Insurance: What, When, How, Why

Will insurance policies cover my luggage?

Fortunately, just about every package policy covers luggage loss or delay, though amounts can vary. Travelex's Travel Plus plan, for example, will pay up to $2,500 for lost luggage and up to $600 ($200 max a day) to replace items in luggage delayed by at least 24 hours, while its cheaper TraveLite plan limits claims to $1,000 and $250, respectively. If I get sick and need to be evacuated, will the policy pay?

Yes, most package policies will pay, but there are limitations. Almost all policies state that they will transport you only as far as the "nearest adequate medical facility," which is determined by them, not you. Some say you must be critically ill or injured to qualify. Some allow the attending physician to decide whether you need to be evacuated, while others say their program directors will make the call.

Am I covered in the event of a terrorist attack?

About 80 percent of policies cover terrorism, according to Evans of Insuremytrip.com. Many have added this coverage since the post-9/11 insurance fiasco, when cruise companies were picking up passengers by van the day after the event and forcing them onto ships, and many travel insurance companies were refusing to allow even those living near Ground Zero to change their travel plans. Policies vary (for examples, see chart). Some cover terrorism in your city of departure and arrival, others just in the arrival city, and others include connecting cities. Some say a terrorist attack must have occurred within 30 days, others say 10 days.

What happens if my cousin, to whom I'm very close, gets seriously ill? Can I cancel?

It depends. Many companies cover family members as long as they're hospitalized. But if your cousin breaks his leg, you probably won't be covered unless you're responsible for his daily care. Some companies, such as CSA and Access America, cover domestic partners; others, including Specialty Risk International, cover business partners. Just about all will pay for your cancellation if your travel companion becomes too sick to travel.

How about preexisting conditions? If I had a heart attack 10 years ago, will I not be covered if I have another one?

Pay close attention to preexisting condition clauses, and give serious thought to your family demographics, your own health and possible situations. Most policies say that a preexisting condition is one diagnosed or treated 120 days prior to purchase. So if you had a heart attack a year ago and you've recovered, that wouldn't be considered a preexisting condition. Most policies also waive preexisting conditions as long as you're stable and you purchase within a certain period of buying the trip. But again, policies can differ. For example, iTravelInsured won't waive preexisting conditions for those over 70 who have ongoing medical issues.

Is there a policy that will cover me if I simply don't feel like going?

No policy will refund your money if you change your mind. Some cruise lines (including Cruise West and Princess) and tour operators (such as Trafalgar) offer "peace of mind" policies that allow you to receive cancellation penalty refunds in the form of a credit toward a future vacation, but they don't just give you your money back unless your trip is so far in the future that you still qualify for a refund.

How do I find insurance? Should I buy the policies offered by cruise lines, travel agents and tour operators, or should I shop around?

The downside of going through your cruise line or tour operator is that you won't be covered if they go bankrupt. Also, many tour operators cover only trip protection, not medical insurance. Travel insurance is commissionable, so travel agents may want to push a certain product. Shop around to get the best coverage at the best price. Even if you go through a travel agent, read the policy. But if the cruise company or tour operator is reputable, the price competitive and the policy covers peace-of-mind cancellations and medical, your best bet might be to go through them.

How much should insurance cost?

According to Evans, the rule of thumb is between 5 and 7.5 percent of the trip's cost, depending on coverage levels. Younger people will pay less, older people will pay more. For example, a $3,200 trip taken by a couple of 25-year-olds should cost about $223 to insure with a top-of-the-line policy, while an 85-year-old couple would pay about $890 for the same coverage.

Carol Sottili will be online to discuss this story Monday at 2 p.m. during the Travel section's regular weekly chat on www.washingtonpost.com.