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Insurance in Action #1: Travel Insurance

Source: Swiss-Sure Media
August 11th, 2016

-Typhoon Trouble…

Tam and Smith are looking forward to their 10 years’ anniversary getaway to Thailand. To their horror, typhoon Kai Tak is hitting Hong Kong on the day of their travel. With this knowledge, they immediately take out travel insurance; in the hope of covering their losses due to cancelled flights and lost hotel bookings. In the end the insurance policy wouldn’t payout – the insurer declined the claim – although it was clearly stated in the terms that travel disruption due to typhoon is covered.

Long story short, the principal of insurance is to provide protection against the possibility of particular losses (risk), therefore any risks guaranteed prior to the purchase of the insurance (in this case the impending typhoon) meant that no payout would be available. Had the couple took out travel insurance before typhoon was certain, they would have been protected by the policy, unfortunately they were not in this case.

Moral of the story, guard yourself from any risk before it becomes imminent.