Every industry has its bad apples, and some categories seem to attract more than others. When it comes to travel insurance, there are a lot of online scams out there. You have to know who to trust with your insurance needs, and that means looking for telltales that affirms the provider with whom you are working is reputable and will stand behind their products.
Even in highly regulated industries, such as insurance, there is fraud. Consumer advocate and freelance writer Christopher Elliott reports that one traveler who thought he was buying travel insurance with a trip cancellation clause from a company recommended by his travel agent when he booked his cruise. When his wife had to have 
spinal surgery and her doctor said she couldn’t travel, he discovered the $432 policy he purchased was a fraud. The company and the policy were unlicensed and they went out of business shortly after he filed his claim.
Most travel insurance scams happen when buying insurance through a travel agency or a travel supplier. Typically they succumb to the temptation of unusually low rates, or incredibly high commissions, instead of really verifying the alleged insurance company’s viability. Comparison websites generally vet their products and suppliers thoroughly before offering the products on their website.
TripInsurance.com has licenses to sell insurance in all 50 states, plus Washington D.C. This is an expensive and time-consuming process, but it is critical to assure compliance will all the local insurance laws across the USA. In addition, every underwriter we represent is also licensed across the US, and every plan we sell has been reviewed and approved by the respective state regulators. We display our state licenses on our site as required by law. You may notice that not every comparison website is legitimately licensed to sell insurance in all 50 states. They cut corners on following regulations so you cannot be sure that every product they are selling is properly regulated.
There are going to be bad apples in every bunch, and when shopping for trip insurance, you need to make sure that you are dealing with a legitimate underwriter. There are a few simple litmus test questions that you can ask to determine if your supplier is legitimate:
1. Do they take credit cards? Any legitimate travel insurance supplier will take credit cards for premium payments. Using a credit card is another layer of protection for you, and added assurance that someone has vetted the company.
2. Are they licensed to do business in all 50 states? Insurance is regulated by each state and any reputable carrier will be licensed to do business anywhere in the U.S.
3. Is their license to conduct business prominently displayed? If you are buying insurance through your travel agent or a third party, then you should have a license number or some indication of their legitimacy in their paperwork. The license also should be prominently displayed on their web site.
4. What is their A.M Best Company rating? A.M. Best is the independent company that monitors and ranks insurance companies, so having a Best company rating is like having the Good Housekeeping seal of approval.
5. Is there a certificate of coverage included from the company? A certificate of coverage is the contract between you and the underwriter. Read it. Make sure that the terms make sense and there are no hidden clauses that might look suspicious.
You want to make sure you are buying a true travel insurance policy backed by a reputable underwriter with a proven track record. If the policy is too confusing or the rates seem too good to be true, then you may be dealing with a scam.
If you are ever scammed by a travel insurance company, contact the insurance commission in your state. They have the authority to act, and act with a vengeance if they uncover fraud.
Buy your travel insurance with confidence on TripInsurance.com. You know we are licensed, and all our products have solid financial backing of the largest and best underwriters in the travel insurance industry.
As with most things in life, shopping for travel insurance mostly requires some basic precautions and common sense. If you take some basic steps and look for obvious telltales before you sign for a travel insurance policy, then you can easily avoid those few bad apples that give the insurance industry a bad name.
