Warren Buffett has announced his company Berkshire Hathaway will back a new travel insurance called AirCare. We know Mr. Buffett to be quite the savvy investor, so why is he backing this particular travel insurance?

AirCare’s benefits are attractive. The coverage will cost $25 per trip, and the following benefits are available:

• $50 if your flight is delayed more than 2 hours
• $500 if a delay causes you to miss your connecting flight or your bags are missing for more than 12 hours
• $1000 if your plane is stuck on the runway for more than 2 hours (with you inside) or your luggage is completely lost

According to George Hobica of AirfareWatchdog.com, you get instant cash if your bags are missing. The words instant cash do sound attractive, indeed. However, as in all cases with insurance, don’t forget that the $25 you pay for the insurance will be “instantly” in the AirCare coffers, whether you experience travel difficulties or not… and odds are,  you won’t experience anything out of the ordinary. That’s what AirCare and Warren Buffett are betting on.