Travel insurance: For who, from where, and why?

There are several different types of travel insurance for consumers and insurance and performance bond programs for travel agents and tour operators [Travel Law § 5.04[5][Public Charter surety bonds] and § 5.09 [Travel Insurance for consumers, travel agents and tour operators] which may provide coverage for common travel problems experienced by tourists including physical injuries sustained while on a carrier, at a hotel or resort, while participating in sports or on recreational equipment, trip cancellation, lost, damaged or delayed baggage, supplier, tour operator or travel agent insolvency or default and a failure to deliver all the travel services paid for and the losses and consequential damages arising therefrom. This article is the first of three articles devoted to these issues.

Who Needs Travel Insurance?

Do you need travel insurance? [See Mayer, A Travel Insurance Skeptic Changes Her Mind, www.forbes.com (7/8/2013)(“I used to scoff at the notion of travel insurance…But now that I’ve gotten older, I’m having second thoughts about travel insurance, especially for expensive excursions, requiring lots of up front cash, to countries not known for their medical care”)].

Who Buys Travel Insurance & Performance Bonds?

Insurance policies or travel performance bonds may be obtained by airlines [see Lopez & Medina Corp. v. Marsh USA, Inc., (contractual dispute between Public Charter tour operator and charter air carrier arising from tour operator’s default in making payments for air transportation is not covered by aircraft owner’s airline insurance policy which only applies to tort not contractual liability); U.S. Aviation Underwriters v. Fitch-Leominster Flying Club (passenger walks into airplane propeller; coverage limited to $100,000 cap); RLI Insurance Co. v. Drollinger (aviation accident insurance policy ambiguous)]; cruise lines [in addition to obtaining standard accident insurance policies to cover passenger injuries, cruise ship touching U.S. ports are required by federal regulations to have sufficient funds, through combinations of surety bonds, insurance or escrow agreements to pay the full cruise contract price under circumstances where the cruise is not performed (Travel Law § 3.03[8][a]); Nova Information Systems, Inc. v. Greenwich Insurance Company (performance bond coverage issue)]; dive boats [see Sylva v. Culebra Dive Shop (scuba diver disappears in water and presumed dead; coverage issues)]; rental car companies [see Radin v. Avis Rent-A-Car System, Inc. (dispute over excess coverage)]; tour bus companies [see Lincoln General Insurance Co. V. De La Luz Garcia (fatal tour bus accident in Mexico; U.S. tour bus company insured for passenger bodily injury or wrongful death but territorial exclusion does not cover accidents in Mexico); Progressive Casualty Insurance Co. v. Lancer Insurance Co. (tour bus passengers injured in tour bus rollover); Lancer Insurance Company v. Garcia Holidays Tours (school children on field trip to Six Flags Texas exposed to coughing driver later diagnosed with active case of tuberculosis)]; hotels and resorts [see Insurance Co. Of North America v. Hilton Hotels (coverage issues for “underlying actions seeking to hold operator liable for failing to prevent sexual assaults that allegedly occurred during [Tailhook Association’s] convention at hotel”); Proshee v. Shree (coverage issues for guest’s injuries from assault in motel parking lot by unknown assailants)]; tour operators [Carley v. Theatre Development Fund (tourist in Russian hotel falls out of window while trying to open it; no evidence presented by injured tourist that tour operator promised to insure “the non-negligent operation of the Hotel Pulkovskaya”); tour operators may obtain Tour Operator’s Professional Liability Coverage insurance policies, Public Charter Tour Operator’s Surety Bonds and performance bonds issued by U.S.T.O.A., A.S.T.A. or N.T.A.); sponsoring organizations [see Insurance Co. Of North America v. Hilton Hotels] and travel agents [Travel Agent Professional Liability policies, Airline Reporting Corporation (ARC) performance bonds, and both may be required [or trust accounts] by a State’s Travel Seller statute [Travel Law § 5.08[1][e]].

