The 500,000 Canadian “snowbirds” who own a winter home in Florida or other parts of the United States may be witnessing their seasonal residences became a little less warm and inviting.
The value of the Canadian dollar has fallen 14% in relation to the U.S. dollar since January, according to the Toronto Star. While this means that the value of Canadians’ U.S. homes has increased, it has also caused travel insurance premiums to skyrocket, presenting a major barrier to traveling there and for the usual extended stays.
Brokers can help to mitigate that obstacle, however.
“While it does fluctuate year over year, and this isn’t the first time we’ve been through this, it does present certain challenges,” said Alex Bitner, president of the Travel Health Insurance Association of Canada.
Since Canadian travel insurers have to pay claims in U.S. funds, the unfavourable currency exchange serves as a major driver of increasing premiums. “Plus, when you have medical inflation in the States rising by about 6% year over year, that becomes a double whammy,” he said.
As a result, Bitner predicts that Canadians will soon be required to pay 12% to 15% higher premiums than they did last year. While this may tempt some to shorten their stay in the United States, brokers can offer other cost-saving measures that might be preferable for travelers who own condos or already have their U.S. accommodations booked.
“What can help this year is to start thinking about deductibles. It’s common with car insurance, but historically it hasn’t been utilized as much as it could in travel insurance, especially to help ride out the peaks and valleys of the currency impact,” Bitner said.
Bitner suggests that the current financial landscape may encourage some policyholders to agree to a $5,000 deductible, which would then reduce premiums by 30 to 35 percent.
“Then next year, if the currency impact isn’t quite as substantial, they can go back to no deductible or a small deductible,” he said. “In the meantime, however, it’s a matter of trying to figure out ways to make the package more palatable.”
Finally, brokers should always be on hand to help snowbirds with their travel insurance applications. This will aid in alleviating the 14% who “falsify” their papers, as well as help Canadians find the best coverage for their particular state of affairs.
“If anyone is going to purchase travel insurance, they should definitely go to an insurance professional, whether that’s an agent, insurance advisor or broker, for assistance,” he said. “It doesn’t cost them anything, but provides them with an expert who can scan the market and find a product that’s appropriate for their needs.”
