Keeping it in the family
When it comes to providing ‘family’ travel insurance, definitions and cover vary from company to company and across the globe. Sarah Marquer looks at just how widely these policies differ and asks if there is a need for simplification when it comes to providing cover for relatives
First published in ITIJ 134, March 2012
When it comes to providing ‘family’ travel insurance, definitions and cover vary from company to company and across the globe. Sarah Marquer looks at just how widely these policies differ and asks if there is a need for simplification when it comes to providing cover for relatives
The international travel insurance industry has taken a hit in recent times, but according to most statistics, people are still travelling and those that do are protecting what’s most precious to them by continuing to purchase travel insurance policies for themselves and their families. Despite the global financial crisis, which has seen budgets for ‘extras’ squeezed, and in light of rising costs and the increasing rate of social instability and natural disasters worldwide, it is no wonder that travel insurance policies for families are becoming increasingly important.
Enter ‘family travel insurance’, or travel insurance policies that can be applied to provide coverage and care for an entire family while they travel away from their primary site of residence. It is an option that families are increasingly resorting to, but also a grey area within the travel insurance industry.
Duty of care
First and foremost, most insurance providers offer coverage for families under certain policies, but not exclusive ‘family travel insurance’ policies. So, while travel insurance for families is available from most insurance companies within policies for ‘independent’ or ‘annual’ travel, and although the availability of exclusive family branded travel insurance policies is growing, coverage for multiple family members currently tends to come under policies that are more generically named. Not having specific ‘family travel insurance’ products can be problematic for customers, as it can lead to confusion, including whether or not an insurer even provides coverage for all members of a family that is planning a holiday together.
For example, Europ Assistance does not offer specific ‘family travel insurance’ policies. However, all of its travel insurance products can be purchased by families and coverage can be extended to individual family members. “Only our annual travel insurance policies offer a premium for families,” explained Francoise Passeron, external relations manager for Europ Assistance France (EA France). She added: “All of our policies can be taken out by families and all of our guarantees apply to all kinds of family situations.”
Similarly, a representative for Access America (now Allianz Global Assistance), another company that does not market exclusive ‘family travel insurance plans’, told ITIJ: “We do not define ‘family,’ we define ‘family member’, as our trip cancellation coverage applies to situations that involve ‘family members’ and ‘immediate family members’. The definition can be easily found in the certificate of insurance that every customer receives when they purchase our plans, while others provide coverage for families under policies that are referred to as ‘independent travel’, or ‘annual/single trip coverage’.”
most travel insurance providers insist that the definition of 'family' or 'family member' under a particular policy is clearly stated in their contracts
So, why aren’t insurers more willing to offer stand-alone ‘family travel insurance’ products? One reason is a difference of opinion amongst insurers as to how they prefer to define certain policy terms. As Mike Powell, insight analyst for Defaqto, explained in a recent article entitled Covering your children on your travel insurance may not be as straightforward as you think, published last June, a particular problem area within the category of travel insurance for families is the inconsistent definition of the term ‘family’ itself. He stated: “Most providers offer family cover, and many customers would therefore assume that all members of their family would be protected. This is not always true and the definition can vary.”
For example, the definition of a ‘family member’ at Access America includes civil and domestic partners, parents, step-parents, step-children, adopted and soon-to-be-adopted children, paid-in living care, a range of in-laws (including nephews and nieces), and even service animals (as defined by the Americans with Disabilities Act). Elsewhere, Travelex is one of the few insurers that include great grand-parents and great-grandchildren under their definition of family member.
What’s in a name?
Particular circumstances must also often be met in order for family and extended family members to qualify for coverage irrespective of their status as a member of the family. Questions must still remain in consumers’ minds as to whether every member of their notion of family is provided for and eligible to receive the benefits of a policy that is taken out.
Powell points out in his article that some industry research has suggested that nearly 30 per cent of annual travel insurance policies in the UK only ‘protect children and step-children under ‘family’ cover if they permanently reside with the policyholder’. This means that if a divorced father takes his two children that live permanently with their mother (i.e. share the same, permanent address) on holiday and takes out an annual or family travel insurance policy, those two children may not be included under the policy taken out by the father.
Similarly, Powell remarks that although half of all annual travel insurance policies provide coverage for multiple members of a family, even if they travel independently of one another, certain restrictions still apply. For example, if a child is insured under a travel insurance policy but travels without a relative or other guardian charged with a legal duty of care over the child, the guarantees and coverage of the policy may not be applicable.
According to Passeron, EA France, for example, covers children of divorced parents. “In the case of a divorced couple, children are covered if the parent that took out the travel insurance policy is fiscally responsible for those children. If it is the non-fiscally responsible parent that wants to take out a policy, we do the following: an individual contract for the parent and an individual contract for the children,” she told ITIJ. However, Passeron noted that this will soon change: “Starting in June, our policies will evolve and will include coverage for children of a divorced parent even if they are not fiscally responsible for the child/children.” She further remarked that there are no other restrictions when it comes to circumstances under which children are or are not provided coverage for when a travel insurance policy is taken out by a parent or legal guardian. However, Passeron explained that at EA France, certain restrictions apply to a policy and its coverage of multiple family members depending on the location of a member’s permanent residence and whether or not they live under the same roof as the individual who has taken out the travel insurance policy.
