The baggage "insurance" you've probably never heard about

By George Hobica

Airfarewatchdog.com

Airlines are required by U.S. regulations to compensate travelers for up to $3,300 in the event that checked bags are lost or damaged. But that's only for domestic travel. For most international flights, bag liability is limited to approximately $9.07 per pound for checked bags, which is virtually nothing (a 30 lb. bag gets you $270 in coverage; note that some international airlines follow a different convention. British Airways, for example, limits bag claims to approx. $1700). For some people--those traveling with Louis Vuitton trunks, Vera Wang wedding gowns, or simply a lot of expensive clothing--$3300 simply isn't enough coverage, and for almost everyone, $270 is way too little.

That's where something called "excess valuation" (EV) can come in handy, and airfarewatchdog considers it a must for international travel. Never heard of this? Well, the airline rep checking your bag at the airport isn't likely to tell you about it unless you ask. So let us explain.

Many airlines will cover an additional $1700 of your luggage and its contents beyond the Federally-mandated $3300 (they don't call it "insurance" because they're not insurance companies, they're airlines) if you declare excess value when you check your bags, the cost of which varies from one airline to another--usually for just $10 per $1000 of coverage, although United charges five times what most airlines do (see chart). Depending on airline, coverage may only cover you in the event of total loss, not merely damage, to the contents and not to the bag itself.

Some international airlines also sell EV coverage, but their web sites, the most readily available source of information, are either vague or woefully out of date, and good luck calling their toll free reservation numbers to get clarification. Your best bet is to inquire at the airport check in counter or a local sales office before your trip. One international carrier that is more straightforward is Taiwanese-based EVA, which sells EV for 50 cents per $100 declared up to a limit of $2500 in coverage beyond what international law requires. Singapore Airlines, according to spokesperson James Boyd, has the same coverage limit and cost. Remember, airlines change their rules on a whim, so be sure to check with your airline before take off.

Additional considerations

Keep in mind that the airline will attempt to depreciate the value of your loss, and will require receipts to prove your claim.  Airlines typically exclude coverage for "fragile" items, "valuables" and "business effects"--this includes things such as electronics, jewelry, cash, art work, and business related documents and samples. However, some airlines, such as Alaska, will cover some fragile items if you buy excess valuation coverage, but only if the item is lost--not damaged.

And if you're thinking that your home owner's insurance will provide coverage, think twice about using it, because your insurer might refuse to renew your policy when it expires, or boost your premium if you make a claim. 

Another thing to consider is that if you buy coverage from, say, Continental and then transfer to Delta during your trip, Continental's coverage ends once the second airline takes charge of your bag. You need to claim your bag, in such a scenario, and re-check it with Delta, paying Delta's fees.

You can also buy travel insurance to cover your bags, but many basic policies don't go very far. For example, Access America's Basic Plan covers only $500. Their more expensive Classic policy is good for $1000, and their Deluxe policy for $1500, and the maximum liability for valuables is $500, but only if you can provide receipts.

For most travelers checking bags internationally, declaring excess valuation is a wise move.