The Baggage "Insurance" Airlines Never Tell You About

Federal regulations require that if an airline loses or damages your luggage or its contents then they are required to pay up to $3,300 in compensation when you fly domestically in the US. However, the airline will attempt to depreciate the value of your loss, and will require receipts to prove your claim. Coverage is considerably less for international travel from the United States, and is based on the weight of your luggage. Airlines typically exclude coverage for "valuables" and "business effects" -- this includes things such as electronics, jewelry, cash, artwork, and business related documents and samples.

But for some people -- those traveling with Louis Vuitton trunks, Vera Wang wedding gowns, or simply a lot of expensive clothing -- $3,300 simply isn't enough coverage. That's where something called "excess valuation" can come in handy. 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.

Most U.S.-based airlines will cover up to $5,000 in total coverage (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 varies from one airline to another (most domestic airlines charge $1 for each $100 of valuation, although American charges $2 and United charges $5 for each $100 of coverage, and we've found foreign airlines that charge just 50 cents per $100). 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. See this chart for the policies of major U.S. airlines offering coverage.

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 can also buy travel insurance to cover your bags, but many basic policies might only cover $500 to $1,500 in losses, and only if you can provide receipts.

Some international airlines also sell excess valuation coverage, but their websites, the most readily available source of information, are either vague or woefully out of date, and good luck calling their toll free reservation numbers to get clarification.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. For example, Taiwan-based EVA sells excess valuation for 50 cents per $100 declared up to a limit of only $2,500 in coverage, but that's far better than what international agreements require. Singapore Airlines also charges 50 cents per $100. Remember, airlines change their rules on a whim, so be sure to check with your airline before take off.