On the other hand, discounts are sometimes given by providers for couples and families that take out travel insurance policies. Access America explained: “Our Classic plan has ‘Kids are Free’, and there is no limit on the number of children included in the policy as long as they’re travelling with their parents/legal custodians or grandparents.” It added that custody situations do not affect coverage.
In fact, many providers offer policies that come with ‘Kids are Free’ premiums. Again, this can present a grey area that insurance providers should be careful to spell out for their customers. Other areas of contention or confusion concern the number of family members or children that can be covered on a policy, and whether or which types of family member need to travel together in order to be covered by the terms of the policy (sometimes adults can travel independently of each other but children have to travel with an adult, for example).
the insurance contract did not make clear to customers the extent of the cover when a family member travelled alone
The diversity of travel insurance policies designed exclusively for families or at least including coverage of the family members belonging to an individual who has taken out the policy is evident. This complicates a consumer’s choices, although most travel insurance providers insist that the definition of ‘family’ or ‘family member’ under a particular policy is clearly stated in their contracts.
Spreading the love
Consumer agencies across North America and Europe advertise that consumers should watch out for policy restrictions in the case of pregnancy; for some insurance providers, protection against trip cancellation in light of a growing family (i.e. pregnancy) is only available should a woman be unaware that she is pregnant at the time of purchasing the policy.
However, Passeron states: “Pregnancy does not affect any of the travel insurance policies that we offer. There is no difference in treatment or coverage for a woman whether she is pregnant or not, no matter what kind of policy she or the person with whom she is traveling has taken out.” However, not all providers treat pregnancy the same way in their policies.
One report by NOLO: Law for All, in an article titled Travel Insurance: The Benefits and Limitations, states that pregnancy is usually excluded from coverage. However, both EA France, as we have seen, and Access America include coverage for pregnancy and labour. Access America added that pregnancy and labour are cause for trip cancellation, which is an option that policy subscribers can opt for coverage for in case of such an event.
Indeed, when asked, both companies assert that they feel their clients understand the terms of their contracts, including the extent, scope and limitations of coverage under the particular travel insurance policy that they have purchased. “To ensure a good understanding of who’s covered, we create easy to read and understand certificates of insurance that hold all necessary terms, conditions, and definitions,” remarks Access America Travel. Furthermore, financial institutions exist to ensure such definitions are clear and fair.
In the UK, for example, UK Underwriting Limited was asked by the Financial Services Authority (FSA) to change the policy wording on its Debenhams annual multi-trip travel insurance policy regarding family members travelling alone. It thought that the insurance contract did not make clear to customers the extent of the cover when a family member travelled alone, and also felt it was unclear whether the policy covered children under 18 when they travel independently of the family unit. The reason the FSA thought this was because the definitions of ‘Family’ and ‘You, Your(s), Insured Person’ that appeared in the ‘meaning of words’ section of the certificate of insurance did not make clear that adults could travel independently under the policy, but that children could not. For example, the old terms of the policy under the ‘You, Your(s), Insured Person’ section read: ‘All person(s) within the Age Limit, the names of whom are provided to Travellers Protection Services at the time of premium payment, being resident in the UK. Each person is separately insured. The new terms in this section read: ‘All person(s) within the Age Limit, the names of whom are provided to Travellers Protection Services at the time of premium payment, being resident in the UK. Each person is separately insured, with the exception of Children/Grandchildren unless travelling with an Insured Adult’. Under the ‘Family’ section, the old terms used the definition: ‘Shall mean parents or grandparents and their Children or grandchildren. Cover for families shall apply where the appropriate premium has been paid and where the family members travel together’. The new definition includes the stipulation that parents and grandparents are covered up to a maximum of two adults. It also includes the additional line: ‘Cover for Children will be provided if travelling with an insured adult and all travelers are named on the policy schedule’.
The provision of clear policy terms and key facts documents, including exclusions and exceptions to coverage, is clearly something that the industry is working on, but doesn’t always get right. It could, however, be a point on which travel insurance providers differentiate themselves and gain market share.
Ultimately, travel insurers need to be aware of a number of factors that affect an individual’s choice when purchasing a travel insurance policy, including the evolving definition of ‘family’. This is particularly poignant when considering that the generally accepted notion of ‘family’ and the units that comprise a family is evolving across the world. Historically accepted notions of the ‘family unit’ are changing, and many travel insurance providers now have policies that recognise and respond to this change. In terms of gaining market share, travel insurance providers have an opportunity to widely publicise the broad definition of ‘family’ and ‘family member’ that their policies include, which should appeal to a wide range of possible clients.