What about "cancellation insurance?" Do I need it?
Every time you book a cruise, you are probably asked if you want to purchase some form of cancellation protection. A lot of people say no. A lot say yes. The answer we get most often is, "Do you think I should get it?"
We're going to tell you right off, we can't answer whether or not you need it. That's a personal decision that only you can make. In this discussion, we're not going to try to sell you on the idea or lead you to a conclusion, just present the facts and answer questions about the types of programs available. How to assess your risks The first thing to do is to look at the risks involved, the types of things that could be covered, and how likely you are to actually need that coverage. Let's look at the types of things for which coverage is available. Keep in mind that we are speaking in generalities here.
Each cruise line's cancellation provisions will be different, and each company's insurance policies will provide different coverage. You will have to take the time to read the information from the line and the insurance company; there is no substitute for that. You need to also check the actual cancellation penalties that could be assessed if you need to cancel before you leave on your cruise. For most lines, there is no penalty at all if you cancel 75 days or more before departure. Usually even until a couple of weeks before departure you only stand to lose a couple hundred dollars per person. That last couple of weeks before departure is when you normally have serious money at risk, and the last few days before you depart, you would lose your entire investment if you cancel. Keep in mind that the cruise lines adhere to these penalties very rigidly. They used to be liberal, but when they started selling insurance themselves, they realized that if they continued to be flexible on their policies, it was unfair to the people who had purchased insurance.
There are also other things which should be considered that are covered by cancellation insurance policies. One of those things your return transportation if you need to leave the cruise early due to the illness of someone back home. Another is your transportation to the first port if you should miss your cruise because your flight is late in arriving at the port city. Another is health insurance for yourself while you are on the cruise. (You are leaving the country, and many people's health insurance (including Medicare) does not cover them for treatment outside the country.) Those are the major things to consider in assessing your risk. How likely are you to need coverage for any of those things?
Next we'll look at what is typically included in the coverage. Keep in mind as we mentioned earlier, the cruise lines adhere to their penalties very strictly. They do not provide credit toward a future cruise or refunds no matter what the hardship. Nonetheless, this is an option to consider. Cancellation Fee Waivers A few cruise lines offer a "cancellation fee waiver." This is not insurance. They simply wave their cancellation penalty if you need to cancel before you depart. This usually only applies up to a few days before departure; at that time, if you cancel, the normal (usually 100%) penalty applies. This waiver must be purchased at the time you make your deposit. You cannot add it later. On the positive side of this plan, you may cancel for any reason whatsoever (up to the period where the plan is no longer effective) and not be assessed a penalty. (Of course, the fee you paid for the waiver is not refundable.)
On the negative side, you have no coverage for anything that happens after the coverage expires (usually about three days before departure) or while you are on your cruise. By comparison to a standard cancellation insurance policy, these waivers are not usually too good a buy. Comparing the cost of the waiver and the insurance policy, the insurance is usually a little less. The disadvantage of the insurance is that you would need to cancel for one of the covered reasons (illness or such). On the other hand, looking at the schedule of cancellation penalties, there are usually only a few short time periods where you would lose too much more by paying the penalty than by paying the fee for the waiver. Cancellation/Trip Interruption insurance policies are what most people consider buying. Note: That it's more than just cancellation insurance; it also covers interruptions in your trip. It includes many more things than just reimbursing you for a penalty assessed by the cruise line.
There are two subcategories of this insurance.
One is that sold by the cruise line, and one is a policy sold independently of the line. They are basically the same, but there are unique advantages to both. Again, you must read the information about your specific policy. Do not purchase anything without fully understanding the coverage. Here is a summary of the main things normally included in these policies: The main thing most people are buying the insurance for is to cover any money they would lose if they had to cancel their cruise due to an illness. This illness could either be of yourself, your traveling companion or an immediate family member (or an immediate member of your traveling companion's family).
It does need to be a verifiable illness that a doctor will need to attest to. (Keep in mind that this is an insurance company you are dealing with. They will check the claim, and the doctor will need to certify to the company that it information given is accurate. It's more than his just writing a note to school saying Johnny was sick, if it's found that he hasn't really told the truth here, you both could be convicted of insurance fraud.) Many people benefit from another part of the coverage that they often don't even consider when deciding to purchase the insurance. If you something happens that you don't make it to the ship, and it sails without you, the cruise line treats it like a cancellation; there is no refund.
The insurance can cover your transportation to the first port to meet up with the ship if you miss your flight because of something unforseen and out of your control like an accident or breakdown on the way to the airport. (This can be important for people who have to drive to the airport in another city.) If you flight is delayed, and you miss your sailing, the airline is not obligated to do anything for you. Their responsibility is just to get you to the destination or refund your ticket if they can't.
This type of insurance will pay for your transportation to the first port and typically, overnight accommodations. Another main benefit of the insurance is if you need to return early due to illness of one of the family members (mentioned above). This would pay for your transportation back from wherever you are on your cruise to your home. One way tickets from the Caribbean can be expensive. If you should become ill while you are on your cruise, this insurance will help you out there too.
Many health insurance plans (including Medicare) do not provide coverage for your treatment outside the U.S. This insurance will provide basic coverage for medical treatment (or in some case also dental treatment) while you are away on your cruise. Many policies also provide for emergency medical transportation, including transportation to the nearest suitable medical facility. It can also include many other transportation benefits, like paying for a family member to come with you if you are going to be hospitalized for a length of time. These benefits, of course, vary by policy.
