If an airline loses your checked baggage, it is liable to compensate you for the loss. Loss compensation is currently capped at $3500 by most U.S. airlines; at 1131 special drawing rights, currently worth about $1600, by the large number of airlines operating under the 1999 Montreal Convention; and at a paltry $10 per pound by a few airlines that do not fall under the Montreal Convention. Moreover, airline liability is based on depreciated value, not either original price or current replacement price. 

I'm a single widowed senior with zero interest in making a fashion statement, and I travel light, so I'd have a hard time coming up with $160 worth of depreciated value in a lost suitcase. But I know that lots of you travel with expensive clothes and accessories that can easily add up to more than even the U.S. standard of $3500, let alone the $1600 Montreal figure. Last month, when a reader named Roz returned home from a trip to Spain and Portugal, her checked baggage did not, and she figured the depreciated value of her stuff was well in excess of $1600. She filled out the requisite forms, but even the full $1600 wouldn't cover her loss.

The risk of lost baggage by airlines keeps getting lower. Currently, airlines "mishandle" about two bags per 1000 passengers or maybe the equivalent of one bag every two or three flights. But those numbers include bags that are "lost" for only a few hours or a few days; permanent loss—which airlines figure at 21 days or more—is a small fraction of the mishandled figure. So your risk is very small.

Still, if you're like reader Roz, you need to think about covering potential baggage loss beyond the mandated U.S. or Montreal limits. You have several options:

• Your regular household/homeowner/tenant policy may cover loss of personal property while you're traveling. If you travel a lot, you might want to make sure your policy covers property during travel, even if you have to add a rider or a supplementary policy. Some household policies, however, limit coverage to "theft" rather than "loss," and if you want to claim theft, you probably have to file a police report.
• If you bought a comprehensive travel insurance policy, it may provide supplementary baggage loss coverage.
• Some credit cards provide a small amount of supplementary baggage loss coverage.
• If none of these benefits is available or sufficient, your final option is to declare and pay for "excess baggage" valuation when you fly. It's a hassle, but better than being stuck with a large loss.

Given that compensation is based on depreciated value, the mandated compensation limits are adequate for many travelers. If not, however, you need to be proactive. Locate any other sources of compensation you already have, and, if necessary, buy extra coverage from the airline when you fly.