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When should your clients buy travel insurance?

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When should your clients buy travel insurance?

An expert from Aon Affinity Travel Practice breaks it down

Beth J. Harpaz, The Associated Press on July 26, 2018

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When you book flights online, you’re typically prompted to buy travel insurance. Same with cruises and tours.

Should you buy the insurance? What will it cover? Equally important, what won’t it cover, and when might it not be worth your while?

Read: Canadians don’t have a good understanding of travel health coverage

The AP Travel podcast “Get Outta Here!” got the answers to these and other questions from Beth Godlin, president of Aon Affinity Travel Practice. Aon, a global insurance broker that represents insurance companies, creates specialized travel products, including insurance policies sold by cruises, tour operators and certain online booking sites.

Excerpts from the podcast interview:

TRAVEL INSURANCE: WHAT IS IT GOOD FOR?

Typically travel insurance protects your financial investment in your trip, to “cover penalties and extra costs you would incur” if you couldn’t take your trip or if your trip was interrupted, Godlin said.

Read: Blockchain could affect info sharing in P&C industry, travel claims payments: InsurTech TO

For example, say you need to cancel a trip or head home early because of a death in the family or because a hurricane is headed to your beach destination. This type of insurance reimburses prepaid expenses – flights, tours, hotel – as well as expenses incurred because the trip was interrupted, like rebooking fees for new flights. This type of insurance also covers additional costs incurred if your trip is delayed – for example, you miss a connection because of a storm and need to stay overnight in a hotel before catching the next flight out.

Another type of travel insurance offers health benefits, typically providing “gap coverage for emergency medical expenses and also medical evacuation.”

Read: Cancellation insurance for space tourism

A third category protects “your stuff,” Godlin said, meaning whatever you bring with you or pack that’s not covered by existing insurance, in case of loss, damage or theft.

WHEN WOULDN’T YOU BUY INSURANCE?

Buying insurance should be based on potential losses and what you can afford to lose.

If you’re staying in a hotel that won’t charge you if you cancel, or you’re taking a trip booked with miles but you can get the miles back with no penalty if you cancel, you don’t need insurance because your losses would be zero.

But if you stand to lose your investment should you cancel, can you live with that risk?

Typically, insurance costs 6% of the cost of a trip. So for $60, you can insure a $1,000 trip. What’s your comfort level on the money? Would you rather spend the extra $60 and know that you’re covered? Or can you live with the possibility that if the trip falls through for some unforeseen reason, you could lose most of what you spent on flights and other nonrefundable components?

“You have to do the math,” Godlin said. “What’s the penalty versus what would be the cost to insure it?”

EXCLUSIONS AND TIMING

Risk assessment is also a factor. If you’re planning now for a Caribbean trip in September, that’s prime hurricane season. Insurance would mitigate potential financial losses if a storm disrupted or caused the cancellation of your trip.

Read: 2017 was the costliest year on record for weather disasters: Aon Benfield

But you cannot get insurance to cover specific problems that already exist. So if your trip starts Friday, and a storm is already headed to your destination, it’s probably too late to buy insurance.

“Insurance is designed to protect the unforeseen,” Godlin said.

Similarly, if a family member was just admitted to the hospital, it’s probably too late to buy insurance to cover the possibility that you’ll have to cancel a planned trip if that person’s condition worsens. Godlin advises calling the insurer and asking if reimbursement would be offered in that scenario, “or is that an exclusion.”

Buying insurance when you book your trip is the best way to assure your claims will be covered, but many policies can be purchased until the day before the trip. That said, of course, you can’t sprain your ankle on Monday, buy insurance on Tuesday and cancel the trip om Wednesday.

Typically, exclusions – things not covered by insurance – include pre-existing medical conditions (though you might be covered if your medical condition has been stable and there’s an unexpected, new complication) and work-related issues (a last-minute deadline that the boss can’t handle without you).

Read: The terrorism talk

One option that covers every scenario: cancel-for-any-reason insurance. That gives you flexibility to just say, “it’s just not a good time for me to go,” Godlin said. Typically, though, that type of insurance only reimburses 75 per cent of your cost rather than the 100 per cent with other types of policies.

TERROR ATTACKS

What if a terror attack unfolds somewhere and you’re feeling so nervous that you want to stay home? If the attack shuts down the city you’re headed to, you may be covered. But if the attack is in a provincial capital and you’re heading to a different region, you probably can’t make a case for an insurance claim unless you have cancel-for-any-reason insurance.

And if insurance doesn’t cover your situation, or you don’t have insurance, it’s always worth contacting the airline, hotel or tour operator. Sometimes travel providers are sympathetic to individual problems or when the public feels skittish following a major event. Even if you can’t get a refund, you might get credit toward a future trip.

