Travel insurance
By Melanie Chambers • Bankrate.com

It would have been nice to have had travel insurance when my luggage, containing frozen salmon and deer meet, went missing on a recent trip. Insurance wouldn't have paid to replace the stinky, soaked clothes I discovered when the bags were found -- that was my own fault -- but if I'd had insurance, it would have given me the money to buy toothpaste and clothing for the three days it took to locate my bags.

That's just one instance when travel insurance would come in handy. What if the airline lost my bag entirely? Or, worse yet, what if the airline went bankrupt days before my flight? -- Not an uncommon scenario for Canadian airlines these days.

According to an Ipsos-Reid poll commissioned by RBC Insurance in 2003, almost 84 percent of Canadians buy insurance so they don't have to worry about such things. "You're better off having coverage and having peace of mind," says Andrea Colbourne, senior travel consultant for Legrows Travel in Cornerbrook, Newfoundland. "You may never use it, but you hope you never have to use your home fire insurance either."

After all, you're on vacation; leave your worries at home.

Types of coverage
If you want a comprehensive travel insurance policy, excluding medical insurance, consider buying a package that covers baggage loss or delay, trip cancellation or interruption and accidents. Of course, you can also buy each type of coverage individually.

Keep in mind that cancellation insurance must be purchased at the time you buy your ticket or within a few days. Each policy differs, so read the fine print to make sure you understand your coverage.

Before you make the purchase, first consider how often you travel. If you're a business traveller taking frequent short excursions throughout the year, an annual policy might suit your needs. It covers you for an unlimited number of trips for a year. While a one-time policy will cost in the neighbourhood of $100, an annual policy can cost as much as $200, depending on the length of each trip you take.

Cancelled flight or interruptions
Your airline ticket is one of your largest expenses when travelling, so buying cancellation insurance should be at the top of your list. But you can't just cancel a flight for any reason and receive a full refund.

You need a valid reason for not making your flight: "It has to be something like a medical reason (to get) the full amount back," says Jennifer Meyer, a travel consultant with CAA based in Thornhill, Ont. A death in the family or a sickness that prevents you from travelling are also valid reasons.

If you decide to cancel your trip because your dog will miss you, that is not a valid reason, and many insurers, including CAA, will only cover 50 percent of the ticket cost.

Insurance companies will make allowances for cancellations beyond your control. If the airline goes bankrupt, your insurance might cover the cost of a new ticket if you're stranded. Likewise, some travel insurance will reimburse you if you've missed an event because of a delayed flight. Or, if your flight to an event is cancelled, some insurance policies will cover the expense of another flight to ensure you reach it on time.

If you decide to extend your vacation once you're out of the country, make sure you top up your coverage before the flight: if you are only covered for nine days, and you come home on the tenth day, you won't be covered.

In the event that your connecting flight is delayed and you have to spend the night at the airport, some policies will pay for your meals and a hotel, provided the flight is delayed for 12 hours or more.

Bags be gone
If your bags don't land with you and are delayed, insurance will cover the costs of buying clothes and personal incidentals to get you by until they arrive. If your bags are lost entirely, most policies will offer $2,500 or more for each bag. If you're packing more expensive items, such as a wedding dress, ask for more coverage when you buy your policy.

To claim a full reimbursement, it's always wise to keep a list of what you packed, as the insurance company will want a brief description of the contents.

Cost
The cost of your insurance will depend on the duration of your trip, the cost of airline ticket and your age.

For instance, travel insurance (including luggage and cancellation) for a 33-year-old traveler going away for seven days on an $800 ticket costs $61 for one policy. If the airline ticket cost $1,500, the insurance would cost $92. Policies also come in family packs: the same trip would cost a family of four $275.

Cost increases with age: for CAA coverage, premiums go up nominally every five years after the age of 59.

The only major variation between policy costs is how much money you receive for lost luggage. One policy may offer $200 for personal necessities if your bags go missing, while another might pay more. Of course, if you want more coverage, they will increase accordingly.

Making a claim
Whether you have to cancel your flight or reclaim lost luggage, insurance companies will want to see a paper trail of all your purchases and/or your reasons for cancelling. 

To ensure speedy reimbursement, keep a copy of your ticket and original copies of important documents, such as a doctor's note.

You can expect your reimbursement within 60 days. But without solid documentation, it will take longer to process.

Also, companies often require notification of lost bags or cancelled flights within 24 hours. But you'll have more time, usually a month or more, to mail in your receipts and documents for reimbursement.

Melanie Chambers is a freelance writer based in London, Ont.