Insuring Fliers Against Travel Snafus

Sometimes, a good customer experience is all about making the best of a bad situation. I touched on this topic a little while back (OK, almost two years back) in a previous column. Now it appears there's a business model based on that.

In case you haven't heard by now—I first encountered it when Brent Leary, founder and partner at CRM Essentials, shared a news story on Facebook—Berkshire Hathaway (BH) now provides air travel protection policies. That isn't news in and of itself; insurance has been available for air travel for decades. You'd never live to see it pay off, though. Literally.

The insurance policies you could get (usually right at the terminal) only covered death as the result of a plane crash. That's why they call them terminals, I guess. Travel protection policies have expanded since the early days, but for the most part they still only cover catastrophes: trip cancellation (due to death, illness, or injury to self, companion, or family member), medical expenses, terrorism, emergency evacuation, and the like. Less dire circumstances also get coverage—lost or stolen bags, trip delay, etc.—but all of these disasters are potentially trip-ending events where you're less concerned with customer service than with life, limb, and property. They also typically require you to submit a claim and are fairly restrictive in their terms, like most insurance policies.

The differences in the BH coverage are aimed at the events that make us think of air travel the way vampires think of root canal: delays at terminal or tarmac, missed connections, delayed bags, and the like. While none are fatal, they're all incredibly annoying, and have formed much of our concept of why flying stinks. With this policy, for a mere $25 (domestic flights), you get real reimbursement for stress. For a delay of more than two hours, you'll receive $50—but if that delay is while you're on the plane, rather than in the terminal, it becomes $1,000. If a delay causes you to miss a connecting flight, that's another $500, plus BH will make new arrangements for you on any airline and pay the flight change costs.

Even better, your policy works in near real time. BH monitors flight information and uses direct deposit to instantly credit your bank account when triggering events occur. For baggage delay or loss, all you have to do is send a picture of your bag claim receipt to get the process started. To be fair, there are other travel protection policies out there, but they go through a regular claims process. Many are also specific to the airline that you fly; Virgin America may have decent travel insurance, but it won't do you any good on United.

I'm aware that this column is dangerously close to a product advertisement or endorsement for Berkshire Hathaway, and I've never even used their service. But so what? Rather than covering once-(and usually last)-in-a-lifetime events, this new service gets to the heart of why air travel has such a bad reputation. When you travel as much as I do, and certainly when you travel as much as Brent Leary, this stuff happens all the time.

Like any other insurance policy, this is a gamble. We pay money to the house and hope that we lose it. The cost is low enough—and air travel is so hated by the masses—that most travelers will gladly drop 25 clams for the protection. Because the actual rate of triggering events is fairly low, the house wins. Travelers, especially frequent ones, will occasionally hit the jackpot. I can't help but think that some air passengers will start hoping for lost bags and missed connections just for the money—and we all know that one person who could probably turn a profit from his rate of misfortune.

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Marshall Lager recognizes that you have a choice in business/humor columnists—OK, not really—and thanks you for flying Third Idea Consulting. For ticketing, go to www.3rd-idea.com, or www.twitter.com/Lager.

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