Canadian Insurance Top Broker is now on Facebook (facebook.com/TopBrokerMag) as well as LinkedIn (linkedin.com/company/citopbroker) and Twitter (twitter.com/CITopBroker). Follow us for easy access to the top P&C news you need to know.

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Ontario’s new automated speed enforcement explained

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(NC) To wage the war against speeding, many municipalities across Ontario have turned to automated speed enforcement. Most recently introduced in Toronto, speed cameras are a high-tech solution to reduce speeding and are considered one of the most effective ways to create safer roads and save lives.  

Recognizing police officers cannot catch all speeders, these cameras fill the gap, providing monitoring in specific locations around the clock. When a car’s speed is even one kilometre over the posted amount, it will take a picture of the offending vehicle’s license plate, using the captured photo as indisputable evidence. A ticket is then served to the vehicle’s owner, regardless of who was driving. 

With a focus on high-risk areas, Ontario’s automated speed enforcement cameras are located in two specific municipal areas: school and community safety zones. School zones are designated streets close to a school, featuring reduced speed limits as dictated by local bylaws. Community safety zones are high-risk corridors and intersections, subject to increased fines and penalties.  

While the Ontario Highway Traffic Act outlines the use of automated speed enforcement, municipalities can decide when and where to use cameras to curb speeding. The act does dictate financial penalties for speed violations captured with cameras, which vary depending on the number of kilometres caught over the speed limit.  

Speed enforcement is not new, but part of a broader, integrated road safety strategy that includes infrastructure improvements, awareness campaigns and new uses of technology. City officials hope for a halo effect, inspiring better driving behaviour across entire communities, not only in areas with cameras. A controversial topic, some critics take exception to speed cameras, labelling them as sneaky cash grabs for municipalities. Governments think the opposite. 

Safety advocate and auto insurance provider Onlia is hopeful that the cameras will provide drivers with a reminder to slow down, especially in high-risk areas like school and community safety zones.  

For those who obey the speed limit, automated speed enforcement shouldn’t change anything about your driving style, says Alex Kelly, Safety Ambassador at OnliaDrivers have fair warning as they approach areas with speed cameras, as mandatory signs provide reasonable notice of upcoming automated speed enforcement. Regardless of warnings, the best speed is the posted speed. 

You can start to understand your speeding style by downloading the insurance provider’s new safe driving app that coaches and rewards for you for safe driving habits.

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Online banking: How to protect yourself from fraud

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(NC) Since the start of the COVID-19 crisis, a growing number of consumers are regularly using mobile and online banking to paybill payments, transfer money and make purchases.

Although these tools can give you easy access to your personal finances on demand, there are also some risks involved. For instance, your banking information—such as your debit or credit card number, user name, or personal identification number (PIN)—could be stolen. If criminals have access to your online banking information, they can steal your money, which is why it’s so important to be  vigilant when you bank online.

Follow these tips to help protect your personal and banking information:

  • For your online bank accounts, use a strong password that can’t be easily guessed, and never share your user name or password with anyone.
  • Check your accounts regularly to make sure there are no transactions you didn’t make or authorize.
  • When making online purchases, never authorize a website to save your credit card information, password or other personal information. Giving websites this permission will save you some time the next time you access the site, but it poses a real threat if a hacker manages to access your information.

Most financial institutions have policies to protect you from transactions that you didn’t make.

However, you are responsible for protecting your online and mobile banking information. If you give your details to anyone—including your spouse or partner, a family member or a friend—your financial institution may hold you responsible for any unauthorized transactions in your account, and even strip you of protection from unauthorized transactions in the future.

If you suspect your information may have been compromised, change your passwords immediately, and check your account and credit card statements for anomalies and report any suspicious transactions to your financial institution.

The Financial Consumer Agency of Canada has created resources to help you protect your online banking information.

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Payday loans: Not the best way to borrow money

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(NC) Payday loans are a very expensive way to borrow money. Even if you’re struggling financially, think twice—and crunch the numbers—before getting this type of loan.

Depending on the rules in your province, payday lenders can charge fees of $15 to $25 per $100 that you borrow.

As an example, let’s say you borrow $300 for home repairs. The payday lender charges you $51 in fees, or $17 for every $100 borrowed. Your loan balance is therefore $351, which amounts to an interest rate of 442 per cent.

There can be serious consequences if you don’t repay your loan by the due date. These may include the following:

  • The payday lender may charge you a fee if there isn’t enough money in your account.
  • Your financial institution may also charge you a fee if there isn’t enough money in your account.
  • The total amount that you owe, including the fees, continues to increase.

There are better options out there

Payday loans should be your last resort to borrow money. Consider cheaper ways of borrowing money, such as:

  • Cashing in vacation days or asking for a pay advance from your employer.
  • Getting a line of credit, a cash advance on a credit card or a personal loan from your financial institution.
  • Getting a loan from family or friends.

Before getting a payday loan and to avoid getting stuck in a debt trap, consider other, less expensive ways to borrow money.

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