Who Provides Traveler Insurance

In addition to insurance covering trip interruption or cancellation and medical evacuation sold by airlines, travel agents [see Travel Re-Insurance Partners v. Liberty Travel (discussion of sale of travel insurance by Liberty Travel); Harris v. Liberty Travel (customers “paid $59 each for trip cancellation/ interruption coverage, the Liberty Travel Protection Plan administered by Berkely Care, Ltd.”; vacation to Dominican Republic interrupted by evacuation caused by hurricane)], cruise lines (see Travel Law § 3.02[8][e](“the cruise line itself may sell it’s own form of traveler protection which travelers should compare with travel insurance available from independent travel insurance companies”)], rental car companies [see Ressler v. Enterprise Rent-A-Car Company (“Plaintiffs seek damages resulted from the alleged improper handling of a claim under a personal accident insurance policy”); for a discussion of rental car insurance see Travel Law § 3.05[3] and Rental Car Companies Behaving Badly [ETN (4/23/2014)]); Ferreiro v. Philadelphia Indemnity Insurance Company (dispute over excess insurance coverage)], travel insurance comparison websites [see www.squaremouth.com, www.insuremytrip.com, www.tripinsurancestore.com for comparisons, price quotes and customer reviews], banks may provide travel insurance to their customers [see Beavers v. Federal Insurance Co. (“The policy insured all persons maintaining a Wachovia Crown account and provided coverage for accidents while riding on a common carrier”) and credit card companies may provide travel insurance to THEIR card holders [see Spath v. Federal Insurance Co. (“Spath…participated in a whitewater rafting expedition…in Big Sky, Montana (and) paid for the trip using a credit card issued by Citibank (which) was the policyholder for an accident policy issued by [insurance company which] provided coverage to Citibank Visa card holders for hazards which the insured may be exposed [to] while [riding a common carrier]”; whitewater rafting company not a common carrier); Frankel v. Citicorp (a putative class action challenging the repeated and erroneous imposition of $13 payments for (Citibank’s) ‘Voluntary Flight Insurance Program’”; enforceability of arbitration clause in credit card agreement at issue)], tour operators may have commercial insurance policies [see Backroads Corp. v. Great Northern Insurance (dispute between tour operator and insurance company over coverage for business losses arising from cancellations after September 11, 2001 onwards”) or consumer protection plans [see National Tour Association v. Nordstrom (“As a participating member of National Tour’s Consumer Protection Plan, her customers …became entitled to recover the amount of their deposits from National Tour by reason of the bankruptcy filing”)].

Cruise Shore Excursion Insurance

In Perry v. Hal Antillen NV a cruise passenger was run over by a tour van hired as a subcontractor by the tour operator Rain Forest Aerial Tram, Ltd.(RFAT) which had entered into a contract with the cruiseline (HAL) and executed a copy of a contract manual entitled ‘Tour Operator Procedures and Policies” (TOPPS) which required “a tour operator in the Caribbean to obtain minimum limits of auto and general liability insurance of ‘US$2.0 million/accident or occurrence’… [s]hould the Operator subcontract for services (such as aircraft, rail, tour buses or watercraft), the Tour Operator must provide a list of its subcontractors and evidence of the subcontractor’s insurance”. The cruiseline asserted that RFAT “was ‘required to assure that any subcontractor it used to provide excursion related services had in place the equivalent USD 2,000,000 in auto and general liability coverage”. Here, it was discovered after the accident that the tour van operator only had $85,000 in insurance coverage and the Court held that the plaintiffs were third party beneficiaries of TOPPS and had a claim against RFAT for failing to disclose to HAL that tour van operator was a subcontractor and was only insured up to $85,000.

Traveler Insurance Coverage

The types of mishaps covered by some travel insurance [see www.squaremouth.com for comparisons] may cover claims arising from wrongful death [see Rizzutti v. Basin Travel Service (tourist dies in plane crash during safari in Africa; travel insurance issuer disclaims coverage)], physical injury [see Fleming v. AAA (tourist purchased “a package tour to Greece from [AAA]…for an additional $59.00 paid to AAA, a travel insurance was added to the travel package”; tourist fell ill in Delphi and fractured her hip which was replaced in Athens Hospital resulting in “endless trouble with hip replacement performed by the Greek physicians, which was ultimately corrected through a completely new hip replacement”; $1,000,000 awarded in general damages at trial)], delays [see Luzadder, Air Canada “Insurance” Protects Stranded Fliers, Travel Weekly (2008)(“The airline announced last week it has built an information network that enables it to sell passengers ‘insurance’ that will automatically book and then pay for hotel rooms, transportation and meals if Air Canada strands them in a blizzard of flight cancellations, whether caused by weather or other ‘irregular operations’”)]; lost baggage [see Cada v. Costa Line, Inc. (fire aboard ship; baggage insurance); Mechaber v. Omaha Indemnity Co. (Torah scrolls are not baggage), trip cancellation should the traveler become ill, or the supplier or tour operator become insolvent or otherwise default in providing services, or the air transportation may be delayed [see Flamenbaum v. Orient Lines, Inc. (missed flight and lost baggage); Walters v. Travel Guard International (weather conditions caused flight delay and cancellation of tour)].

There have been additional coverage disputes involving alleged misrepresentations by an insurance company “that a physician [must] advise the Insured to cancel or interrupt their trip” [see Wallace v. BCS Insurance Company], efforts to limit damages caused by a hurricane [see Harris v. Liberty Travel; Camarinos v. Liberty Travel (Hurricane Rita)], refusal to pay for an air ambulance [see Braka v. Travel Assistance International (car accident during vacation in Fiji and $350,000 paid for air ambulance to United States)] and because a tour operator instead of the covered travel agent issued tickets on an intra-Africa airline flight that crashed [see Rizzutti v. Basin Travel Service].

Conclusion

In next week’s article we shall discuss Travel Agent’s and Tour Operator’s Professional Liability Policies also known as Professional Errors & Omissions [E&O] policies.

The author, Justice Dickerson, been writing about Travel Law for 38 years including his annually-updated law books, Travel Law, Law Journal Press (2014), and Litigating International Torts in U.S. Courts, Thomson Reuters WestLaw (2014), and over 300 legal articles many of which are available at .

This article may not be reproduced without the permission of Thomas A. Dickerson.