Many plans will offer coverage for “Terrorism”. The coverage generally covers incidents in itinerary cities only, and not a city nearby. Since the coverage provides benefits for trip cancellation, it is included in “package” plans.
Trip cancellation coverage is generally considered to be a “named peril” type policy, meaning that only those perils that are named in the policy are covered. This includes terrorism. Each company includes their own definition of terrorism, so be sure to read the terms thoroughly.
