Insurance lets you stop a lot of worrying

Your Money

May 02, 2004|By Lorene Yue

If you're the sort of person who worries about everything, the insurance industry has a policy -- or policies -- for you.

A newcomer to the field is online auction protection. Buy Safe Inc. of Alexandria, Va., offers a surety-bond product if you sell stuff through an online auction site such as eBay.

"We guarantee a seller's performance to the buyer," said Jeff Grass, president and chief executive of Buy Safe. "We allow sellers to signal to buyers that they are trustworthy."

Sellers must be screened by Buy Safe, and the company collects 1 percent of the sales price as its fee.

Buyers purchasing from Buy Safe clients reap the benefits of the surety bond for free. If the seller skips town before delivering the promised product, you can settle the claim with Buy Safe.

Vacationers afraid that a glitch will turn a prepaid dream trip into a financial drain can buy travelers insurance. Pet owners wary of big vet bills are turning to animal health insurance, and couples heading down the aisle can buy wedding insurance -- not to replace the groom with a newer model but to recoup a large deposit if the banquet hall goes bust.

Trying to decide whether to buy a policy

When are buying these unusual policies worth the risk?

"The biggest question is, if you can't go and you lose your money, how upset will you be?" said Mike O'Malley, a partner at Diplomat Travel in Chicago. "You want to protect your investment. If you buy a $200 airline ticket, I don't consider that an investment."

But let's say a death in the family meant that at the last minute you couldn't take the world cruise you'd paid for, or an airline strike kept you grounded.

O'Malley said travel insurance will reimburse you for some of the expenses you couldn't recover on your own.

Some travel insurance companies will allow you to cancel a trip and recover your costs if you lose your job and no longer can afford the expense, if the travel company goes belly up or turned out to be a fraud, or if the place you were going to visit has become uninhabitable.

The cost for insuring a trip is usually based on the traveler's age. Insurance for a $1,000 trip could cost $62 for a 33-year-old and $152 for someone who is 72.

Consumers should ask what the policy does not cover, and at what point during the trip does it expire. The same questions apply when buying wedding or pet medical insurance.

Businesses protecting their image

It's not just consumers who need unusual insurance. ASU International Inc. of Boston sells insurance to compensate businesses for the losses of people, investments, buildings and even reputations.

Say a sports star, the darling of a marketing campaign, takes a morality dive. Image-protection insurance will cover the costs of yanking products and advertising.

"When a book publisher gives you a $1 million advance, they come to us to make sure you are healthy enough to deliver the product," said Bill Hubbard, president and CEO of ASU, a subsidiary of HCC Insurance Holdings Inc.

More and more businesses are buying policies to protect against event cancellation and kidnapping and ransom.

Trade show and event organizers take out an insurance policy if they are worried that heightened security could result in a site being declared off-limits, or the main talent is prevented from catching a flight to reach the show.

Kidnapping and ransom insurance policies provide a personal negotiating team and pay for any fees and expenses incurred during the ordeal.

As businesses continue to expand into emerging markets, insurance broker Aon Corp. of Chicago expects to see growing interest in political-risk insurance.

"Say you're building a manufacturing plant in China," said John Minor, national director for Aon Trade Credit's political-risk division. "Political-risk insurance would protect you from government intervention if the government kicks you out and takes over the factory."

Lorene Yue is a Your Money staff writer.

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