better in some areas than outside policies. For example, Princess Cruises has an insurance policy that allows you to cancel for all the reasons that an outside policy would (illness, injury) and get cash reimbursement, or they will let you cancel for any reason whatsoever (from fear of flying to a bad hair day) up until the day of departure and have 75% to 90% of the normal penalty for canceling your cruise applied toward a future trip. Norwegian, Celebrity, and Royal Caribbean offer similar "any reason" policies, which provide a cruise credit for up to 75%. For an extra $100 above their standard insurance fee (or $250 if purchased alone), high-end Silversea allows you to cancel cruises for any reason 1 to 14 days before sailing and get a credit for 100% of the penalty amount (including airfare, if booked through Silversea), applicable toward any cruise within the following 12 months. Many other lines offer similar cancellation plans. The cruise lines using the BerkelyCare policies also reimburse passengers for days missed on a cruise -- say, if you missed your flight and had to join up with the cruise two days later -- covering hotel costs during the missed days and transportation to the ship (though typically only to a max of $500). Keep in mind, cruise line policies do change, so before purchasing insurance be sure you understand exactly what you're getting.

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