Trip insurance: beware loopholes.(up front: News / Trends / Advice)(Brief Article)

Hurricanes, terrorist attacks, and airline bankruptcies are leading more travelers to buy insurance for prepaid trips. Such policies can cover losses if your itinerary is ruined by events beyond your control, including illness or a death in your family. They can also help pay for lost luggage and emergency medical expenses, especially important if you're insured by Medicare, which generally doesn't cover U.S. citizens traveling abroad.

But trip-insurance policies can cost 4 to 8 percent of the total trip expense, and they're full of exemptions. Here's how you can avoid getting tripped up:

Read the fine print. Not all policies cover all hazards all the time. Although most trip insurers offer terrorism coverage, some policies don't kick in until the State Department issues a travel warning for your destination. The better policies let you cancel your trip if a terrorist attack occurs within 30 days of your scheduled arrival.

As for natural disasters, even hurricanes, some policies won't cover canceled plans if airlines have resumed flights into the affected area, even if your resort is flattened. But relatively new coverage allows for cancellation if your destination is uninhabitable. Look for such a ...