Hotels will sometimes overbook their rooms. Similar to the airlines, they are counting on at least a few people having to cancel or failing to show up, but for frequent travelers or travelers on a holiday, the practice can be disastrous.

When you arrive at your hotel, however, you want the room you reserved. So, what happens when the hotel overbooks AND it can’t find alternative accommodations AND that results in your having to fork over additional money in a region that is clearly packed with travelers?

Travel Guard has a few travel insurance plans with a unique benefit. It’s called Hotel Overbooking and it means that Travel Guard will reimburse you those unexpected lodging costs.

Protection for hotel overbooking can be found in Travel Guard’s annual travel protection plan called Travel Rite.

The description of coverage for Hotel Overbooking reads like this:

The Insurer will reimburse the Insured for additional, alternative
lodging expenses, less any reimbursed deposit and/or pre-paid
Hotel arrangements up to the Maximum Limit shown in the
Schedule, for 1 night’s lodging for each room guaranteed or
confirmed by a Reservation made through the Insured’s Travel
Supplier that is oversold, if the Insured’s Hotel is unable to provide
reasonable, alternative accommodations.

Of course, it’s important that you insure the original lodging costs when you purchase your insurance, and you’ll need to get some written confirmation from the hotel saying your stay could not be accommodated.

This is only a brief description of the coverage(s) available.

The Policy will contain reductions, limitations, exclusions and termination provisions. Insurance is underwritten by National Union Fire Insurance Company of Pittsburgh, Pa., a Pennsylvania insurance company, with its principal place of business at 175 Water Street, New York, NY 10038. It is currently authorized to transact business in all states and the District of Columbia. NAIC No. 19445. Coverage may not be available in all states.

Knowing when to purchase single-trip insurance versus an annual travel insurance plan depends entirely on your travel plans. If you’re a last-minute traveler, you’ll likely only be purchasing single-trip coverage for those ad-hoc trips, but if you’re the kind of traveler who knows what trips you’ll be taking in advance, purchasing annual travel protection can save you a lot of money. Plus, having the same coverage all year long cuts down on purchasing the individual plans each time you make your reservations.

So, we decided to take two travelers we know and the trips they plan to take in 2012 and run the numbers to see whether it would be more cost-effective for them to purchase annual travel insurance.

Meet Sam and Sylvia

Our travelers: Sam and Sylvia are 53 and 50, respectively, and these are the trips they plan to take in 2012:

• A vacation in Bali, Indonesia for 20 days in May
• A 4-day getaway in New York, New York to attend their niece’s wedding in July
• A one-week visit to California to spend time with old college friends in September
• A pre-Christmas snow-shoeing adventure in Aspen in late November/December

Let’s say our travelers like the RoundTrip plan and they’ll purchase that for their three U.S.-based trips, and they like the TravelEx plan for their Bali trip. Their travel insurance plans would be:

Bali – $72
New York – $55
California -  $55
Aspen -  $55

Total = $237

Covering their trips with annual travel insurance

It’s important to remember that with annual travel insurance, travelers do not get trip cancellation protection.

We ran our traveler’s details into the quote engine to see what they would pay for annual travel insurance and found these two plans:

The prices on these two plans are wildly different, but the coverage is different as well. Note that the Travel Guard plan includes up to $100,000 per person for non medical evacuations. So, if there is a non medical emergency Sam and Sylvia can have help getting to safety. There are other differences as well. Travel Guard includes up to 2 evacuations per person with their coverage, and the HTH plan delivers ups to $250,000 per person (which should be more than adequate – even for their Bali trip).

In this particular circumstance, Sam and Sylvia might find that purchasing the HTH Worldwide plan would be best for them. It would cover the trips they are planning to take, but for a price that totals to less than the individual coverage totals, it would also cover any surprise trips.

Of course, travel insurance is like any other insurance in that individual people purchase more or less based on their own circumstances and their comfort level. This is just a comparison, and your own numbers will vary.

If you’re a first time traveler, trying to figure out the ins and outs of how travel insurance works can be intimidating. There are so many small details that can set your anxiety off. What if something happens? What if I’m not really covered for something I think I am? What if I don’t understand everything about the policy? Even seasoned travelers can run into trouble sometimes.

Travelers may find themselves worrying over this situation: someone in their family dies and suddenly they have to postpone a trip and change their flight plans. So they worry that their insurance coverage will not cover the flight change they need because of a death in the family.

Don’t worry because this is exactly the kind of thing travel insurance is meant to cover. The short answer is: Yes, travel insurance will cover a flight change because of a death in the family. In fact, many companies not only cover flight changes, they cover flight cancellation. If your family member dies and you suddenly have to postpone or cancel a flight entirely, the insurance company pays the costs and fees. So, if you just change the flight, they cover or reimburse you for the fees of the flight change. In the event that you actually cancel the flight, most policies will also reimburse you for the cost of the tickets since most airlines refuse to refund plane tickets.

This applies to all kinds of insurance. It is most commonly applied to single trip travel insurance because these trips are more often interrupted due to family emergencies. These policies are only meant to cover a single, short trip so it’s a very good idea to get travel insurance in case a death in the family does occur. This way, you don’t have to pay for flight changes or worse, absorb the cost of the entire plane ticket.

For annual travel insurance, you may not actually need it. Annual travel insurance is meant to cover multiple trips taken over a year. Since this kind of travel insurance is most commonly used for business trips, the company will have arranged for some kind of insurance policy when it comes to emergency plan changes. Most annual travel insurance plans do cover flight changes which result from a family death.

Long stay travel insurance usually includes clauses that cover emergency flight change. Long stay travel insurance is actually intended for people who travel extensively or who plan to take a long holiday or vacation, anywhere from 3 to 18 months. These policies actually are quite flexible when it comes to return dates so there may not be an issue at all with flight change or ticket cancellation fees.

The bottom line is, the death of a family member and the sudden change or cancellation of plans is exactly the kind of thing travel insurance is intended for.