FIGHT BACK : SOME OBSCURE, AND COSTLY, PITFALLS OF TRAVEL INSURANCE.

Byline: David Horowitz

What can go wrong on a vacation trip? Almost anything. That's exactly what travel insurance is designed to cover.

There are three basic types of travel insurance: lost baggage, illness and accidental injury and trip cancellation. Lost baggage insurance covers what the airlines don't cover, such as replacement of cash, high-value items such as cameras and jewelry and immediate replacement of lost clothing and personal items. Illness and accident insurance covers your medical expenses away from home and may include death benefits in addition to your own life insurance. And for those prepaid, nonrefundable cruises and package tours, there is trip cancellation insurance (TCI).

TCI is not cheap. Most policies cost between $5 and $7 for each $100 of travel expenses you are covering. Protecting a $5,000 vacation would cost you between $250 and $350. But most travel advisers believe that TCI is a good investment. Very few tour operators or cruise lines grant full refunds for emergency cancellations, regardless of the reason.

Trip cancellation insurance covers most emergencies - illness, accident, death in the family, a flat tire and even jury duty. However, some policies still exclude pre-existing illnesses, and you will never get a refund for changing your mind at the last minute and deciding you don't want to go.

Most TCI policies protect you against having your trip interrupted and being stranded overseas because the airline, tour operator or cruise line suddenly goes broke. But you have to read the fine print carefully. Some provide a full-fare ticket home, and some don't. Watch out for the word ``bankrupt.'' You want a policy that covers any type of ``failure'' or ``default,'' and not just a court-approved bankruptcy.

One other problem a reader brought to my attention: If the tour operator cancels the trip and refunds the price of your tickets, are you also entitled to a refund on your TCI? Probably not. Trip insurance is just that - insurance.

Before you buy travel health insurance, check your own health, homeowners and auto insurance policies to avoid duplicating coverage you already have. Find out if your existing medical plan covers you away from home, especially in foreign countries. Even if it does, be sure you're prepared: You may need cash or credit cards.

Finally, a word about flight insurance, namely the kind you buy from a dispensing machine or kiosk at the airport. In purely money terms, it's a poor bargain. You pay $4 for $200,000 worth of insurance for the few hours you will be in the air. However, if it makes you feel better to have that extra coverage and if it's going to make your flight more comfortable, go ahead and buy it. It's better than spending that money at the airport bar.