Whether it's something as mundane as a bout of the flu the night before a trip or as monumental as a State Department advisory to steer clear of the Soviet Union, last-minute snafus can unravel the most carefully crafted travel plans.
The penalty for an unexpected illness or change of heart can be severe: up to the full cost of a tour, airline ticket or cruise if you cancel or interrupt your trip.
One safeguard is trip-cancellation/interruption insurance, designed to protect you from operator-imposed penalties or other expenses if you must either interrupt a trip or cancel it before it starts. The price isn't cheap -- generally about $5.50 per $100 worth of coverage -- but might be worth it for older passengers or anyone planning a major trip months in advance.
But if you hedge your bets by purchasing trip-cancellation/interruption insurance before leaving, you should ask plenty of questions and read the fine print. What you assume is covered may not be.
For example, the issuance of a State Department warning -- the strongest type of traveler's advisory -- may prompt companies to cancel tours to the affected destination or to waive last-minute cancellation penalties. But if a tour leaves as planned and the operator chooses not to waive the cancellation penalty, a jittery passenger would be out of luck. That's because insurance policies specifically exclude war, civil strife and other governmental actions as valid reasons for dropping out.
Some insurance companies offer trip-cancellation/interruption insurance separately. Most bundle it with other forms of insurance, including emergency medical coverage (which pays for hospitalization, doctors' fees and emergency evacuation if necessary) and protection against baggage damage or loss. Most insurance is sold through travel agents, who earn 30 to 40 percent commissions on the sale.
No matter what type of policy you're considering, check first with your own homeowner's and medical policies to see what travel-related expenses would be covered. Then be sure to ask these questions:
*Under what circumstances can I cancel?
At a minimum, most trip-cancellation/interruption policies cover the death, illness or accidental injury of the traveler, an immediate family member or a traveling companion. Others may include jury duty, the death of a business associate or an unforeseen emergency such as a traffic accident on the way to the airport. Some policies also allow you to cancel if your home is uninhabitable because of a recent fire, theft or natural disaster.
Several tour operators and cruise lines offer their own cancellation waivers, which permit you to cancel for any reason. This protection, which generally costs around $35 to $75 per person depending on the length and expense of the trip, sometimes includes baggage insurance. But beware: The waiver doesn't cover you if you must leave a trip after it's started. You must contact the company in writing, often at least 24 hours before scheduled departure. And the waivers don't cover you if the company itself goes out of business before your trip.
*Does the policy insure against bankruptcy or default?
The growing number of airline and tour company defaults has prompted a few trip-cancellation/interruption policies to include this kind of provision. But check to make sure the policy isn't limited to a formal declaration of bankruptcy, which some firms avoid even if they've ceased operations. Be aware, too, that policies do not cover the default of the travel agency that sells you the policy. Remember that default protection does not extend to a travel company or airline -- such as America West, Continental, Midway or Pan Am -- that has filed for bankruptcy.
A more effective form of default protection is to pay for your trip by credit card. It won't help you if you change your mind or interrupt your trip, but under the Federal Fair Credit Billing Act, you're not required to pay for goods or services that you never received.
*Is terrorism covered?
This provision gained heightened visibility during the Persian Gulf War, and a few policies -- including those sold by Access America and Travel Assistance International -- allow travelers to cancel if they're worried about a potential terrorist attack at their planned destination.
But, notes Ralph Davis of Travel Insurance Services, a California insurance broker, terrorism insurance "is not well-written or understood . . . there's a large blacklist of countries and cities, and the definition of terrorism is often very fluid."
For example, Travel Assistance International allows travelers to cancel without penalty if an incident of terrorism -- defined as "a major terrorist event that is reported in The Wall Street Journal" -- occurs at a traveler's destination within 30 days of the scheduled departure. But Travel Assistance International excludes 60 countries from such coverage -- including Britain, which was exempted following a bombing at the prime minister's residence in London last spring.
*What exclusions and limitations apply?
Many policies exclude cancellations for a long list of pre-existing conditions, including pregnancy. They also exclude illnesses that were being treated within 60 days of the policy's effective date. Some won't cover injuries caused by participating in team sports or activities such as scuba diving.
*What expenses will the policy cover, and what are the procedures for filing a claim?
Most travel insurance policies require you to pay for any additional costs, keep the receipts and be reimbursed later. Covered expenses typically include cancellation penalties, the unused portion of hotel, ground and other tour costs and additional air fare associated with flying home early.
But check to see whether the coverage is secondary, meaning the insurer picks up only what your own insurance company doesn't, or primary.