From the November 2008 issue of Wealth Manager Web • Subscribe!

Managing the Risk

No one takes a trip expecting something bad to happen. But despite the best-laid plans for risk management, something often does. In fact, according to the Chubb Group of Insurance Companies survey cited in last month's article, 13% of respondents required hospitalization while traveling, and 15% cut a trip short for medical reasons. The desire to transfer to an advanced medical facility in a health emergency--a desire expressed by 92% of respondents--seems sensible enough. But, depending on the prognosis, a long trip could prove life threatening. At the same time, the quality of care at the local hospital may be decades behind American standards.

Some insurers and service providers are now offering access to medical advisors who can find the closest and best treatment options, whether it's staying put, heading to a facility in a neighboring country or going home. These multilingual advocates can contact and converse with reputable local doctors and then act as an interpreter and counselor for patients, family and primary care physicians back home. The overarching goal: Explore the full range of treatment options, and then determine a plan that dramatically improves recovery prospects.

Notably, when scripting an evacuation plan, the advisor must troubleshoot patient and family transport issues to avoid legal pitfalls that can undermine care and keep loved ones apart. In certain countries, a private jet can be denied landing clearance for up to 72 hours. A commercial flight may be a better idea, but only with the right medical accommodations. In addition to access to an advisor who can make allowances for these sorts of security obstacles, clients will want insurance to cover "air ambulance" evacuation costs that can run into the six figures.

Most people don't realize that their medical insurance typically does not extend outside the United States. The affluent traveler should consider excess medical coverage when preparing to visit some less developed countries where hospitals may prohibit checkouts until the patient's bill is paid in full. Excess medical coverage may pay up to $50,000 in medical bills at the time of discharge. Otherwise, the bill may not be paid by the traveler's primary health insurer for weeks or months, if at all.

Insuring the Expected

Even when an accident or illness requires only minor treatment, it can still lead to a major liability for the world traveler or serious problems for minors in their care. Clients will want to know that their insurer or agent understands local insurance regulations and can refer lawyers versed in the local language and legal system as well as a variety of on-the-ground emergency services.

Take the possibility of being involved in a fender bender--quite conceivable when driving a less familiar vehicle on less familiar roads, governed by confusing foreign laws and customs. In many countries, local law enforcement may take both parties in a car accident into custody and then let a court (or a bribe) sort out the issue of fault. It is all too easy for foreign travelers to find themselves on the wrong side of the law because they are unaware of local laws and insurance regulations.

Before leaving on the trip, it is vital that the client receive expert advice from an insurance agent on whether, and to what degree, a domestic auto policy will provide coverage abroad. In some countries, you must purchase a policy from a local insurance company regardless of whether yourdomestic policy includes worldwide coverage.

More problematic is the prospect that an illness, auto accident, criminal assault or abduction (by a street mugger, carjacker, or modern day pirate boarding your seagoing vessel) could prevent an affluent traveler from caring for under-aged guests. Often, wealthy retirees take grandkids abroad for vacations while dual career parents stay home or visit only briefly.

Fortunately, there are domestic insurance policies whose coverages can travel with a client. These policies typically address medical, psychiatric, security and other covered expenses associated with a home invasion or similar intrusion into a hotel room. Most important, they can become invaluable when a child separated from a travel guardian by a medical, legal or other emergency is temporarily placed with a professional caregiver.

These policies may also provide financial and otherassistance if a child is abducted. However, since the kidnapping of wealthy Americans is a concern in many regions of the world, frequent travelers should consider more robustkidnap and ransom coverage.

Less worrisome but more likely is the unexpected snatching of a personal item. Anything of extraordinary value should be left locked up at home or stowed in the hotel's centralized safe. That said, so-called "everyday" items of the affluent--a $1,400 wristwatch on the nightstand or that $2,800 Louis Vuitton in the closet--can grow legs in an instant or be left behind. Though few mass-market insurance policies cover "mysterious disappearance" claims, it's worthwhile to make sure your client's homeowners' or valuable articles policy includes such coverage and can respond to losses that occur anywhere in the world.

Another high probability risk is loss or damage to keepsakes purchased while traveling. A rare vase or lithograph that's damaged or stolen in transit to home won't be covered--unless, that is, the buyer's homeowners' or valuable articles policy includes "newly acquired" coverage that allows up to 90 days to notify the insurance agent of the purchase.

Clearly, discussing travel risks such as these may not seem like your first order of business with a client. But by helping to safeguard clients, their families and possessions, you can help make their experience--and your service--considerably more memorable.

Andrew McElwee is executive vice president of Chubb & Son and chief operating officer of Chubb Personal Insurance. He can be reached at amcelwee@chubb.com.

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