Osama bin Laden death: What travel insurance will and won’t do for you

Want to cancel your vacation abroad because the U.S. State Department issued a worldwide travel alert after U.S. forces killed terrorist leader Osama bin Laden? Go ahead, but don’t expect to get your money back through travel insurance -- unless you bought a very special policy.

That’s because most travel or trip insurance is designed to cover events, not states of mind, insurers say. So if a terrorist attack occurs in a city that you plan to visit on your insured trip -- or while you’re there — you can probably cancel or interrupt your journey and get your nonrefundable deposits back. But if there’s no attack, and you’re just afraid to go there or to travel at all, you’re out of luck with most policies.

Here’s the exception: a policy with a so-called cancel-for-any-reason rider, which is pretty much what it sounds like. It allows you to cancel your trip just because you feel like it, or for any other reason.

To collect on the rider, you’ll probably need to cancel at least two days ahead of your planned departure, and you’ll likely get only 70% to 80% of your trip costs back, said Peter Evans, executive vice president of InsureMyTrip.com, an online travel insurance agency.

And of course, the rider isn’t free. Expect to pay about 50% more to add it to a typical bundled trip insurance policy -- one that covers you for illness, terrorism, natural disasters and other specified events -- on top of a premium that may run 4% to 7% of your trip’s cost, Evans said.

Evans’ website, QuoteWright.com, Squaremouth.com and similar sites are useful for comparing different insurance policies. For tips on buying insurance, and the pitfalls, check out some of my previous stories:

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