Column: Sorry your trip got canceled. But we’re keeping your travel-insurance money

Most travel insurance has so many exclusions — including for epidemics — that I generally don’t advise people to bother with coverage unless they’re spending big bucks on a trip, like for a cruise.

But what if you cancel your cruise, or the trip is canceled by the cruise line, because of the coronavirus? Should you be able to get the cost of your travel insurance refunded?

After all, it’s protection you no longer need due to circumstances beyond your control. You haven’t gone anywhere. You haven’t submitted any claims.

What rationale could the insurance company have for keeping your money?

That’s what David and Barbara Negrete were wondering after asking AIG, the insurance giant, for a refund of the more than $2,300 they said they spent on AIG’s Travel Guard coverage.

The Huntington Beach couple purchased the policy after plunking down a $1,500 deposit for a $12,000 jazz-themed cruise scheduled to set sail a year from now. They’ve decided not to make the voyage.

“We’re both 67,” David Negrete told me. “We won’t be taking that cruise because of the coronavirus.”

First he contacted the cruise organizer, a company called Flying Dutchman, and asked for their deposit to be refunded.

“They said no,” Negrete recalled. “They’re keeping the deposit.”

No surprise there. I’ve written about the difficulties cruise passengers have had obtaining refunds for cancellations. In many cases, cruise operators have offered credit for a future trip but no money back.

Then Negrete contacted AIG with the same request.

“They won’t give us a refund, either,” he said. “Instead, they offered us a voucher for travel insurance that can be used between now and 2022.”

The thing is, Negrete and his wife have no plans to travel during that time. “It doesn’t seem safe,” he said. “And we’re not getting any younger.”

My usual response to situations like this is a deal’s a deal. If you purchase a service, and then you decide you don’t want that service, well, too bad.

But this is different. Consumers aren’t acting on a whim when it comes to the coronavirus.

They’re protecting themselves from a potentially lethal global pandemic that grows worse by the day and over which they have zero control.

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That’s why I’ve taken cruise operators, airlines, hotels and others to task for stubbornly refusing to give people their money back.

It’s why I raised a stink when most vehicle insurers said they wouldn’t give discounts to policyholders even though many people had stopped driving. California Insurance Commissioner Ricardo Lara subsequently ordered that partial discounts be provided.

I understand companies’ reasoning from a business perspective — who wants to return cash that’s already been booked as revenue, especially when profits are dropping off a cliff because of the coronavirus?

But come on. There’s what’s good for business, and then there’s what’s just plain good.

And if doing the stand-up thing is so tough, consider the long-term consequences of short-term greed.

Every cruise and airline passenger I’ve spoken with has told me the behavior of companies during the pandemic will absolutely affect their decision-making when it comes to future travel plans.

In some cases, the problem appears to be miscommunication. Pasadena resident Howard Abrams contacted me with the same problem Negrete is having.

Abrams, 73, said the insurance company Allianz was refusing to refund the travel coverage he purchased for a canceled July cruise he intended to take with his son.

But when I contacted Allianz, I was told refunds are in fact being made available “for a temporary period” because of the coronavirus.

Abrams tried again and, lo and behold, was told his money would be given back. He was told it could take about a month to process the refund because of a backlog.

Daniel Durazo, an Allianz spokesman, said the company has decided to cover trip cancellations for people who become ill with COVID-19, despite the typical exclusion for epidemics.

“We are also offering premium refunds to customers whose trips have been canceled by their travel supplier due to COVID-19,” he said.

Good for them. This shows an awareness of how the current pandemic is devastating for so many people. It’s also an important way to demonstrate to customers that the company cares.

AIG, by comparison, is just being mulish.

Its obstinacy is all the more galling when you consider this company would have collapsed if not for $182 billion in bailout cash from taxpayers during the Great Recession.

New York-based AIG reported net income of $1.7 billion in the first quarter, up nearly 90% from a year earlier.

“If you are considering canceling your trip due to the COVID-19, please read your insurance policy thoroughly,” AIG told customers in March. “Generally, fear of travel is not a covered event under most of our policies.”

It said refunds are possible only if requested within 15 days of purchasing travel coverage. If it’s outside that narrow window, and you’re freaking out about the tens of thousands of Americans who have been killed so far by COVID-19, bummer, but no.

I said up top that most travel insurance comes with so many exclusions, travelers may want to think twice before splurging on coverage.

Negrete’s Travel Guard policy, for example, excludes claims involving preexisting medical conditions and pregnancy. It excludes claims related to risky holiday fun such as bungee jumping, as well as claims for natural disasters, pollution and, once again, epidemics such as the one we’re currently experiencing.

An AIG spokesman told me the company would be willing to discuss the matter, but only off the record, which means I couldn’t share what they said with you. I declined.

The spokesman then sent me an on-the-record statement from the company.

“In the midst of the unprecedented challenges caused by COVID-19, Travel Guard has deployed significant additional resources to meet the demands of an extraordinary volume of claims, including those involving requests for premium refunds and the recovery of trip cancellation costs,” the statement said.

“Travel Guard will continue to look carefully at the specific facts and circumstances of each individual claim, as well as the relevant policy language, in honoring the commitments made to its customers.”

As best as I can tell, the company isn’t making any commitments to customers regarding refunds, but that’s what it had to say.

All I know is that if I were ever in the market for travel insurance, I know which company I’d trust.