In a perfect world for beleaguered travelers, there would be no extensive security checks, delayed flights or lost baggage. Travel insurance aims to take some of the sting out of travel problems.

The need for travel insurance is primarily an economic one, says Jim Grace, CEO of InsureMyTrip.com, an online travel insurance comparison site. Travelers are concerned about protecting their investment and travel can be a risky investment.

Travel insurance is offered for cruises, tours, flights and vacation home rentals and can cover:

• Medical: There is nothing worse than being sick when you are supposed to be on vacation. Medical travel insurance pays for doctor visits and illnesses that occur during your trip, such as treatment for malaria or food poisoning, prescription drugs and laboratory work to diagnose illnesses. Policies cover local ambulance service and emergency medical situations that require surgeries (and often exclude pre-existing conditions). What it will not cover is a routine physical exam, mental health care or replacement of hearing aids, eyeglasses and contact lenses.

Emergency evacuation also covers a flight home if you became seriously ill or injured.

• Emergency evacuation: Typically, coverage includes airlifts from a mountain due to a skiing or hiking accident, or a long-term stay at a foreign hospital. Emergency evacuation also covers a flight home if you became seriously ill or injured. When traveling to a foreign country, bring copies of your medical records with you and consider an evacuation policy in case you develop a serious medical condition.
• Trip cancellation: If your cruise line or tour operator goes out of business, trip cancellation provides coverage if you must cancel a trip due to sickness, a death in the family, or another event that would prevent you from going on your trip. The policy reimburses you for the unused portion of the vacation if you or an immediate family member becomes seriously ill.
• Travel delay/trip interruption: Tired of sitting in the airport? This reimburses you for any flight delays from 2 hours up. For example, AIG Travel Guard offers total reimbursement of your airline ticket for any delays that exceed 5 hours. If your flight is one to two hours late, you will be reimbursed 20 percent of the cost of the ticket. If the flight is 3 hours late, it goes to 30 percent and 4 hours, 40 percent. For more than 6 hours, you would be reimbursed 80 percent of the cost of the ticket. According to the Insurance Information Institute (III), trip-interruption insurance costs between 5 to 7 percent of the price of your trip.
• Baggage delay: If your personal belongings are lost, stolen or damaged during your trip this would pay replace them.
• Dental: If you chip a tooth during a trip, this covers all emergency dental procedures. You can purchase additional dental coverage to relieve acute dental pain and surgical procedures provided in a hospital. There may be limitations for the replacement of artificial teeth or repairing a crown.
• 24-hour traveler assistance, including hotlines/helplines and other support services: Provides 24-hour, 7-day-a-week telephone assistance for filing claims for lost baggage, emergency cash transfers, reporting credit card identity fraud to the right agency, message center, legal assistance (passport, visa, bail bonds), emergency translations and pre-trip assistance. Some policies even provide access to security profiles, which include up-to-date information about terrorism, kidnapping and political stability. Others might provide concierge services such as arrangements for escort/return home of children, arrangement for a visit to your bedside by family or friend, dining information and reservations, flower and gift delivery, sightseeing tour reservations, golf course information and reservations.
• Accidental death dismemberment: Provides compensation if you die or are permanently disabled during a trip. It includes accidental loss of life, limb or sight during your trip other than while flying.
• Collision/damage coverage for rental cars: Provides coverage for physical damage to, or loss of, an automobile rented from a commercial foreign or domestic rental car agency.
• Flight accidental death: Flight accident and/or "common carrier accident" insurance pays your beneficiary (or your estate if you do not name a beneficiary) a lump sum benefit that can range from $300,000 to $1 million when a flight accident or crash results in your death.
• Repatriating a body: Provides coverage in the event you die while on vacation and your remains have to be transported back to the United States. It can be very costly to have a body repatriated from one country to another, ranging well into the thousands. Repatriation can also be a lengthy process. Before a body can be removed from another country, it must have examination by a coroner (who signs a release and a noninfectious-disease note), an embalming certificate, passport or identity card, funeral director's declaration, embassy permit and other documentation. The coverage includes the cost of paperwork, a coffin and airfare that can range from $1,200 to more than $3,000.

Factors driving the cost of travel insurance include your age, the number traveling in your party and the type of insurance coverage you choose.

Coverage could only be denied if travel to a certain destination is prohibited by the United States. Dan McGinnity, spokesperson for AIG Travel Guard, a provider of travel insurance and assistance services plans, says a good example of prohibited travel is Cuba.

"Cancel for any reason" insurance

Cancel for any reason coverage provides trip-cancellation and flight-delay protection in the event you are delayed by weather or traffic or you have an emergency and have to cancel the flight.

Statistics by the U.S. Department of Transportation (DOT) show that 2007 was among the worst years for airline delays and cancellations. Flight delays climbed to over 26 percent the second-worst rate on record.

The "cancel for any reason" upgrade costs 40 and 50 percent more than a regular travel insurance policy, but there are a number of benefits that many consumers feel is invaluable, says Grace of InsureMyTrip.com. It has become popular because it takes all of the guesswork out of purchasing travel insurance and it gives you the advantage of being able to cancel your trip at any time and recouping 75 to 90 percent of your trip costs.

AIG Travel Guard saw a 114 percent increase in calls for assistance with flight delays and cancellations in 2007, a significant climb from 2006. McGinnity of AIG Travel Guard says there are a number of factors that have contributed to the popularity of cancel for any reason upgrades.

