I own a timeshare on the East Coast that got lucky: we did not get hit hard by Hurricane Matthew in October. However, I understand that dozens of resorts were devastated by wind and water. In light of the hurricane, I have a simple question: should I buy trip insurance to cover my timeshare travels?
This is a great question that every traveler ought to consider, since travel insurance is a relatively inexpensive security blanket for frequent travelers. However, there are many options to consider, which is why RedWeek contacted timeshare insurance experts, HOAs, developers and management companies to get some answers. Their overall recommendation is that insurance, costing $200 to $300, is a smart investment for travelers who invest a lot of time and money in their timeshare vacations. Here are our findings.
Hurricanes — with 100 mph winds and storm water surges — are messy beasts that cause billions of dollars in property damages. Hurricane Matthew riveted the entire country for a week in October as residents watched the hurricane slowly roil the entire Eastern Seaboard.
Matthew also caused a lot of headaches, and losses, for timeshare resorts and timeshare owners who were either caught in the middle of the storm — or stayed home to avoid it completely. In the wake of the hurricane, we discovered a very mixed bag of insurance-related issues that will linger long after the physical damages are repaired. For example:
- Some resorts, using the "act of God" terminology familiar from disaster movies, have not reimbursed owners for usage weeks lost to the storm.
- Other developers and HOAs meanwhile, are offering compensatory weeks to owners from their inventory of HOA-owned units (that were delinquent).
- Owners who previously purchased trip-interruption or trip-cancellation insurance (and that's roughly 20 percent of all travelers) may be eligible to recover reimbursement for all out-of-pocket expenses. Depending on their policy, they may even qualify for reimbursement of maintenance fees paid for their points or weeks.
- Primary homeowner insurance policies, typically, do not cover vacation losses. Timeshare owners interested in protecting future vacations must avail themselves of specialty carriers who have contracts with HOAs or developers. Owners must also read the fine print on any policy to determine deductibles, exclusions and exceptions to coverage.
Developers Offer Several — Or No — Insurance Programs
Timeshare developers offer a variety of programs — or none at all — for trip-cancellation insurance that is typically handled by a partner company that specializes in insurance for timeshare owners. Here are three examples: Marriott Vacation Club offers a full year's coverage for all Marriott timeshare trips, for up to 13 people, for $169. It includes trip-cancellation, medical, dental, injury, lost luggage, rental car damage, airline ticket reissues and other losses caused by events beyond an owner's control. Marriott's insurance, offered by Travelex, will also reimburse owners for maintenance fees on lost weeks.
Diamond Resorts, meanwhile, offers a "cancel for any reason" points reimbursement plan if purchased at the time of reservation. It costs $225 for annual coverage of all Diamond Club trips, or $85 for a single reservation. This is not insurance but a points-protection policy. Diamond also offers a menu of a la carte services that owners can buy to cover other possible issues on a trip: a 10-day Legal Protection plan for $19.95; a SkyMed transportation-home plan for $34.95; and a Healthiest You plan for mid-trip, online medical consultation and prescription services for $19.95.
Wyndham Vacation Ownership, the world's largest timeshare company, does not offer a specific insurance program to Club owners. However, when a disaster strikes, such as Matthew, it provides a case-by-case review to determine whether club points should be refunded to owners. "As a general consideration, we believe travelers should thoughtfully consider pursuing insurance options," the company said in an email to RedWeek.com. "We do have emergency response protocols in place at all resorts to ensure safe evacuation of owners and guests, and have the ability to modify our cancellation policy and coordinate refunds for stays impacted by natural disasters."
Some Timeshare Insurance Carriers Cover All Trips, All Clubs
VacationGuard is one of several specialty insurance carriers that provides trip-cancellation coverage through timeshare HOAs and management companies. But it also offers programs for individuals that are broader in scope than plans offered by specific travel clubs. Its Timeshare Plus Protection Plan, for example, covers all travel losses, among all clubs, for a full year. The $299 insurance premium includes trip cancellation, trip interruption, trip delay, emergency medical, rental car damage, and more for up to eight people.
