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Trip-cancellation insurance (TCI) has disappointed quite a few consumers over the last month, and future protection will be even weaker. TCI suppliers were not really ready for an outbreak of terrorism in the United States, leaving many consumers unhappy with their limited options. To make matters worse, several of the larger insurance companies have just announced they'll stop covering the failure of travel suppliers.

As a quick refresher, when consumers have to cancel trips for covered reasons, TCI is supposed to compensate them for any prepayments they can't get fully or partially refunded by the suppliers. I've always recommended TCI for travelers who are required to pay a lot of money up front for a tour, cruise, vacation rental, or any other travel service where cancellation penalties typically range from severe to draconian.

As far as I know, no TCI policies specifically cover domestic terrorism. Some don't cover terrorism at all, while others cover it only for areas where the State Department has issued an official travel Warning ("don't go there, and if you're already there, come home"). Needless to say, the events of Sept. 11 fell well outside the typical policy's purview.

Most TCI policies are apparently covering travelers whose departures were actually canceled immediately after the tragedy in New York. But lots of consumers who held -- or still hold -- reservations for departures during the rest of the year have decided they really don't want to travel overseas, even if their trips depart on schedule. As far as I can tell, the only large-company policies to reimburse travelers for those "just don't feel right in going" cancellations are the two top-of-the-line policies from Travel Guard.

Consumers who bought other TCI policies are generally at the mercy of suppliers' cancellation terms. Those have ranged from moderately liberal for airlines and many tour companies to hard-nosed for most cruise lines. And for trips scheduled after mid-September, those suppliers are generally offering only to reschedule trips, not cash refunds. Many travelers who no longer want to travel are simply out of luck.

As if the insurance situation wasn't bad enough, four large TCI companies -- CSA, GlobalCare, Travel Insured and TravelSafe -- have announced that they're withdrawing coverage for supplier failure. That means those TCI policies will not protect travelers should their cruise line, airline or tour operator fail.

Failure is a far more likely prospect now than it was before Sept. 11. Previously, we could expect, maybe, a small tour operator to go broke every year or two. Now we've already seen a major cruise line (Renaissance) go under, and the press is rife with stories of possible bankruptcies among airlines and other travel suppliers. Isn't that just like insurance companies: They're happy to charge grossly inflated premiums to cover minuscule risks (flight insurance) but back away from genuine risks when they become significant. As I'm writing this column, other big TCI companies haven't pulled away from supplier failure. But some of them could well follow.

Given that dismal picture, here are my recommendations:

If you have to pay in advance, insist on paying for any big-ticket travel service with a charge card. The federally-mandated charge-back provisions can protect you if you don't receive a service for which you've paid.

If you're buying a tour, cruise, or totally nonrefundable air ticket, find a TCI policy that still covers supplier failure -- a much greater risk than in prior years. Coverage for supplier failure, however, is less critical in the case of a vacation rental.

And to my travel agent readers, I strongly recommend that you stop selling TCI that doesn't cover supplier failure -- even if it means switching insurance companies.

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