A guide to travel insurance

The volcanic ash clouds, the earthquakes, the tornadoes, the floods. Where will it all end? It won’t, and that’s why you should consider buying travel insurance for your next trip. Paying a few hundred dollars in premiums could save you untold grief and thousands of dollars if your trip goes awry.

Cases in point:

Thanks to insurance, Don Van Brackel and his wife, Madonna, of Coldwater, Mich., earlier this month received more than $8,000 in refunds on flights and a European cruise they missed when ash clouds from the Icelandic volcano disrupted air traffic in April. That was 10 times what their premiums cost.

The same disaster grounded Daniel and Kristy Dicke of Pasadena in France for a week. Daniel said the couple, who hadn’t insured their trip, “burned through most of our savings� to get back home. They paid more than $4,500 for last-minute airfares and car rental.

Although trip insurance can be helpful, it won’t cover every mishap or outright tragedy that can befall a journey. With rare exceptions, you can’t just cancel your trip on a whim and get your money back.

But with the Icelandic volcano, earthquakes in Haiti and Chile, floods in Southern states — and don’t forget that hurricane season starts Tuesday — 2010 is shaping up as a good year to think about insuring your next big trip.

Here’s a primer on how to buy travel insurance, what you get and the pitfalls, gleaned from industry experts and travelers’ experiences.

How do I get travel insurance?

You can buy it through an online broker, your travel agent or your tour or cruise company. Each source has its good and bad points.

Online brokers, such as InsureMyTrip.com and Squaremouth.com, make it easy to compare dozens of policies from different companies. Just be sure to read the full policy, not just the summary, before you buy.

Travel agents often work regularly with a single insurance company, so they may not be as familiar with other offerings. But that also means the agent should know the policy they sell, act as your advocate if problems arise and help you gather the right paperwork for claims.

Policies bought through tour and cruise operators can offer inexpensive, basic protection. But they generally will not cover you if you lose trip deposits because the operator itself goes bankrupt, and they may be tailored as much to protect the operator as the traveler. In some cases, benefits are paid in vouchers for future travel, not cash.

What should travel insurance cover?

It should reimburse you for nonrefundable deposits with cruise, tour and hotel companies, as well as extra airfare costs you may incur when the unexpected happens before or during a trip. Look for medical coverage too, including hospital stays and emergency evacuation, because your regular health insurance may not cover you outside the U.S.

How much should I pay for a premium?

Expect to pay 4% to 8% of your trip’s cost for a so-called bundled or package policy, the most popular type, which covers situations such as travel delay and trip cancellation and interruption. Premiums vary by the buyer’s age, the scope of coverage and other factors.

Will insurance handle every problem?

No. A standard policy covers you only if certain unforeseen events, such as illness, weather or labor strikes, affect your ability to start or complete your trip, or cause problems along the way. These events may be listed under “covered reasons� or “benefits� in your certificate of insurance.

Before you buy a policy, read the full certificate, which can run 20 pages or more. You can obtain this document from your travel agent or the insurance company, which may post it on its website.

Don’t rely on a policy summary or other shorthand that refers vaguely to “weather coverage� or “illness coverage.� Details count. Many insurers, for instance, won’t cover pre-existing medical conditions if you buy a policy more than two weeks after making your first trip deposit.

I heard the ash clouds from the Icelandic volcano were going to shut down my departure airport for several days. So I canceled my tour. Can I get my money back?

If you nixed your trip before your departure date, maybe not. Insurance covers events, not states of mind. If you tried to catch your flight and the plane never got off the ground and you couldn’t quickly rebook, you’re more likely to be covered for nonrefundable tour deposits. But not just because you thought your flight might be canceled.

I bought a “cancel for any reason� rider. Am I covered for everything?

A lot, but not everything. These increasingly popular riders, also called “cancel anytime� provisions, are optional additions to standard policies. Instead of limiting you to reasons listed in the policies, they allow you to cancel trips for any reason, even if you just change your mind. That can save you a lot of arguing over fine print.

The downsides: Your premium will cost about 50% more if you add the rider. And if you cancel your trip for a reason not listed in the main policy, you’ll typically be covered for only 75% or 80% of your costs.

And here’s another wrinkle: Often you’ll need to cancel at least 48 hours before your scheduled departure to use the rider. So if a problem comes up the day before your trip, the rider doesn’t help; you’ll be covered only for reasons listed in the main policy. That’s an issue when ash clouds close airspace on short notice.

My flight was canceled because an earthquake shut down the airport I was flying to and the airline had no idea when flights would resume. Because my policy contains coverage for natural disasters, I’ll get my deposits back on my hotel or tour, right?

A. It’s not a sure thing. If “natural disaster� in your policy is a covered reason for a broad range of situations, you’re probably OK. But some policies won’t pay unless the disaster affects your lodging.

That’s what happened to Al and Carol Schuh of Valencia in March after the Chilean earthquake shut down the Santiago airport, causing the couple to miss a connecting flight to a fishing lodge in Patagonia, which was undamaged.

In denying their claim for more than $10,000 in tour deposits, the Schuhs’ insurer quoted from their policy, which covered a “natural disaster at the site of your destination which renders your destination accommodations uninhabitable.� It didn’t matter that the couple could not get to the lodge.

Had the Santiago airport been shut by bad weather, the Schuhs might have been covered under a different policy provision. “Unfortunately, an earthquake is not considered a weather condition, it is a natural disaster,� the insurance company wrote.

In case you’re wondering: Ash clouds from the Icelandic volcano are being defined as “weather� by many insurers, even though the eruption itself might be classified as a natural disaster.

My insurer denied my claim. What else can I do?

You can file an appeal with the insurer or complain to your state insurance department. In California, the complaint line is (800) 927-4357 or you can file online at https://www.insurance.ca.gov.

If you paid for your trip with a credit card, you should also request a charge-back from the card company. Under the Fair Credit Billing Act, card holders can have charges removed for goods or services that they do not receive. For that reason alone, it’s wise to put big trip deposits on your credit card; never pay by cash or check.

Don’t forget to check with your hotel and tour or cruise operator. Even if their policies say deposits are nonrefundable, they may make exceptions or offer vouchers for future travel.

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