Travel essentials: Tickets, and insurance?
Daniel Jimenez • Bankrate.com

Policies cover everything from lost luggage to kidnappings.

Being invited to go away on a vacation used to be anything but relaxing for Nikki Lopez. The assistant office administrator from San Lorenzo, California did not attend two family vacations because of a fear of flying she'd developed after a rocky flight years earlier.

"My head felt like it was going to explode," says Lopez of the flight that sparked her phobia. "I was coming to terms with, 'Oh my God, I can die.' When I had a child then I really felt afraid because I didn't want to leave my child motherless."

But when a job assignment required her to fly to Arizona, Lopez decided to conquer the fear that had kept her grounded since she was a teenager. She got over that obstacle by taking a course through The Pegasus Fear of Flying Foundation. Curiously though, Lopez never considered getting flight insurance despite her fear of the not-so-friendly skies. Was she being careless? Not hardly. She merely avoided joining the millions of travelers who are buying unneeded travel insurance.

Insurance you probably don't need

The simple truth is that flight insurance is as unnecessary as bringing chopsticks to a pie-eating contest. Most life insurance policies offer a better value than flight insurance by protecting you year round instead of just for some one-time event. Captain David Linsley, president of Pegasus in Jupiter, Florida, is quick to shoot down the idea that fearful flyers buy flight insurance.

"It's the dumbest investment you can make. Flying is 77 times safer than driving a car. I've had thousands of clients and none of them have ever bought flight insurance. I was an airline pilot for 30 years and I never saw anybody buy it at an airport either," says Linsley.

Another reason for not buying flight insurance is that you may already be covered by your employer's insurance if you're going on a business trip. The same goes for leisure travelers who may have unknowingly bought flight insurance as part of a larger package, or automatically if they used a credit card to buy their tickets. For example, you can get $50,000 in free travel accident insurance by using the Citibank MasterCard to buy your airline tickets. On the other hand, you'd pay an average of $16.65 for up to $500,000 of coverage through Mutual of Omaha.

Here are two more types of travel insurance that you can likely do without:

Personal Property Insurance. Your personal stuff should already be covered if you own insurance on your home, condominium or apartment. These policies usually cover about 10 percent of your personal property limit if your stuff gets stolen or damaged while away from home. For example, if your home was worth $100,000 then you'd have $10,000 in personal property coverage.

Lost Baggage Insurance. Don't waste your money on this type of insurance if you already have homeowners, condominium or renters insurance (see above). Travel pros do recommend that you keep a record of everything you take on a trip, including purchase receipts to show what your stuff is worth. This rule goes for anything you may have bought during your trip as well.

"I had a video camera stolen at a security checkpoint in Boston's Logan airport," says Janet Bernstel, a frequent traveler from N. Palm Beach, Fla. "Luckily, I had the purchase receipt at home and the insurance company replaced it. Of course, they couldn't replace the vacation videos!"

Insure yourself against unfriendly natives

One of the more unusual types of traveler protection available is kidnap insurance. The number of business executives who've been kidnapped while visiting another country has increased, about 85 Americans were abducted in Columbia alone since 1980, making this insurance more popular. Kidnappings are bad for employee morale (not to mention their health) so companies are turning to specialty insurers such as Seitlin Risk Management & Insurance.

Richard Johnson, vice president of Seitlin's kidnap and ransom insurance division in Miami, Florida, says that most of Latin America poses kidnapping risks, but that places such as Columbia and Brazil have become especially dangerous for business travelers.

"Then there's wacky old Mexico where you have a group that is very violent," says Johnson. "They're big into cutting off victim's ears and sending them to family members. They're into showing the seriousness of the person doing the kidnapping."

How much does kidnap insurance cost? It depends on the amount of people insured and the length of stay, but some companies offer $1 million worth of coverage for as little as $500 or $1,000 per year. It's definitely worth the price if you believe Johnson's figures. He estimates that although only 2 percent of all kidnap victims don't survive, victims without insurance have a greater chance (9%) of not ever coming back. You'll be able to tell how your bosses really feel about you if they skimp on this type of insurance when you travel abroad on business.

Coverage that is worth thinking about

But even if you're not in danger of winding up in some guerilla group's hideaway, there are several other types of insurance that travelers often overlook but may actually be quite useful.

Special Medical Insurance. The good news is that your health insurance will probably cover medical emergencies that happen while traveling in the United States. The bad news is that your insurance will probably be worth jack squat if you're out of the country.

"Most U.S.-based medical policies will not cover travelers while they're abroad," says Amy Gergleli, manager of consumer communications for the Independent Insurance Agents of America (IIAA), in Alexandria, Virginia. You might also want to buy extra medical coverage if you'll be bungee jumping or sky diving since some plans don't cover injuries caused by extreme sports.

Trip Cancellation Insurance (TCI). This type of insurance is tailor made for events such as the recent Carnival Cruise Lines ship fire. Carnival has already said it would give all passengers a full refund plus a voucher for a free cruise, but that's not always the case.

"Carnival is being real good to their passengers," says Gergleli. "Other companies might offer to pay back only a portion of their non-refundable tickets. Some travelers pay as much as $10,000 in advance for a vacation. They could lose their whole investment if an incident like this happens on a less reputable cruise line."

TCI also protects you if your travel agency suddenly bites the dust or you get sick and can't make the trip. The IIAA warns that the TCI policies sold by travel providers usually do not protect you against the source of most travel interruptions, the travel service provider itself. The group suggests that you buy your policy from a third-party insurer that offers a tour operator default option. TCI prices range from about $80 to $180 per person.

Here's one final tip that works no matter what kind of insurance you're considering. Read the entire contract carefully so you know what type of coverage you're buying. You don't want to be worrying about the insurance you should have bought when you notice smoke belching out of your cruise ship's tail end.

-- Posted: Aug. 20, 1998