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Independent Travel Insurance vs. Airline Or Cruise Carriers, When Is It Best To Buy More?

by on July 5, 2013 · 12 comments

in Cruises, Delta, Travel Insurance

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As I discovered from the results of the travel insurance study conducted by Princeton Survey Research Associates International that I posted last week, there is a lot of confusion among travelers about whether it is worth it to pay  for extra coverage on top of  whatever you are already paying for your trip, and what exactly it covers.

If you do decide to take out extra coverage, then the next big question is whether to buy from your airline or cruise carrier, and if you decide to go independent, which company is right and useful “one-stop-shops” for that are travel insurance comparison sites. As you can see – there are a lot of questions!

An unexpected storm can put the best laid plans to waste, and you need to know your insurance policy has you covered.

An unexpected storm can put the best laid plans to waste, and you need to know your insurance policy has you covered.

The UStiA (US Travel Insurance Association) offers comprehensive advice, education and feedback on what to look for in an insurance policy, and part of their mission statement is to “promote fairness, integrity and a commitment to excellence in the travel insurance industry.”

While as a trade association, they can’t advise on which company is better than another, they do have 29 member companies with which they are affiliated that provide comprehensively vetted products and service.

I spoke to a representative at UStiA who explained that the most important thing a consumer should ask is whether the policy covers their needs, as there are many different types of policies available today from a variety of sources.

No one anticipate a disaster like Costa Concordia, and insurance covered by a cruise line may not cover you if the company goes bankrupt.

No one anticipates a disaster like Costa Concordia, and insurance covered by a cruise line may not cover you if the company goes bankrupt.

A key factor to consider is that a policy purchased from an independent travel insurance company may cover you if the carrier goes into bankruptcy, but in general if you purchase directly from the airline/cruise that won’t be one of the contingencies.

Most insurance companies publish either a list of suppliers/carriers they do cover in case of bankruptcy, or ones they don’t cover, so be sure to check before you purchase the policy if financial stability is a concern.

According to the Insurance Information Institute, the four major types of coverage are as follows:

  • Trip Cancellation
  • Baggage Insurance and Personal Effects Coverage
  • Emergency Medical Assistance
  • Accidental Death
A board full of canceled flights is every traveler's nightmare.

A board full of canceled flights is every traveler’s nightmare.

Trip Cancellation Insurance: This is useful coverage for in case the company you purchased your travel through goes out of business or if you have to cancel due to sickness or another calamity such as a national disaster or the outbreak of war. It usually costs about 5 to 7% of the cost of your trip, so a $5,000 trip would cost roughly $250 to $350 to insure.

Trip Cancellation Insurance is very different to a Cancellation Waiver that you might be tempted to buy directly from the carrier that is far cheaper but usually has many restrictions and won’t cover you immediately before departure (the time period most people cancel) or after the trip has begun, whereas some Trip Cancellation Insurance policies start covering you for a wide spectrum of potential problems from the time you book your trip through your return home. Don’t be fooled into thinking a waiver is insurance!

Natural disasters such as the 2010 volcano in Iceland can leave thousands of passengers stranded.

Natural disasters such as the 2010 volcano in Iceland can leave thousands of passengers stranded.

On the other hand, beware not to overbuy. Before purchasing a new policy it is wise to check what your current insurance plans cover while overseas. For instance, your homeowners or renters insurance may provide coverage for off-premises theft. Sports fanatics regularly traveling with expensive equipment such as golf clubs, scuba gear or high-tech cameras may be better off buying “floater” coverage for a whole year, anywhere in the world.

An emergency airlift is costly venture and may make it worth buying extra travel insurance if you are going on an adventurous trip.

An emergency airlift is costly venture and may make it worth buying extra travel insurance if you are going on an adventurous trip.

Emergency Medical Insurance is worthwhile in circumstances where you are going to be involved in unusual activities like adventure travel in remote regions – for example, if you are climbing a mountain and could need to get airlifted off, or have a preexisting condition that could cause a mid-air emergency. But if you are going to just be lying by the pool at Club Med, your regular health insurance may suffice.

Accidental Death Insurance covers if you or a loved one dies on the trip, but again this may be a duplicate depending on your life insurance policy and coverage that many credit cards offer on travel you use them to purchase.

