When a layoff cancels a trip

You pay thousands in deposits for a trip and then get laid off. Now what? If your travel insurer, cruise or airline company offers a so-called job-loss guarantee, you might get your money back. Or not, depending on the policy.

Job-loss coverage is nothing new in travel, but in the last two months, more companies have jumped in. 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.

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

“People are struggling, and we want to be an advocate for the consumer,� she said. “We’ll take some hits on it. We’ll pay some claims.�

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, spokesman Bryan Baldwin said, 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, the picture is murkier. Some company’s policies may cover you under job loss, or you may qualify under other provisions.

What is a job loss? Did you get laid off or fired, or did you resign voluntarily? 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 due to the economy.�

Travelex’s 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,� she said. Choosing to take a buyout would be considered voluntary, she added.

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. Check for time limits.

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 May 1 or later. At CruiseOne and Cruises Inc., the Cruise Assurance provision applies to trips booked March 1 through May 2.

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 even during the trip; JetBlue wants 14 days’ notice.

How do I prove I lost my job? It varies by company. JetBlue, for instance, requires that you complete a notarized form and send it by fax and certified mail. Travelex wants “something from human resources,� such as a termination letter, 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% of the trip cost. At Travelex, expect to pay about 5%, depending on the policy and trip.

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 the bill if a travel company goes bankrupt.

At JetBlue, the 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 cancellation 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, a major consideration in this stumbling economy. Look for “financial default� or similar 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 so-called third-party insurer, also covers financial default, with some exceptions; many insurers exclude companies in Chapter 11 bankruptcy protection, for instance.

What’s the alternative? Many insurance firms sell so-called 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% more in premiums to get this coverage, which usually refunds less than 100% of your trip 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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