Weighing options of travel insurance

We see terrorist attacks at airports, record airline delays and bankruptcies among travel providers. No wonder people are buying so much travel insurance.

But is all that spending - $1.3 billion in 2006, at least twice the annual figures before September 11, 2001 - worth it? Not necessarily.

You may already have coverage for some of your travel concerns. And considering that the typical policy runs four per cent to eight per cent of the cost of your trip, that can be a sizable sum to buy what you already have.

"We're not huge fans of travel insurance," says Greg Daugherty, executive editor of Consumer Reports.

Travel insurance reimburses nonrefundable travel expenses if you, say, cancel your trip because of an illness or your flight is delayed or cancelled. It can cover medical bills, lost luggage or meals when flights are hours late. Many policies, too, will reimburse the cost of a cancelled trip if a terrorist act occurs in the city of your destination.

"People are more concerned when they travel today and 9-11 opened a lot of eyes," says Brad Finkle, president of the US Travel Insurance Association. "We've had increased security and delays that go with that."

Benefit

While travel insurance might duplicate coverage you already have, that's not to say you should never buy it. The best argument for a policy is the medical care benefit, particularly if you're not in the best of health and travelling abroad. Medicare - insurance for those 65 and up - won't pick up medical bills outside the United States, except in very limited situations. Even younger travellers may find that their health insurance won't cover them outside the country.

And if you have to be airlifted out of the Australian outback or some other far away place because of a medical emergency, it could cost you well into the tens of thousands of dollars if you don't have insurance.

Some travel experts also suggest insurance is worthwhile if you've been saving up for an expensive trip for years and you don't want to lose money if you suddenly can't go or your cruise line goes out of business.

Indeed, there's another reason to buy the insurance: Peace of mind.

"Anyone who is so nervous and can't sleep should buy it," says Robert Hunter, director of insurance for the Consumer Federation of America. Everyone else: "Save the money on travel insurance and get a nice meal," Hunter says.

So before shelling out what could be several hundred dollars, consider what you're worried about. Lost luggage? A medical emergency? Having to cancel because of the flu? Then see if you already covered for these events.

Most travellers buy insurance to protect themselves in case they must cancel the trip because of a family illness or loss of a job, or if a trip is cancelled on them because their tour operator went belly up.

US Federal law requires airlines to compensate you for lost or damaged baggage. You'll get reimbursed for the depreciated value of your lost items, not what it costs to replace them.

Reimbursement

In March, the amount was raised by $200 to $3,000 per traveller on domestic flights.

Reimbursement on international flights is based on a currency benchmark that changes daily.

Check to see what baggage coverage might be available through your credit card and homeowner's or renter's policy. Your credit card or auto policy might also cover you when you're driving a rental car on vacation.

Many times, though, people don't want to file claims for travel-related incidents on their homeowner's and auto policies because they don't want to see their premiums go up, says Mark Cipolletti, a spokesman with World Access, an insurance broker.

Travel policies often provide a death benefit if you die on the trip. But if you already have life insurance - and you should if you have people depending on your income - then you don't need to spend money on buying more insurance for vacation.

If you still want travel insurance, read the details of policies before buying. Some insurers might not cover medical expenses related to a pre-existing condition. Others will if you buy insurance within a couple of weeks of booking your trip.

Hunter also suggests you can find better deals by shopping for a policy through insurance agents and brokers or online rather than by buying a policy from a travel agent.