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Terror Fears Boost Insurance
The Travel Tightwad · November 8, 2002

The terrorist bombing on the island of Bali last month that claimed the lives of nearly 200 people, many of them tourists, made Alicia Nieva-Woodgate reconsider her planned trip to the Far East.

"I thought: What if something like that happens again?" the San Francisco sportswriter says. "I just wanted to be prepared for the worst."

So before she leaves for a three-month adventure to Cambodia, Vietnam, India, Thailand and Burma in December, Nieva-Woodgate is buying a $199 travel insurance policy that covers medical expenses, lost luggage and the cost of returning home if a terrorist incident interrupts her trip.

Travel insurance seems to be as popular as roll-on luggage these days. The "take-up" rate among travelers - the number of people buying trip insurance - was about 10% before the terrorist attacks on New York and Washington. After 9/11, the industry average jumped to about 20%, insurers say. One insurance Web site, insure.com, is claiming take-up rates as high as 30%.

Interest in insurance remains high today in part because of sustained terrorism fears and in part because of new airline rules that limit changes made to non-refundable tickets. The new policies, dubbed "use it or lose it," have left many travelers feeling as if their vacations are more at risk than ever. (Some insurance policies cover these change fees or cancellations under the new restrictions.)

That doesn't necessarily mean the travel insurance business is booming, says Samuel Halpern, executive vice president of the insurance site WorldTravelCenter.com. "I wouldn't say we've seen a dramatic growth in business, because there are fewer people traveling after Sept. 11," he says. In other words, any increase in take-up rates has been negated by a decrease in tourism.

There are still three main kinds of travel insurance. The most popular variety is the travel-cancellation policy, which typically costs 4 1/2 % to 7% of the price of a trip. A cancellation policy helps you get your money back if you have to call your trip off. Most policies cover you up to $50,000 per person.

Flight insurance, which starts at about $8 per flight, covers you if you're killed on a plane. You'll get about $250,000 worth of coverage.

Medical insurance policies, which range from $25 for a few days of coverage to annual policies in excess of $2,000, help pay your doctor bills overseas that aren't included in your regular medical insurance. They also cover a medical evacuation, if needed. The amount of coverage starts at about $50,000 for short trips, up to $1 million for a year.

Most travel insurance policies offer two or three kinds of coverage. Nieva-Woodgate's, for example, also includes a provision for property that is lost or stolen while she's on the road. But it's also possible to buy just one kind of policy if that's all you need.

Sept. 11 changed the way travelers are insured in small but important ways. HTH Worldwide, an insurance company based in Radnor, Pa., added terrorism and air-flight accident to its policies after the attacks. "We've also improved our security services and information to help travelers access critical information specific to their destination such as terrorism, crime and political stability," vice president Brendan Sharkey says.

Do you need insurance for your next trip? It depends.

When to buy. If you have spent more than $1,000 on a vacation and your homeowners or health insurance policies don't cover the trip, then experts say travel insurance is something you should consider. "When there's money at risk and it's a risk you're not willing to bear, then you should consider travel insurance," says Jim Grace, president of the online travel insurance supermarket Insuremytrip.com.

When not to bother. For shorter, less expensive trips or ones for which your homeowner, renter or health insurance policies offer coverage, don't worry about insurance. Bob Hunter, the director of insurance for the Consumer Federation of America in Washington and a former insurance commissioner for Texas, says some of the coverage, like flight insurance, probably isn't necessary at all. He says that statistically speaking, you're about as likely to slip in the bathtub and die as to perish in a plane crash: "You don't see people buying bathtub insurance, do you?"

Where to buy it. An insurance company or travel agent can help. But if you're taking a tour and are offered cancellation insurance through the tour operator, experts say it probably won't cover you if the company files for bankruptcy. Halpern of WorldTravelCenter.com says that if an operator goes belly-up and you bought cancellation insurance through it, "you're out of luck."

What to watch for. Read the fine print before you buy a policy. Some insurance plans cover you only if a travel company formally files for bankruptcy protection. (Not every policy covers every bankruptcy.) Other policies leave it up to the U.S. State Department, law enforcement agencies or news media outlets - not you - to define what constitutes a terrorist attack, foreign or domestic. And they set limits on how close the attack has to be to your destination before it goes into effect. Keep in mind, though, that you generally must buy the policy before violence erupts to be covered.

But the increased popularity in travel insurance troubles safety experts like Terry Riley, who say the policies can leave people with a false sense of security.

"Maybe people feel as if they have travel insurance, nothing will happen to them," the editor of the Web site errtravel.com says. "But there's no substitute for doing your research about your destination. That's the only way to have a safer trip."

Who covers what

A number of insurance companies sell medical, flight and trip-cancellation policies. A sampling:

Travel Guard International. A variety of single-trip travel protection plans, including an annual trip-protection plan and optional flight accident insurance up to $500,000, and evacuation coverage upgrade. 800-826-4919; www.TravelGuard.com.

Travelex Insurance Services. Three single-trip travel protection plans and one annual multi-trip travel-protection plan. 800-228-9792; www.Travelex-Insurance.com.

Travel Insured International. Single-trip travel-protection plan and a more economical plan to cover trips after departure. 800-243-3174; www.TravelInsured.com.

International Medical Group. Single-trip and annual multi-trip medical insurance for individuals and groups, as well as renewable global medical insurance for Americans traveling and living abroad. 800-628-4664; www.imglobal.com.

MEDJET Assistance. An annual membership plan providing prepaid air ambulance transportation, including worldwide evacuation and repatriation to the member's hometown hospital. 800-963- 3538; www.medjetassistance.com.

HTH Worldwide. Offers travel medical coverage, trip-cancellation protection and global health and security information. Among policies: TripProtector, which includes trip-cancellation and evacuation coverage. 888-243-2358; www.highwaytohealth.com.

Source: WorldTravelCenter.com

Christopher Elliott is a travel commentator based in Key Largo, Fla. All e-mailed questions may be edited, condensed or republished at the site's discretion.