There are far more destinations and with some of those destinations there are often exclusions concerning political unrest and acts of war, says McGinnity. Consumers want to have the option of canceling their trip if the situation gets unsafe, McGinnity adds. No one wants to have to choose between their safety and having to throw away expensive airline tickets or all-inclusive travel packages.

Trip-cancellation insurance is very different from a waiver that cruise ships and tour operators offer. The price of a waiver is $40 to $60 and provides coverage if you have to cancel a trip, but they have a number of restrictions. They must be purchased when booking your trip, but they will not immediately cover you before the departure date or after the trip has begun. They are also not regulated by the state department of insurance because they are not insurance. If your tour operator declares bankruptcy, you may not be reimbursed for the cost of the cruise.

Cruises

According to the U.S. Travel Insurance Association, travel insurance policies address the needs of cruise passengers with trip-cancellation/interruption, medical and evacuation coverage, and enhancements such as missed-cruise connection coverage: If you miss a flight and can't board your ship, the insurance covers the flight to the ship's next port and provides reimbursement for the portion of the cruise that was missed. Some policies even provide assistance for anything that might occur en route to ports, including roadside assistance.

Weathering the storm

If riding out a hurricane in the basement of a resort while eating bags of peanuts isn't your idea of a great way to spend your vacation, inclement weather insurance may be for you. In most instances, it provides reimbursement for a trip that has been disrupted by a tropical storm. In addition to tropical storms, it also covers tropical depressions, floods, snowstorms and tsunamis.

Hurricanes are a top concern among travelers. If prevention is the best medicine, then avoid booking trips during hurricane season. In the Atlantic, Caribbean Sea and Gulf of Mexico it runs June 1 to Nov. 30. The season peaks in September.

Hurricane insurance tips

• Most travel insurance policies that offer hurricane insurance will only provide coverage within 24 hours of your departure, and only if you've held the policy for 15 days.
• Since insurance is based on unforeseen circumstances, once a hurricane is named it is considered foreseen, and you won't be covered for losses associated with that storm.
• Pay close attention to your policy and always read the fine print. Often a hurricane is under the natural disaster or inclement weather category.
• A policy that provides cancel for any reason can be a good bet when it comes to coverage for hurricanes.
• Some airline, cruise and tour operators offer alternate trips for the same travel dates. If you refuse the offer and if the dates are different, most insurance companies will pay the claim.
• There are policies that cover travel delays if you're traveling by car.
• If your resort has sustained damage from a hurricane before you leave for your trip and cannot accommodate you or find alternate accommodations for you, your nonrefundable costs will generally be reimbursed by your travel policy.
• If a storm directly affects your travel arrangements and accommodations, you can be entitled to trip cancellation and trip interruption benefits.
• Most travel insurance pays for accommodations during a travel delay until travel becomes possible again.

Be aware of what policies cover and what they do not, says Shellabear. There are subtle differences between the policies that may appeal to some, but not others. A lot of it has to do with convenience. In the event something happens, can you talk to a live person 24-hours a day to get help? A lot of companies also only cover your claim 7 to 14 days after the initial deposit. That way you don't have to pay an insurance premium until you really need it.

Airlines, cruise lines and other travel providers sell travel insurance policies. Travel experts agree that independent travel insurers usually offer the best and most affordable coverage. Grace at InsureMyTrip.com says that travel insurance can be purchased from an online insurance provider or through a travel agent. He suggests that you purchase a policy on the same day you purchase you trip.

Other ways to cover travel

Shellabear warns consumers who believe their credit cards will cover a lot of travel problems. The U.S. Travel Association has done extensive research on the need for travel insurance and it found that 80 percent of people who rely on their credit cards for travel protection think they have more coverage than they actually do.

When it comes to credit cards, if you are bumped from a flight, you may qualify for a denied-boarding compensation, which is a cash payment up to $400. If your carrier goes out of business before your trip, credit card companies often provide a federally guaranteed insurance policy for reimbursement.

The Fair Credit Billing Act provides an appeal mechanism to those who were charged for goods and services never received. If you pay with a credit card and the cruise line goes bankrupt the cruise, you can file for a refund. However, it is active for only 60 days after the date of purchase.

In most cases, your health insurance may offer additional supplementary insurance for medical assistance abroad and, if it doesn't, there are a number of travel medical policies that would cover you and your family abroad. The biggest players include Atlas Travel Medical Insurance (backed by Lloyd's of London) and CIGNA International. Coverage can range from 15 days to a year.

They provide individual and group international health insurance plans and plans that cater to the business executive who makes multiple trips abroad.

Some aspects of travel insurance may be covered by your homeowners insurance, such as personal property that is damaged or stolen during a trip. This can include clothing, sports gear and luggage. The III says it may be cost-effective to purchase a floater to your homeowners or renters policy to make sure expensive items are covered.

Airlines may already have cancellation reimbursement built into the purchase of your airline tickets, but the conditions and extent of coverage varies from airline to airline. Also check to see how much insurance the airline or trip operator provides for your luggage and personal belongings.

"Airlines are trying to figure out how to pass along fuel surcharges, so they are doubling and tripling the cost of air travel. They are currently almost $30 billion in the hole because of fuel costs. These are valid concerns for the consumer," says Grace of InsureMyTrip.com. "Allowing the consumer to have control over their travel does help them decide whether they want to travel or not; in this regard insurance is absolutely necessary to encourage further travel."