Make Sure That Your Trip Insurance Covers Terrorism

A rash of terrorist attacks in cities including Paris, Nice and Brussels has prompted many travelers to buy trip-cancellation insurance policies.

These policies typically include 100% reimbursement of prepaid nonrefundable expenses such as airfare, hotels and vacation property rentals if you cancel the trip because of a terrorist attack, a health problem, natural disaster or for certain other reasons.

When it comes to a trip being interrupted by an act of terrorism, coverage is likely to kick in only if all of the following are true…

A terrorist attack happens very close to your trip itinerary in both time and location. Some policies specify that the attack must occur no more than seven days prior to your scheduled departure date, though others extend this to 30 days. And the attack typically must occur in or near a city that is on your itinerary.

You will need to provide proof that this city is on your itinerary, such as a receipt. It is not enough to say something like, “I intended to sightsee there.”

The US State Department declares the incident an act of terrorism. The fact that the State Department has issued an official Travel Alert or Travel Warning about an area generally is not enough to trigger trip-cancellation coverage.

If an incident occurs just days or hours before your trip begins, the State Department might not have yet officially declared it an act of terrorism. You still could cancel the trip if this happens, but your losses would be covered only if the State Department later officially rules the incident to have been an act of terrorism.

You purchased the policy before the attack. If there already has been an incident, insurers still might sell you trip-cancellation coverage, but this coverage will not cover your losses if you eventually cancel the trip because of that earlier attack.

Your policy lists terrorism among its “named perils.” Some trip–cancellation insurance does not cover terrorism at all.

What to do: Before purchasing travel insurance, locate the “named perils” section of the policy and make sure that “acts of terrorism” is listed. Read the details to make sure that the policy is not excessively restrictive.

It’s a good sign if, for example, the policy covers terrorist attacks that occur as long as 30 days before departure…and if coverage kicks in when an incident occurs within, say, 50 miles of a city that is on your itinerary, not just within the city limits.

Pay particular attention to this “distance from terrorist attack” coverage detail if your trip involves flying into airports that are located outside major cities, not within city limits, and also when staying in hotels or vacation rentals that are not within cities.

Alternatively, you could upgrade to “cancel for any reason” coverage, an option offered by most providers. With this, most of your losses—often 75%, though this can vary—will be covered even if you cancel for a reason not specifically covered by your policy…as long as you cancel at least two to three days before your departure time. This kind of coverage typically must be purchased soon after your first booking for the trip—this window could be as little as one day or as much as 30 days, depending on the issuer.