Travel insurance policy costs can vary, depending on:

  • The country or U.S. state in which you have residency
  • Your age
  • The overall cost of your trip
  • The length of time for which you desire coverage

Travel insurance coverage is sometimes denied in instances of:

  • Existing medical conditions (e.g. a heart condition, pregnancy, etc.)
  • Acts of war, civil disorder or unrest
  • Epidemic or pandemic
  • Terrorist events
  • Travel bulletins or alerts*

*Before inquiring about travel insurance from a third-party provider, be sure to check if any of your desired destinations have been put on alert by the State Department, the Centers for Disease Control and Prevention, or other government agency.

Should you buy independent coverage or through your carrier?

As mentioned above, the biggest risk of buying through your carrier is if the company goes bankrupt, and taking into account the recent high profile cruise ship disasters such as the Carnival Costa Concordia, there is the fear among passengers that they may end up becoming part of the next CNN breaking news story.

I currently have a cruise to Antarctica booked that cost approximately $15,000 and the insurance through the carrier was over $1,000 for protection alone. Not satisfied with what they were offering me, I found a more comprehensive policy on InsureMyTrip for $600-800.

So the question becomes, through whom should you buy your insurance? In most cases, you get a better deal by going through a comparison site like InsureMyTrip, but not always, as you’ll see in the examples below.

First I’ll list the plans offered on some sample trips when purchased through airlines or cruise lines, and then below you’ll see what the same or similar plans would cost by going through a comparison site.

Purchasing from the airline:

Aer Lingus - Allianz Ireland

Insurance direct from Aer Lingus provided by Allianz for a 2 week trip to Ireland costs $278.

While it seems easy to simply buy insurances while you are booking your flight, convenience often costs you in the long run. I test drove it with insurance for a two-week vacation to Dublin, Ireland booked through Aer Lingus (total cost $3,000) but provided by Allianz costs $278.

Aer Lingus - Ireland Details

Aer Lingus coverage cost breakdown.

For that you will get:

  • Cancellation protection up to amount purchased
  • Trip interruption protection up to amount purchased
  • $10,0000 emergency medical or dental coverage
  • $50,000 emergency medical transportation
  • $500 baggage coverage
  • $100 baggage delay
  • $150 travel/trip delay
  • 24-hour hotline assistance
Insurance for a trip to italy through United Airlines costs $193.

Insurance for a trip to Italy through United Airlines costs $193.

Insurance for a one week trip to Rome, Italy (total cost $6,000) through United Airlines, which is also provided by Allianz costs $193.

For that you will get:

  • Cancellation protection up to amount purchased
  • Trip interruption protection up to amount purchased
  • $15,0000 emergency medical or dental coverage
  • $50,000 emergency medical transportation
  • $500 baggage coverage
  • $300 baggage delay
  • $200 travel/trip delay
  • Concierge
  • 24-hour hotline assistance
Delta

Insurance for a similar trip through Delta costs $578.

For the same trip but with Delta, which is also provided by Allianz, the insurance cost takes a big leap up to $578.

For this you get:

  • $10,000 for trip cancellation
  • $10,000 for trip interruption
  • $10,000 emergency medical or dental coverage
  • $50,000 emergency medical transportation
  • $500 baggage coverage
  • $100 baggage delay
  • $150 travel/trip delay
  • Coverage of existing medical conditions
  • 24-hour hotline assistance

Cruise Carrier Coverage

Considering recent events on cruise lines, insurance when hitting the high seas is much more of necessity, and to avoid being one of those disgruntled passengers on the Triumph who were offered $500 and a credit for a future Carnival cruise after traveling on what essentially turned into a floating toilet, be sure to know what you are buying.

Royal Caribbean Cruise Insurance

Royal Caribbean Cruise Insurance costs $59 for a week on the Allure Of The Sea.

Royal Caribbean has a CruiseCare Travel Insurance Program that is provided by Stonebridge Casualty Insurance Company. For a week-long cruise on the Allure Of The Sea to the Eastern Caribbean for September 15-22 with three stops for an Ocean View Room traveling departing from Fort Lauderdale, Florida (total trip cost of $1149), the insurance would cost $59 per person.

For that you would be covered for:

  • Trip cancellation and trip interruption for independently booked air
  • $500 for trip delays
  • $10,000 for accident, sickness and medical expenses
  • $25,000 for emergency medical evacuation
  • $1,500 for lost or stolen lost, stolen or damaged baggage
  • Bag delays provides coverage up to $500
  • Airline protection

Travel Insurance Comparison Sites

If you decide to forgo a policy sold by your carrier and opt to go independently, then next step is where to buy it. There is a number of online brokers or aggregator sites that pool from a variety of companies across the price range.

