What you get
In all of these circumstances—TCI, delay, or whatever—the insurance pays off in money. And the policies I've seen are all secondary. In other words, you get only whatever you can't first recover through other sources. If your airline fails, that limitation means that you get reimbursed only if you can't first get a refund from the airline or a chargeback on your credit card. In the case of baggage loss, the insurance pays only what you can't first recover from the airline.
With a major delay, the airline almost always offers either a refund or a rebooking. In that case, TCI would pay nothing on your airline ticket. However, TCI would pay whatever cancellation penalties might apply in case the delay resulted in your missing a cruise, tour departure, or arrival at a vacation rental. If the airline didn't accommodate you overnight, however, the delay coverage would pay.
What you don't get
Neither TCI nor delay insurance actually protects your trip. The insurance company does nothing to assist you in arranging alternative reservations. Coverage is strictly a matter of dollars.
Do's and don't's of insurance
- Do buy TCI whenever you have a large up-front payment for a travel service that entails a significant cancellation penalty. That typically includes cruises, tours, and vacation rentals. If you're concerned that a potential airline failure might cause you to miss your cruise, tour, or rental, buy a policy that specifically includes airline failure.
- Don't buy TCI to protect yourself against just an airline failure. Instead, buy your ticket with a credit card, which typically offers all the protection you need. The insurance company will require you to pursue remuneration from your credit card provider before it pays anything anyway.
- Do buy delay and baggage coverage if you want to cover all the bases, but figure that over the years, you'd probably pay out more in premiums that you would recover in payments.