Got you covered: why you need travel insurance. (Travel Wise).

September 11 marked the end of Los Angeles resident Leisha D. Smith's two-week European vacation. On her return home, Smith had her purse stolen at the airport in Barcelona, Spain, and her plane was diverted to Nova Scotia, Canada. With no cash and no luggage, Smith had money wired to her to purchase clothing better suited to the frigid Canadian weather. Unfortunately, Smith purchased insurance from the tour operator rather than the third-party provider. Tour operators primarily protect themselves and may not provide as comprehensive a plan as a third-party provider would, and they are not available 24 hours a day.

Dan McGinnity, a spokesperson for Travel Guard International, says travel insurance policies cost 5% to 7% of your total trip, and cover five basic areas: trip cancellation, trip interruption, emergency medical services, medical evacuation, and a 24-hour emergency travel assistance service. With the exception of trip cancellation and trip interruption, your homeowners/renters or health insurance, or your credit card, may offer a small amount of coverage. Know what you have before purchasing any additional insurance.

Note that trip cancellation insurance covers you before your trip begins, reimbursing your for prepaid, nonrefundable expenses. Trip interruption insurance covers you during your trip.

Many policies also include emergency monetary assistance, which would have provided Smith with more immediate access to cash. Many insurers have recently changed the terrorism provision in their plans to include domestic attacks. Ask about the distinction between foreign and domestic acts of terrorism and what's covered, or more importantly, what's not. Most providers require you to purchase insurance within a week to 10 days of paying for your trip.