What is baggage insurance?
Baggage insurance will pay to replace personal possessions, including luggage, in the event of loss, theft or damage.
- Secondary coverage — Where the insurance policy pays only after other forms of compensation have been claimed. Airlines lost luggage compensation, homeowner’s or renter’s insurance and credit card insurance may all be “primary” insurers, paying first. The baggage insurance only covers whatever is left over, up to the policy maximum.
- Coverage limits — There’s a total amount of coverage per traveler or family. There’s also a per item maximum, typically in the $300 – $500 range. Some policies have a higher limit for specifically named items, typically around $500 – $600. A few premium policies offer $1000 – $2000.
- Sports equipment coverage — What if one of your centerpiece experiences requires that you bring equipment with you? Bulky sports equipment always has to be checked-in to an airline. The airlines are very stingy about what they will reimburse, even if the loss or damage is their fault. So, you can get extra coverage on some travel insurance policies specifically for sports equipment (scuba gear, climbing gear, surf boards etc… but not bicycles, which are included in the basic baggage insurance policy). Notably, some premium policies cover the cost if you have to rent expensive equipment at your destination because your own equipment didn’t make it.
Do you need it?
Independent travel means moving around — a lot. You will take one transport leg after another and stay in one room and then another. Almost every day, you will be out doing new things in new locations. All of this creates plenty of opportunity to lose your stuff. You can be a target of theft, an airline can lose your bag or you can lose stuff all by yourself. If you lack caution or are unlucky, you could lose one or two valuable items, or even your entire main bag or day bag, with all the contents. That might sound alarming, but most travelers complete their trips without loss.
Many independent travelers don’t bother to insure their personal possessions. Ideally, you shouldn’t be traveling with possessions whose sentimental or material value is so high that it will seriously hurt if you lose them. You should also be doing your best to secure what you have. If you don’t insure, you have to accept that something might go missing and you’ll have to pay to replace it or do without. Yet, there are a few reasons you might consider insurance.
- Valuable items — If you’re going to travel with a high-end laptop, fancy camera or top range phone — and especially if you’ll carry 2 or 3 expensive items — maybe you should insure them.
- Items that must be replaced en route — Our rule is that everything you carry should be necessary for your travels or you should leave it at home. It’s possible that something “necessary” could go missing and you could still get by without it. For example, suppose you’re traveling with both a mobile phone and a tablet. If you lose the tablet, you can still do all your digital travel tasks with the phone. But, if you have only a phone and that goes missing, you’ll have to replace it. Do you have the funds to do so, or is the expense going to slice an important experience off your trip? (Remember that an insurance claim is still going to take some time and you may not get the amount that you claim.)
- Checked luggage — Every time your luggage is out of your possession, you put it and its contents at risk. It’s not just airlines. If you have to stow your bag in a bus cargo bay or on the roof, there’s a risk of pilferage or the entire bag could go missing. If you put your bag in the left luggage room of a lodge, there’s also some pilferage risk. However, you should never leave high value, salable items in your main bag when it is out of your possession, except when you leave stuff in your room for the day. (And if your “room” is a grass hut on the beach or other insecure situation, your fancy laptop could be in extreme peril.)
- Peace of mind — People have different ideas about the amount of an acceptable loss. It’s always bad luck if that $600 mobile phone goes missing, but will it devastate you or can you suck it up and move on? What if your phone is worth just $150? Is that still going to hurt too much? If you’re nervous leaving expensive stuff in the room of your lodge when you’re out for the day, you may get some solace from insurance.
What do you need?
Most DIY travelers don’t travel with a lot of valuable stuff. One bag travelers have reduced risk, since they don’t have to turn anything over to an airline. The most carefree travelers are those whose main bag (and not the stuff in it) is the most valuable item in their possession.
Nonetheless, if you’re leaving a computer or other valuables in a long series of hotel rooms, you might enjoy your days more knowing that they’re insured. While no room is invulnerable to theft, your risk is higher where there’s no hotel room safe, where the door has a dodgy lock, where there are unsecured ground floor windows or where the whole vibe of the lodge is just off. (We told you so: you should reject lodges and rooms that don’t pass your initial inspection.)
- Valuable items — List anything that would really hurt to lose. This does not include low value items just because they’re useful or have sentimental value. It’s only more expensive items that you would want to replace, especially anything that is itself over an insurance policy deductible amount. Don’t forget your main bag itself. Don’t include anything that’s still covered under your homeowner’s or tenant’s insurance.
- Look up the replacement value of each item — Keep in mind that the cost may have changed since you purchased yours. Your insurer may depreciate the value, too, so you won’t be insured for the full replacement value of that 2-year old phone.
- Tally the amount — Add the value of all the items you want to insure. This will set the benchmark for the insurance you need, although there will be coverage limits to individual items and the total of all your stuff.
What coverage do you already have?
Coverage you may already have could be part of:
- Airline coverage — Don’t rely on an airline! If an airline loses your bag, you may get some compensation, but it’s bureaucratic and always insufficient to cover your loss. The whole thing is terrible for passengers and reinforces the strategy that you should travel with carry-on luggage only. Even if you have to check-in your luggage, your most valuable items should never be in it.
- Coverage varies by carrier, but they are generally liable for very limited amounts.
- It takes a long time before the airline will concede that your bag is permanently lost.
- Then they will expect an itemized list of the contents, along with receipts to establish the value of those items. If you’ve prepared properly, at least you’ll have scans or photos of receipts for some of the items in your bag. But then the airline will depreciate the value of those items, so you won’t get full replacement value.
- When compensation is offered, the airline can take months to pay. Some airlines don’t pay in cash, offering credit for future flights instead.
- Homeowner’s or renter’s (tenant’s) insurance — If you already have one of these policies at home, look to see if the most valuable possessions you plan to take with you are covered.
- Valuable items that you insured at home (a laptop or camera, for example) could still be covered when you travel with them.
- If they’re not, see whether a low-cost rider can be added to the policy to insure valuable items for travel.
- We’ve heard of travelers arranging an instant rental (that they do not occupy, of course) in order to get renter’s insurance for travel. We have not substantiated that this tactic is legitimate or cost effective.
- Credit card insurance — Some credit cards provide limited duration insurance for goods purchased with the card.
- Find out what is covered (damage, loss, theft) and the maximum amount covered.
- Check the duration of coverage after date of purchase — 90 days is usually the maximum, with many durations as low as 30 days.
- If you’re going on a trip longer than the duration of coverage and still want the item insured, you’ll have to buy additional coverage.