How can you avoid having your luggage lost and what should you do if it goes go astray?

Here are some tips:
Don't check luggage. The most obvious answer is to not check luggage at all. Pack light.

Take nonstops. If you can't pack light enough to fit everything in cabin luggage and you must check luggage, then at least avoid connecting flights whenever possible since each connection ups the chances of a lost bag.

Make sure it's tagged properly. When checking your bags curbside or at a counter make sure the agent or skycap has put the correct destination tag on your bag.

Ship your luggage ahead. Send your luggage 4 or 5 days ahead of your arrival to your destination. Especially if you have heavy or oversized bags that would otherwise incur a hefty airline baggage fee this might actually end up costing less. Other advantages: the shipping company lugs the luggage, not you; UPS and FedEx do a better job getting packages where they're going than the airlines do; should something go wrong, at least you'll get your shipping charges (airlines don't refund luggage fees if they lose your bag!). Costs are surprisingly low. Shipping a 52 pound bag from Phoenix to New York via FedEx Ground using 5 day service costs about $68, including insurance of up to $2000 ($5000 in insurance would just be $20 more); the same bag on US Airways: $15 for the first bag fee, plus $65 because it's over 50 lbs for a total of $80. Shipping an oversized suitcase (over 62 total linear inches) of the same weight costs the same via FedEx but an extra $100 on USAir (that's $360 round trip!)
Addresses on the inside too.
Do remember to put your home and "away" addresses both inside and outside the suitcase. Those flimsy address tags the airlines hand out for free fall off easily.
What protection can you buy? You're already covered for up to $3300 per trip on domestic flights thanks to DOT regulations, but beware: the airlines will try to depreciate the value of your suitcase and its contents (if you claim $2500 of value they might only pay $1500), and will not cover a range of "valuable" items such as electronics, cash, "business effects," and jewelry.

Keep all receipts. The airlines will ask for them to assign a value to your loss. If you buy something valuable, even if you don't plan on packing it in luggage, keep the receipt.
Excess valuation. Most airlines sell excess valuation insurance, which you can buy when you check yours bags. Domestic airlines sell this coverage for as little as $1 per $100 of declared value, and some international airlines charge as little as 50 cents per $100. Upper limits of coverage vary among airlines.

Travel insurance. Most travel insurance also covers lost or damaged luggage, but there are limits and exclusions, and you should always read the fine print to avoid unpleasant surprises.
What to do if your luggage is lost? File a claim immediately, before leaving the airport. And hope for the best.

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