The first stop in an insured trip should be the fine print

The recent hurricanes in the Caribbean and the U.S. and terrorist attacks on London’s transit system have prompted travelers to scrutinize trip insurance policies, a subject of some confusion since the Sept. 11, 2001, terrorist attacks in the U.S.

“We got swamped with telephone calls after the London bombings,” said Beth Godlin, senior vice president of travel markets for Access America, a large insurance company with offices in Richmond, Va. “Most people wanted to know what benefits they had.”

For some in this situation, the answers are reassuring; for others, disappointing. It usually hinges on the fine print.

Millions of American leisure travelers buy insurance -- about 30%, an increase from 10% before the Sept. 11 attacks, the United States Travel Insurance Assn., a Washington, D.C., trade group estimated in May.

Some buy policies online or through travel agents; others through a tour operator or cruise line. Now some airlines sell them.

Those policies are complex products. Travel insurance may cover medical care, baggage loss, unused parts of interrupted trips or nonrefundable deposits on trips that get canceled -- or all of these situations. A certificate of insurance for package policies, which combine several types of coverage, may fill 15 or more pages, with dozens of definitions, exclusions and caveats.

But travel insurance can be worth buying, and, fortunately, the industry cleaves to some standard, if not universal, practices.

Package policies are popular. Premiums for these generally are 4% to 8% of the trip’s price, depending on your age and what is covered. Such policies usually include:

* Trip interruption and cancellation. This reimburses you for losses if an emergency forces you to cancel or cut short a trip. Covered events typically include a serious illness, a natural disaster (including bad weather), a terrorist attack, an accident on the way to departing, a jury summons or a labor strike.

* Medical. This pays for care during your trip or evacuation to a medical facility or both. Designed to cover emergencies, it usually excludes preexisting conditions. Check limits on payouts; evacuations can cost $10,000 or more.

* Baggage loss or damage.

* Emergency assistance by phone.

Besides regular trip insurance, some cruise and tour operators sell waivers that allow customers to cancel trips for any reason and still recover at least part of their deposits.

For instance, Tauck World Discovery, a tour operator based in Norwalk, Conn., sells a “guest protection plan” for $200 to $300, depending on trip length. It allows you to cancel for any reason up to the day of departure and get a full refund on your tour price, said spokesman Tom Armstrong; airfare is refundable only under certain conditions.

Princess Cruises sells a “travel care” plan that also allows cancellation for any reason. Depending on the situation and level of coverage, you may get all your cruise deposit or fare refunded in cash or only a part, as a credit on a future cruise. The cost is $59 to more than $300, based on the fare price and coverage limits.

Buying travel insurance or a waiver can be especially worthwhile if you are elderly or in delicate health or if the trip is so expensive that you would have a hard time taking a loss on it. A $200 plane ticket is probably not worth insuring; a $2,000 cruise or tour may be another story.

It’s just as important to know what an insurance policy doesn’t cover as what it does. Although policies vary, they often exclude these situations:

* You’re afraid to travel because of a recent terrorist attack. Many trip interruption and cancellation policies cover terrorism, but they are strictly limited. Typically, insurers will reimburse you for various costs if the attack occurred while you were traveling or if you had planned to go to a city within 30 days of an attack -- providing you bought the policy before the attack.

“The policy is city-specific,” Godlin said of Access America’s terms. “If something happens in London and you want to cancel your trip to Manchester, England, you’re not covered.”

Some insurers exclude terrorism coverage in a country for six months after an incident; others don’t.

* Your employer won’t give you time off. Changes in work schedules are among the most common reasons people cancel trips. But unless you bought a cancel-for-any-reason waiver, you probably won’t be covered.

If you’re laid off, as opposed to fired for cause, you may be covered, depending on how long you’ve worked at the same place. The minimum can be a year or as long as five years.

* Your airline or cruise or tour company goes bankrupt. Many policies cover this situation under “financial default” provisions. But restrictions can be significant. Some companies may not be covered.

Access America, for instance, maintains a list of more than 300 companies, mostly tour operators, that it will insure for default. Among those not on the list, as of the Travel section’s Tuesday deadline, were United Airlines and US Airways, which have been under Chapter 11 bankruptcy protection.

If you buy a waiver or insurance through an airline or other travel supplier, it probably won’t cover financial default of that supplier. Eventually, you may be able to collect through a charge-back on your credit card or through bonds or letters of credit that the company holds, but it can take a while.

That’s one reason it’s advisable to pay for travel on your credit card, not in cash or by check. Federal law gives cardholders certain protections, including the right to dispute charges for goods (including services such as travel) that are not received.

Just don’t rely on your credit card for travel insurance. Some come with services such as rental car coverage and emergency advice by phone, but the benefits tend to be limited.

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Hear more tips from Jane Engle on Travel Insider topics at latimes.com/engle. She welcomes comments but can’t respond individually to letters and calls. Write to Travel Insider, L.A. Times, 202 W. 1st St., Los Angeles, CA 90012, or e-mail jane.engle@latimes.com.