Travel Insurance Revisited:
Terrorism and Supplier Default
ABOVE: Cancellations and a massive drop in
bookings caused Renaissance Cruises to declare bankruptcy two weeks after 9/11.
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
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
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.
For more information, see:
This article describes the most common types of travel coverage.
"The largest travel insurance comparison site on the
Internet" offers products from leading insurers, mostly in the U.S.. Use the automated
to price and compare coverage, and to see which policies will compensate you for
trip cancellation or supplier default after a terrorist attack. In Britain, try:
This site offers product comparisons for 70 insurance companies that sell
policies in Britain, along with general insurance advice for UK-based travelers.