Praise be to Allaah.
Commercial insurance of all
types is haraam, because the insurance contracts involve riba, gambling and
ambiguity. This has been explained in several previous answers. Please see
the answer to question no. 39474
What you should do is ask
the airline company or the travel company about the luggage. This applies if
the airline company or the travel company is responsible for lost luggage.
But if the luggage was lost
because of carelessness on your part, then you have no right to go back to
them and ask for the value of the luggage.
If an insurance contract is
done, the policy holder has no right to take from the insurance company any
more than the equivalent of the premiums he paid. This has been explained in
the answer to question no. 103233
Based on this, if the
compensation that was paid to you is equal to the premiums you paid, or
less, then this money is permissible for you; if it is more than that, then
you should give the excess amount to charitable causes.
And Allaah knows best.