Your trip protection coverage may not be bona fide insurance

Fred Zemble suffered a major heart attack on a cruise ship last year, was rushed to a hospital in a foreign country, then airlifted back to South Florida for treatment. He figured his travel insurance would pay the bills.

About $33,000 later, Zemble and his wife learned the truth: the company that issued their coverage went out of business in January and, so far, has paid none of their medical expenses.

The carrier was Prime Travel Protection Services, which never was licensed as an insurance provider in Florida or its home state of Colorado. The Zembles got the plan from their travel agent.

Travel professionals have been selling such coverage for years, often as part of cruise package that bundles port charges and other fees.
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As state regulators continue to investigate Prime Travel, questions are being raised as to whether policies sold as "travel protection" in some cases are unlicensed trip insurance. Insurance officials also are examining if travel agents are breaking the law if they are peddling unauthorized coverage or selling insurance products without a state insurance license.

Either practice could lead to criminal charges under state law, said Jayme O'Rourke, spokeswoman for the Florida Department of Financial Services. At least three Florida travel agencies were ordered to stop selling Prime Travel products by state Chief Financial Officer Alex Sink earlier this month.

Consumers can be understandably puzzled about trip protection vs. trip insurance, as the travel industry uses the terms interchangeably.

. "It can get confusing," said Bob Chambers, director of operations for San Diego-based CSA Travel Protection --which is licensed to provide travel insurance. "But agents have a duty to their clients that what they are selling is what it's represented to be."

Cruise lines and tour operators sometimes will offer their own waiver or "protection" packages, Chambers said, which are legitimate but not insurance. These waiver programs usually reimburse for trip cancellations under certain circumstances, with claims paid or credit given through the tour or cruise company.

But waiver coverage usually doesn't pay for medical emergencies, cancellation due to weather events, and won't reimburse if the company goes out of business, Chambers said. Trip insurance, typically bought through a third-party carrier, is far more inclusive and regulated. State officials require trip insurance coverage to be underwritten, to assure claims will be paid.

As far as the state is concerned: Any product providing "insurance-like coverage" will be regulated as insurance, regardless if it's called trip "protection" or anything else, O'Rourke said. And travel agents who sell unauthorized insurance policies can be liable for unpaid claims, the department said.

The Florida Office of Insurance Regulation issued a cease and desist order against Prime Travel and its affiliates last week, which said the company was an unauthorized insurer and had no underwriting, instead paying claims directly from the company's funds.

The two Colorado telephone numbers for Prime Travel have been disconnected.

Trip protection holders contacted by the Sun-Sentinel, most of them senior citizens, had gotten their coverage through their travel agents.

"My travel agents told me they were not at fault at all... that they sold it in good faith," said Ann Zemble, 82, who bought her December cruise on the Queen Mary from J.B. Cruises in Boynton Beach. Her husband's uncovered emergency medical costs mounted so quickly that the Delray Beach couple maxed out their credit card in 24 hours, and their son had to pay the air ambulance in order to get Fred back to his doctors.

J.B. owner Janice Oliveira said she isn't responsible for Prime Travel's claims because she never got compensated for selling its products, and is not an employee or sales agent. But she said that similar protection plans have been sold by travel agencies for years, and that the industry needs clarification from state insurance officials about its responsibility.

At least two of the travel agencies ordered to stop selling Prime had previously offered plans from the Tennessee-based firm Trip Assured.

One of the two, the Vacation Network of Port St. Lucie, doing business as Best Price Cruises, was sued by an Orlando-area man six years ago when Trip Assured refused to pay a claim.

Mark Golden, whose 93-year-old mother died before she could take her cruise, said the agency settled his claim for $5,000 before the case went to court. Best Price Cruises did not return telephone calls.

Smartcruiser.com, the second agency notified by Sink, offered "trip insurance" benefits from Trip Assured, according to archived Web sites from 2003 through 2005. Lee Smolinski, CEO of Boca Raton-based Smartcruiser, referred inquires to his attorney, Dan Newman, who said: "We've heard of the company but we can't talk about Trip Assured. My clients don't believe they did anything improper and were in compliance with the law."

Trip Assured's vice president at the time was Jerry Watson -- who later became the president of Prime Travel. Watson did not return an e-mail seeking comment.

Trip Assured, which never was licensed in Florida and order to stop doing business here and in several other states by insurance regulators in 2006, no longer is operating, Tennessee insurance officials said. A telephone number for the company was disconnected.

Sheryl Rose, of Coconut Creek, said she paid a South Florida cruise specialist about $270 extra for "insurance" from Trip Assured in 2002. She had to cancel the trip because her husband's leg was amputated due to complications from diabetes. She said she could get no help from Trip Assured or the Plantation-based travel agency.

"They charged us a lot of money and acted like we were in the wrong," Rose said.