With Aloha, ATA, Skybus and Skyway Airlines all going out of business last week in one incredible five-day free-fall, it’s time for travelers to think about something they may not have considered before: travel insurance.
Buying travel insurance can’t stop an airline from liquidating — or canceling your flight or losing your bags, for that matter — but it can increase the compensation you are paid if any of those things happen, and it can give you some peace of mind in turbulent times like these.
Whether you need travel insurance or can give it a pass depends on where you’re going, how long you’ll be traveling, and how much you’re paying to travel. It also depends on how much, or how little, trip coverage you may already be getting through your credit card company.
Say, for example, you are laying out $79 to fly Virgin America from San Francisco to Las Vegas and you’re not checking any bags; you plan to return home two days later, after trying your luck in the casinos.
You may need a lot of luck playing Vegas, but you don’t need travel insurance. You aren’t spending much money for your air, you aren’t going far, you’re traveling entirely within a highly developed country — in this case, the United States — and since you’re carrying it all on, you don’t have many bags that could be lost, damaged or stolen.
Conversely, it may be worth your while to buy travel insurance that covers cancelled flights, or lost, damaged or stolen bags, and helps find you a hotel room and another flight if — like a number of holiday-makers stranded in Hawaii when ATA stopped flying — your airline unexpectedly goes belly-up.
Travel insurance also becomes more desirable if you have a complex itinerary: Say, you’re traveling through unevenly developed Southeast Asia, you’re planning to be away from home for three weeks, you’re paying big bucks, and you’re taking lots of gear — which you will have to check.
Now, you may need the back-up travel insurance can give you. Some industry experts advise insuring your luggage, for example, by buying excess valuation insurance at the airport from the agent at the airline counter before you depart; this provides as much as $5,000 in additional coverage.
Many vendors sell travel insurance policies, including airlines. It’s better to buy a policy from a company other than an airline or tour operator. That way, if the company fails to deliver on promises — or fails entirely — you won’t be dependent on them.
Prices, types of travel insurance and what is and is not covered vary widely. As always, it pays to read the fine print. Travel insurance policies generally cost 4 to 7 percent of the price of a pre-paid trip; seniors may have to pay a bit more.