CTA Trip Cancellation & Travel Insurance 3 — Questions and Answers
Question 1: A traveler purchases travel insurance but fails to disclose a recent cancer diagnosis. The insurer later denies a cancer-related claim. What legal principle justifies the denial?
- Subrogation
- Material misrepresentation (Correct answer)
- Indemnity
- Proximate cause
Correct answer: Material misrepresentation
Material misrepresentation — withholding information that would affect underwriting — gives insurers grounds to deny claims or void policies.
Question 2: Which travel insurance benefit would cover a traveler who needs to be flown home by private air ambulance after a serious accident abroad?
- Trip interruption
- Emergency medical evacuation (Correct answer)
- Accidental death & dismemberment
- Travel delay
Correct answer: Emergency medical evacuation
Emergency medical evacuation covers the cost of transporting an injured or ill traveler to an appropriate medical facility or back home.
Question 3: What is 'subrogation' in the context of travel insurance?
- The insurer's right to recover from a third party after paying a claim (Correct answer)
- The traveler's right to cancel for any reason
- A secondary insurance policy kicking in after primary
- The process of upgrading coverage mid-trip
Correct answer: The insurer's right to recover from a third party after paying a claim
Subrogation allows the insurer to pursue recovery from a responsible third party after compensating the insured traveler.
Question 4: A couple purchases a joint travel insurance policy. One spouse becomes ill and cannot travel; the other spouse chooses to cancel also. Is the healthy spouse's cancellation typically covered?
- No, only the ill traveler's costs are covered
- Yes, a traveling companion's cancellation is a standard covered reason (Correct answer)
- Yes, but only under CFAR
- No, each traveler must purchase individual policies
Correct answer: Yes, a traveling companion's cancellation is a standard covered reason
Most trip cancellation policies cover a traveling companion canceling when the other insured traveler cannot travel due to a covered reason.
Question 5: Which of the following is NOT typically covered under standard trip cancellation insurance?
- Jury duty requiring the traveler to stay home
- Fear of travel due to a news report about unrest (Correct answer)
- Death of a family member
- Traveler's home made uninhabitable by fire
Correct answer: Fear of travel due to a news report about unrest
Fear of travel based on news reports is not a covered peril under standard trip cancellation; CFAR would be needed for this.
Question 6: A traveler's flight is delayed 6 hours, causing them to miss a prepaid dinner reservation worth $150. What travel insurance benefit may cover this?
- Trip cancellation
- Travel delay (Correct answer)
- Baggage delay
- Trip interruption
Correct answer: Travel delay
Travel delay coverage reimburses reasonable additional expenses — like meals — incurred due to a covered delay.
Question 7: Which insurer rating organization is most commonly referenced when evaluating the financial strength of travel insurance providers?
- J.D. Power
- A.M. Best (Correct answer)
- Better Business Bureau
- Consumer Reports
Correct answer: A.M. Best
A.M. Best is the primary rating agency used to assess the financial stability and claims-paying ability of insurance companies.
CTA Trip Cancellation & Travel Insurance 3
A traveler purchases travel insurance but fails to disclose a recent cancer diagnosis.
The insurer later denies a cancer-related claim.
What legal principle justifies the denial?