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Travel insurance: Are you already covered?

With tensions in the travel industry and the global political scene, more travelers are looking into travel insurance.

But the term can mean widely different things, and can offer either real benefits or an expensive duplication of coverage you probably already have.

If ever there were a purchase that calls for research and reading the fine print, travel insurance is it, says Edward Hasbrouck, author of "The Practical Nomad" series of travel books.

That's because many of the reasons for which people would buy travel insurance, such as an airline or cruise line going out of business or the government shutting down every airport in the country, may not be covered.

Hasbrouck says he's recommended trip cancellation and interruption insurance for years, especially if a trip is being paid for well in advance.

Let's say you've booked a two-week walking tour of France and then take a spill and find yourself on crutches a week before you're scheduled to leave. Or your mom has emergency surgery while you're on an Alaskan cruise and you need to get home.

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It happens all the time, Hasbrouck says, and the result is that vacations are ruined because people either cancel their trips and lose the money, or go when they'd rather stay home because they can't get a refund.

"It doesn't deal with the emotional pain, but it allows you to make your decisions unclouded by money," Hasbrouck says. "The further in advance you're paying, you're crazy not to get the insurance."

Pricing for the policies typically is based on the cost of your trip, how old you are and how long you're going to be traveling. As a rough guideline, expect to pay between 8 percent and 10 percent of the cost of your trip.

The best form of trip cancellation and interruption insurance will not only cover illness and injury, but also supplier default, which means the company folded. This is especially important for airlines since Sept. 11, Hasbrouck says, and for cruise lines, some of which have built too many ships and are on shaky financial ground.

TravelGuard International offers supplier default coverage if it's purchased within seven days of putting down a deposit. Likewise, their medical expense coverage will cover pre-existing conditions if it's bought within that window.

Know what you pay for
The key is to ask the right questions, read the fine print, and make sure that you're actually getting what you think you're buying.

Take flight insurance, for example. This is a life insurance policy that only pays off if you're killed or maimed in a plane crash. According to the Independent Insurance Agents of America, you've got a higher chance of getting hit by a bus when you're walking out of the airport than being killed in a plane crash.

Many policies will also cover you on the ground while you're using "common conveyances," such as buses, trains, subways, taxis and hotel courtesy shuttles, but not private tour buses or rental cars. Chances are good, though, that you've already got this kind of coverage with your personal or company-paid life insurance policy.

If you're traveling for business, your employer may have already paid for this kind of insurance as an employee benefit even if the company only has a few employees who travel, says Ron Barto, director of group life and accident product management at The Hartford, one of a small group of companies offering travel insurance to businesses.

"When someone dies or has an accident, there's almost always an immediate need for cash," he says. "This provides that, for whatever reason. We don't ask why, and we pay fairly quickly. If you're on business, the employer wants to make sure you're taken care of."

A homeowners or renters insurance policy generally covers the theft of your personal property, according to IIAA, even if you're traveling out of the country. Some valuables, such as jewelry, cameras and laptops, probably won't be covered, but check with your insurer. Hasbrouck recommends for computer insurance.

Most health insurance policies should cover medical expenses if you're sick or injured, but may not apply overseas. If you're headed for a remote location or have a medical condition, you might look into a policy that includes medical transportation expenses. An air ambulance can cost thousands of dollars and typically isn't reimbursed by health care policies.

Travel policies often will say the coverage is to get you to an adequate medical facility. The question to ask is what's their definition of 'adequate.'

You may also have coverage from your credit card. Diners Club, for example, offers up to $350,000 in automatic travel accidental-death-and-dismemberment insurance if you buy your ticket with the credit card and automatic collision/damage insurance for rental cars.

"It's full value rental car collision or loss damage," says Amy Venetucci, senior vice president of brand management for Diners Club. "That coverage would be primary. It overrides your insurance you have for your personal auto. You get our coverage and save about $16 a day."

Plus, you don't have to file a claim with your insurance company, which generally means you won't have a rate increase.

Coverered by your credit card?
Regardless of which credit card you use to rent the car, your auto insurance should cover you while you're driving it. If you're only covered for liability, though, it might be worth getting collision coverage. TravelGuard sells collision coverage for $7 a day.

The coverage offered at the rental car counter should be a last resort, Hasbrouck says, because it's expensive and poor coverage. Credit card coverage varies, he says, and may exclude convertibles or SUVs. Check with your auto insurance and credit card company to see what's covered before you leave home.

Diners Club also automatically provides up to $1,250 in baggage coverage beyond what you'd get paid if the airline, cruise line or other common carrier loses your luggage.

It's definitely not worth the money to pay for lost luggage insurance, Hasbrouck says, because it's extremely rare for a carrier to truly lose your bags. They might misroute it for a day or so, but eventually, your bags should catch up with you. In the meantime, the airline will usually give you cash to buy a few necessities.

Besides, if they actually lose your bags, the things you really care about -- jewelry, cameras and computers -- almost certainly will be excluded.

Also check with your credit card company about supplemental coverage. Diners Club offers really cheap supplemental coverage. It includes up to $1 million dollars in flight insurance and $150,000 worth of life insurance on the ground, but the real peace of mind comes in the trip cancellation, interruption or airline bankruptcy coverage that's bundled with the life insurance. You can get up to $500 per ticket.

Pat Curry is a contributing editor based in Georgia.

-- Posted: Sept. 23, 2003

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