Tuesday, March 29, 2011

Fear of radiation isn't a valid insurance claim

As travelers often find out after the fact, just because they have travel insurance doesn't mean they are covered. And now, with the magnitude 9 earthquake and tsunami that struck Japan on March 11 and damaged some of its nuclear reactors, travelers have a new question: Will their travel insurance policy cover them if they cancel trips because of radiation contamination in the region?
Insurers are grappling with this question - and with different outcomes. But several I contacted recently agreed on one point: Unless you added a so-called cancel-for-any-reason rider to your policy, you won't be reimbursed for deposits and other costs if you cancel your Japan trip solely because of fear - that is, you worry that you might encounter radiation.
That's because insurance covers events, not states of mind. No matter how acute your anxiety, insurance companies consider that your problem, not theirs.
If, on the other hand, your hotel is in an area that has been evacuated because of radiation concerns, or the hotel has been shut down because of those concerns, you might be able to collect on the policy. So far this question, thankfully, may be hypothetical. None of the insurers I spoke with reported receiving such a claim.
Why just a chance of collecting? Because insurance policies generally won't cover radiation-related events, the experts told me.
"I am not aware of any travel insurance plan that includes the potential for radiation or nuclear meltdown, as some have put it, as a covered reason for cancellation," said Carol Mueller, spokeswoman for Travel Guard North America, an insurance company based in Stevens Point, Wis.
For instance, CSA Travel Protection lists "nuclear reaction, radiation or radioactive contamination" as a general exclusion in at least one of its policies, said Kathy Townend, marketing manager for the San Diego-based insurance company. (Wording may vary by policy.)
Nonetheless, Townend added: "We're talking to our underwriter to see what kind of decision would be made" in the event of such a claim in Japan.
One factor that may work in policy-holders' favor is that the damage to Japan's nuclear reactors was caused by an earthquake and a tsunami - natural disasters that travel insurance typically covers. In fact, Sheri Machat, senior vice president of sales and marketing for MH Ross Travel Insurance Services Inc., based in Kansas City, Mo., said her company might cover radiation-related claims, viewing them as a byproduct of these disasters.
"If a hotel is shut down in Japan because of radiation, we would consider it under 'destination being rendered uninhabitable by fire, flood, burglary or other natural disaster within 10 days of departure,'" she said.
Dan Durazo, spokesman for Access America, a travel insurance company based in Richmond, Va., said given that policies typically exclude radiation, "it's hard to get a handle on what that situation is. We'll adjudicate those one on one ... If your destination has become uninhabitable, it might be covered."
Just don't expect to be covered for radiation - or any other travel problem stemming from Japan's earthquake - if you bought your travel insurance policy after March 11, when the quake hit the Asian nation. This wording, from Access America's website, is typical of the alerts being issued by insurers:
"As of March 11, 2011, the earthquake and tsunami that have affected Japan is a known/foreseeable event for travel insurance purposes. Policies purchased on or after March 11, 2011 do not cover losses related to this event."
As of Friday, the death toll from the disasters was placed at more than 10,000, and more than 17,400 people were still missing. The extent of radiation released by the damaged Fukushima Daiichi nuclear plant, about 150 miles north of Tokyo, was not fully known, and the situation was changing daily. So check with your travel insurer for updates and details about coverage.

Jane Engle

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