I like InsureMyTrip as they sell from 21 different carriers, have an easy-to-follow website that allows you to compare and contrast each policy or e-mail details to yourself, and offer a wide range from standard policies to 5 star coverage.

You simply input your destination, dates, origin country/nationality and age (be honest!) and you get a list of plans. I researched some sample trips and came up with a number of options:

InsureMyTrip.com estimate for Ireland in August.

InsureMyTrip.com estimate for Ireland in August/September.

That same sample trip to Ireland for two weeks costing $3,000 generated several plans including the following.

A basic package with Allianz will cost $122 to cover a $3000 trip to Ireland.

A basic package with Allianz will cost $122 to cover a $3000 trip to Ireland.

A basic package with Allianz will cost you $112 for the trip and pay out the following:

  • $3,000 for trip cancellation or interruption
  • $500 for travel baggage
  • $100 for baggage delay (24+ hours)
  • $150 for a travel delay (6 hours +)
  • $10,000 medical (after a $50 deductible)
  • $500 dental  (included in medical)
  • $50,000 for emergency evacuation
  • Pre-existing condition waiver if the insurance is purchased within 14 days of initial trip payment
  • Pre-existing condition period of 120 days

The Amex Gold Travel Shield Classic is a dollar less at $111 and the terms are very similar, although medical and emergency evacuation are covered for up to $25,000 each, and emergency death is $150,000 and emergency death on a common carrier/flight is $100,000.

For a trip to Ireland where the most dangerous thing you will be doing is drinking whiskey and kissing the Blarney Stone (although both could be hazardous to your health!) then that should be sufficient. If you decided to up your coverage, there are a number of options with more benefits.

TravelInsured

The TravelInsured Worldwide Trip Protector Gold costs $217 for the same trip to Ireland.

The TravelInsured Worldwide Trip Protector Gold will cost $217 and this is what you extra dollars will get you:

  • $3,000 for trip cancellation
  • $4,500 for interruption
  • Cancellation for any reason
  • $2,500 for travel baggage
  • $150 for baggage delay (12+ hours)
  • $200 per day/$1,500 maximum for a travel delay (6 hours +)
  • $50,000 medical (after a $50 deductible)
  • $750 dental (included in medical)
  • $100,000 for emergency evacuation
  • Pre-existing condition waiver if the insurance is purchased within 30 days of initial trip payment
  • Pre-existing condition period of 180 days
  • $50,000 for rental car collision/loss
  • $25,000 for accidental death
  • $100,000 for accidental death on a flight

It also covers you for “Terrorism In Itinerary City,” which means, according to the details: “A Terrorist Incident that occurs in a city listed on the itinerary of Your Covered Trip and within 30 days prior to Your Scheduled Departure Date. The Terrorist Incident must occur after the Effective Date of Your Trip Cancellation Coverage.” While Ireland – including the formally volatile city of Belfast – has been thankfully peaceful over recent years, terrorism coverage can be a great asset when traveling to more dangerous areas of the world such as the Middle East or parts of Africa.

InsureMyTrip - Italy

Coverage options for Italy on InsureMyTrip are more than United but less than Delta.

Surprisingly, my $6,000 trip to Italy came up with estimates more expensive with InsureMyTrip than directly with the insurance plan United offered – but significantly cheaper than buying directly through Delta. The basic package with Allianz will cost $224 and pay out the following:

  • $6,000 for trip cancellation
  • $6,000 for trip interruption
  • $500 for travel baggage
  • $100 for baggage delay (24+ hours)
  • $150 for a travel delay (6 hours +)
  • $10,000 medical (after a $50 deductible)
  • $500 dental  (included in medical)
  • $50,000 for emergency evacuation
  • Pre-existing condition waiver if the insurance is purchased within 14 days of initial trip payment
  • Pre-existing condition period of 120 days
InsureMyTrip Estimates - Caribbean

InsureMyTrip Estimates for the Caribbean.

When it comes to cruises, InsureMyTrip can be a useful resource yet again. I priced out out the Caribbean trip (although it didn’t make the distinction for a cruise clear) in September and coverage with our old friend Allianz cost just $57.

For that you get the same as above but with $1,200 trip cancellation/interruption due to the lower cost of the overall trip (I calculated it in terms of traveling from Fort Lauderdale but if you are flying from elsewhere in the county then add in the costs of flights). Other plans from Amex, CSA, Global Alert! and TravelInsured range from there up to around $80 so prices are comparable.

