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Travel Insurance Revisited: Terrorism and Supplier Default
Terrorist attacks and threats of war have left many travelers nervous since 2001, and the economic impact on airlines, cruise lines, and other travel businesses has been severe. As a result, travel insurance makes even more sense now than it usually does.
In our Travel Insurance article, we talk about the most common types of travel coverage: trip interruption, baggage loss, emergency medical evacuation, etc. Now let's talk about two other coverages that are of special interest right now: terrorism and supplier default.
Many policies don't cover terrorism, period. Others allow you to cancel a flight, cruise, etc. if an incident of "terrorism or civil unrest" has occurred in a country you're visiting, or if a specified government agency (e.g., the U.S. State Department) has issued a warning against traveling in that country. Even if a policy does cover terrorism or civil unrest, the coverage isn't likely to be open-ended, so know exactly what you're buying before spending money on a policy.
If your airline, cruise line, or tour company goes bankrupt, you could be stuck with worthless tickets. That's where "supplier default" insurance comes to the rescue. The insurance company refunds the money that you've lost to the bankrupt carrier or tour company.
Again, it's wise to know what you're buying up front. Insurers may exclude some companies, or their coverages may have other limitations. Ask for a definition of what's covered before you buy a policy.
If you're a U.S. resident, paying by credit card can help you avoid losses if a travel supplier goes bankrupt. The U.S. Fair Retail Credit Billing Act requires credit-card companies to refund payments for goods and services (such as airline tickets, a cruise, or a tour) that weren't received by the customer. There are time limits on such refunds, so phone your credit-card company immediately if a travel supplier goes out of business.
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