First, let me say I'm not a big fan of Christopher Elliott. While alot of his information is helpful, he is more interested in pointing out the few problems than in writing about the overwhelming positives.
With that said, insurance companies are not the easiest ones to do business with. I've been involved with travel for over 25 years before starting my own business more than 10 years ago, so I've dealt with alot of these situations. As I've said before, this is definitely one of those things where it can be invaluable to have an agent when booking your travel and your travel insurance. Otherwise, if you do have any problems, you're on your own.
As for insuring every penny of your cruise and the story given in the article, that's not always the case. While you should try to cover all of your expenses, sometimes things change. For example, what happens if the taxes go up on your cruise.
We had a client two years ago who purchased an expensive 2 week Alaskan cruisetour. He purchased the travel insurance to cover all of the costs involved. Unbeknownst to us, he had gone on the cruise line's website two weeks before they were leaving and booked some shore excursions. His wife is a high school teacher and two days before they were scheduled to leave on their trip she got hurt. The bell dismissed the last class on the last day of school before Summer vacation. A rather large kid ran out the door and accidently stomped on her foot breaking it. The doctor her told her she could not walk on it for 6 weeks. Needless to say, they had to cancel their trip the day before they were to leave. This particular cruise line has a policy that if you book shore excursions through them and want to cancel them, you must do so more than 48 hours prior to sailing. (I should point out they have since changed this policy.) Therefore, his claim was for more than the amount of coverage he purchased. However, while it was understandable the insurance company would only pay up to the total amount of coverage, there was absolutely no problem whatsoever of denying the claim because he did not purchase enough coverage to protect all of his trip.
While unfortunate situations do occur, most of those can be taken care of with a phone call and submitting additional information. As I said, I've been doing this for a very long time and we sell travel insurance to approximately 40% of the trips. In that time, we've never once had any claim denied.
With that said, should you find that the cost of your trip has changed and the insurance you purchased may need to be changed, talk to your agent and find out what needs to be done. If you didn't use an agent, then call the insurance company and talk to them directly about it. Make sure you document the date and time you called, who your talked to, and their phone number.
But the two things to learn from something like this is first, make sure you book with an agent, and two, don't let this dissuade you from purchasing travel insurance as it can save you in the long run.