How to avoid travel insurance 'gotchas'

— -- As I noted in a recent column, you have to be careful to comply precisely with the fine print in travel insurance if you don't want to risk a denied claim. That report elicited a response from John Cook, President of QuoteWright, echoing my conclusions and pointing out some additional details—details I thought are important enough to pass along to readers. As you might expect, most of the worst potential gotchas and pitfalls deal with pre-existing medical conditions.

The basic problem

Repeating the information in my original response, the question of pre-existing medical conditions is central to two key travel insurance issues:

Trip-cancelation and medical insurance policies generally exempt and therefore do not pay claims based on a pre-existing medical condition—illness or accident for which you sought or should have sought medical attention during a specified period prior to your insurance purchase. That period varies by company and policy; typically it's 60, 90, 120, or 180 days.

Many policies waive this exemption if you (1) buy enough insurance to cover the full nonrefundable portions of your trip and (2) buy it within a few days after you make your initial deposit. That purchase deadline varies by company and policy; typically, it's 10, 14, or 15 days, but a few policies allow you as little as 24 hours and a few as much as 21 days. And some policies—which you should avoid—don't waive the exemption at all.

The fine print applies to everyone

Most trip-cancelation policies cover cancelation when something happens not only to you but also to someone else in your travel party or a close family member who is not traveling. That's a valuable protection, because even through you might have no pre-existing medical problems, you might well have to cancel your trip because someone close to you falls ill or suffers an accident due to a pre-existing condition.

But the corollary to such coverage is that the limitation on pre-existing medical conditions applies to anyone on whom you might base a cancelation claim, not just to you. That fact clearly reinforces my earlier conclusion: No matter what your personal health situation, you're extremely foolish to buy travel insurance without buying early enough to get the exemption for pre-existing conditions waived. The waiver doesn't increase your cost; all you have to do is buy within the insurance company's time window.