"Travel insurance is for the unexpected. Most of the time, nothing happens. But if something goes wrong, like someone gets sick or injured, this insurance can not only help provide peace of mind, but financial protections as well," said Brian Rock, vice president and national director for VacationGuard.
The company's program, fine-tuned since the 1990s, also reimburses travelers for maintenance fees and exchange fees, regardless of whether they own points or weeks. There is no deductible payment required, either.
Backed by the Berkshire Hathaway Travel Protection brand, VacationGuard offers an extensive list of timeshare travel recommendations on its website.
Another major timeshare insurance provider, Brown and Brown Insurance, has an entire division dedicated to disasters at timeshare resorts. Tom Cook, senior vice president of the Vacation Resorts Specialty Division, says avid travelers should consider insurance a small price to protect their investments in family vacations — especially if they own units in areas that are prone to occasional hurricanes or similar weather-events.
Cook's clients are legacy HOA's and their management companies, focusing on property and liability issues, including emergency relocation expenses, reconstruction, roof repairs and, in the aftermath of Matthew, wind and water damage at dozens of resorts along the East Coast. Cook refers owners who want individual travel-protection insurance to companies like VacationGuard. Regular credit card companies that offer travel insurance, he added, frequently exclude natural disasters from coverage.
"We have insurance contracts with about 50 HOAs around the country; some have 12 units but others have 2,000," Cook said. "In South Florida, many of the HOAs were out (shut down) two to three weeks because of the severity of the water damage and flooding."
Brown and Brown is one of the pioneers in timeshare resort coverage, getting into the market when it became clear, 20-plus years ago, that none of the major insurance companies would provide policies for timeshare properties.
Timeshare Resorts Struggle to Recover From Hurricane Matthew
Mike Scallan, HOA board president at Tropic Sun Towers, in Ormond Beach, Florida, is living with the "act of God" known as Hurricane Matthew. His board planned for it, setting aside reserves for years just in case another major hurricane hit — and it did.
"We have insurance to cover everything but don't know what it will cost because of all the damage caused by the high winds and the ocean surge," Scallan said. But the resort's wind-damage deductible, $400,000 in reserves, is already gone.
Gone, too, is the pool, fence, and stairs that faced the ocean. Also gone are many timeshare vacation weeks that got wiped out by Matthew. Many owners sought reimbursement for their maintenance fees but, so far, that hasn't happened. Instead, the board has offered owners extra weeks from the delinquent/foreclosed intervals that are owned by the HOA. According to Scallan, who lived through a hurricane onslaught in 1994 that caused $8 million in damages, maintenance fees are not reimbursable. "We're doing the best we can," he says.
Thomas Little, a board member at Royal Dunes Resort in Hilton Head, South Carolina, can empathize with Scallan. Matthew blew the roof off one building at Royal Dunes (out of four), and water inundated the rest of it, so Building One will be out-of-action for months. The other three buildings may be back in service in a month. Little, appearing at a Timeshare Board Members Association meeting in late October, said the board was grappling with ways to compensate owners who lost their vacations. Three days after the TBMA meeting, on Oct. 21, Board President Eric Gowins notified all owners (in a very detailed personal note posted on the resort's website): "We hope to be able to offer owners who have lost time to the storm or to repairs compensatory time at our resort, so if you did lose out, be flexible. As I said, we're currently playing all of this by ear."
Here is the the full text of Gowins' remarks, plus pictures of the damages at Royal Dunes.
The Last Word on Insurance: Wise Investment
As we said at the top of this story, hurricanes are messy, leaving far more questions in their wake than most people would ever want to address.
The lingering question for timeshare owners who travel several weeks a year is whether a small investment in travel cancellation insurance is a smart move. All of the experts RedWeek consulted say yes, including the National Timeshare Owners Association. "Most major resort developers say the same thing. If it's an act of God, there's nothing we can do for owners," said Greg Crist, NTOA's CEO. "There are a number of good insurance programs that cover loss due to hurricanes, but people have to be careful, because some policies have exclusions that won't cover your particular instance. Do your diligence and read the policy guidelines."