Job-loss Guarantee Policies Differ Widely

April 26, 2009|By Jane Engle | Jane Engle,Tribune Newspapers

You pay thousands in deposits for a trip, then get laid off. Now what?

If your travel insurer, cruise or airline company offers a "job-loss guarantee," you might get your money back. Or not, depending on the policy.

Job-loss coverage is nothing new in travel, but more companies have jumped in the past two months. JetBlue Airways, Norwegian Cruise Line and at least two cruise sellers have announced layoff policies, and insurers are tweaking the rules. Typically, such policies return trip deposits if you get laid off.

In March, Travelex Insurance Services of Omaha, Neb., a big industry player whose travel policies have covered job loss since 1996, decreased from three years to one year the length of time you must be with an employer to qualify for the benefit, said Vice President Sally Dunlap.

You'll want to ask questions before relying on a company's promise to return your money if you lose your job. Every offer is different, but all hinge on the same thing: definitions.

What is a job? Not a simple question, as it turns out. Besides Travelex, Norwegian Cruise Line and cruise sellers CruiseOne and Cruises Inc. require that you be employed for at least a year to get coverage. JetBlue doesn't care about longevity, said spokesman Bryan Baldwin, but you must work full time; NCL also requires full-time employment.

CruiseOne and Cruises Inc., allied agency networks based in Fort Lauderdale, Fla., that together book more than 60,000 travelers each year, cover full- and part-time work, said Steven Hattem, vice president of marketing.

So does Travelex, said Heather Siebken, product and training manager. As for contract employees, she said, "We have to look at each case on its own."

If you're a company owner, freelance or self-employed, some company's policies may cover you under job loss, or you might qualify under other provisions.

What is a job loss? Did you get laid off or fired, or did you resign? Take a buyout to get benefits after being told you were on the layoff list? Maybe you were canned for misconduct. Whatever happened, it can determine whether you get back your trip deposits.

JetBlue, NCL and Travelex representatives said your departure must be involuntary.

When asked whether someone who was fired for cause, such as theft, would be covered, JetBlue's Baldwin said in an e-mail, "The spirit of the program is to accommodate those who have involuntarily lost their jobs."

Siebken said the answer depended on the policy and underwriter; at least one said a job loss must be "through no fault of your own."

Choosing to take a buyout would be considered voluntary.

CruiseOne and Cruises Inc. cover "an unexpected layoff," which can include a furlough or even a reduction in hours, Hattem said.

Which trips are eligible? It depends on when you book and travel.

JetBlue's offer, called the Promise Program, applies to customers who book flights between Feb. 1 and June 1. NCL's BookSafe Travel Protection Plan took effect Feb. 26 for customers who leave Friday or later.

At CruiseOne and Cruises Inc., the Cruise Assurance provision applies to trips booked March 1 through Saturday. At Travelex, departures March 1 to Dec. 31 are covered by the new one-year rule.

Cancellation deadlines also vary. Some policies let you cancel right up to departure or during the trip; JetBlue wants 14 days' notice.

How do I prove I lost my job? It varies. JetBlue, for instance, requires that you complete a notarized form and send it by fax and certified mail. Travelex wants "something from human resources," Siebken said.

What does it cost? JetBlue charges nothing to cover you for job loss. NCL and the two cruise agencies require that you buy their trip-protection plans, which also cover costs such as lost baggage and medical treatment. At NCL, the plan starts at $29 per person; at the cruise agencies, the tab is about 8 percent of the trip cost. At Travelex, expect to pay about 5 percent.

What are the downsides? Aside from a false sense of security if you believe that all policies cover all eventualities, I see two main ones: below-the-radar costs and getting stuck with a bill if a travel company goes bankrupt.

At JetBlue, job-loss coverage is automatic. But if, after you cancel your flight and turn in your paperwork, the airline decides you don't qualify under its rules, you'll be dinged a $100 fee, Baldwin said. The balance of your ticket price is credited toward a future flight.

The problem with buying trip protection plans from your cruise line or any company you're traveling with is that these plans generally don't cover you if the company quits operating. Look for "financial default" clauses.

NCL's plan, administered by BerkelyCare, is typical. It says, "Benefits will not be paid for expenses not refunded in the event of the airline's or NCL's insolvency."

Policies sold by CruiseOne and Cruises Inc. don't have this disadvantage, Hattem said, because they are not confined to one cruise line. Travelex, as a third-party insurer, also covers financial default, with some exceptions.

What's the alternative? Many insurance companies sell cancel-for-any-reason coverage, either as a stand-alone policy or an optional upgrade to a regular policy. With some exceptions, this generally covers most any eventuality, including job loss.

Expect to pay about 50 percent more in premiums to get this coverage, which usually refunds less than 100 percent of your costs.

What's the bottom line? If you're worried about being laid off, look for job-loss coverage that costs nothing or is included in a third-party insurance policy that also covers financial default. If you dread dickering with claims adjusters, buy a cancel-for-any-reason policy.

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