In contrast to more peaceful locales, I searched for coverage for a trip to Kenya, a country that, although stunning, has its dangers both out on the plains in terms of sharp-toothed or poisonous wildlife, and in the cities with crime. Based on a trip costing $5,000 trip to Kenya in October for two weeks…

InsureMyTrip - Kenya

The policy options from InsureMyTrip for 2 weeks in Kenya.

InsureMyTrip came up with several plans including the following well-priced one from Allianz.

Allianz - Kenya

A basic package from Allianz for two weeks in Kenya will cost $165.

A basic package with Allianz will cost you $165 and includes:

  • $5,000 for trip cancelation
  • $5,000 for trip interruption
  • $500 for travel baggage
  • $100 for baggage delay (24+ hours)
  • $150 for a travel delay (6 hours +)
  • $10,000 medical (after a $50 deductible)
  • $500 dental (included in medical)
  • $50,000 for emergency evacuation
  • Pre-existing condition waiver if the insurance is purchased within 14 days of initial trip payment
  • Pre-existing condition period of 120 days

However, for a trip that will no doubt involve more adventures off the beaten track such as a safari or mountain climbing, in a country that is more unstable than Ireland or America, you may be wise to get more coverage.

Again TravelInsured has a Worldwide Trip Protector Gold policy for $381 that includes:

  • 5,000 for trip cancelation
  • $7,500 for interruption
  • Cancellation for any reason
  • $2,500 for travel baggage
  • $150 for baggage delay (12+ hours)
  • $200 per day/$1,500 maximum for a travel delay (6 hours +)
  • $50,000 medical (after a $50 deductible)
  • $750 dental (included in medical)
  • $100,000 for emergency evacuation
  • Pre-existing condition waiver if the insurance is purchased within 30 days of initial trip payment
  • Pre-existing condition period of 180 days
  • $50,000 for rental car collision/loss
  • $25,000 for accidental death
  • $100,000 for accidental death on a flight

Other more extensive plans with similar benefits are available from Travel Guard Platinum ($400), TravelSafe Classic Plus ($371), or the Allianz Deluxe for $374 and all those mentioned are member companies with the UStiA.

SquareMouth Ireland

SquareMouth found a wide range of options for Ireland.

Another popular aggregator site is SquareMouth, which aggregates quotes from a number of different companies as well.

iTravelInsured - Ireland

iTravelInsured coverage to Ireland from SquareMouth.

The first policy it sent me for the trip to Ireland was from iTravelInsured, which cost $92 and included:

  • $3,000 for trip cancelation
  • $3,000 for trip interruption
  • $500 for a travel delay with a $100 daily limit (24 hours +)
  • $100 per person (24 hours +), but no coverage for baggage or personal items lost
  • $500 for missed connections (8 hours +)

It also provides coverage the complete cessation of the common carrier in the wake of natural disasters as long as the coverage was bought before the storm was named, and for foreign or domestic terrorism. If laid-off from your employment, you are covered if employed for one continuous year.

One major aspect lacking is medical coverage or emergency evacuation, which could be a red flag for many people, but if you have a thorough health plan already that covers you abroad then this could be a cheaper way to focus extra coverage just on your trip.

Another trip I searched for on SquareMouth was a $5,000 trip to Italy. The search results came back with over 40 different travel insurance companies, so I’d recommend this site if looking to shop for the cheapest option – though again, the devil is in the details, so be sure to read the fine print of what is covered and what is not and decide on the policy with the best coverage for your likely needs.

Search results from SquareMouth

Search results from SquareMouth for Italy.

Whichever route you choose to take to help you sleep at night while away, the bottom line is know what you are paying for. While it is wise to expect the unexpected especially in foreign lands, being over cautious or under-researched could boost the cost incrementally.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

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  • lookcle

    TPG, How the insurance provided by AMEX (when you buy you air ticket using your credit card) complements additional insurance? For example, I can get Automatic Flight Insurance, Travel Delay Protection, Baggage Insurance plan with my AMEX card.

  • DaveRamseyIsDangerous

    Why is cancellation insurance offered by airlines when one redeems miles for flights? What would that cover?

  • UAPhil

    When comparing medical evacuation policies, check the details. I use MedJet Assist because they have more liberal T’s & C’s about when you are eligible for evacuation, and where they will take you.

  • MJM

    Agree with UAPhil re checking the details. True as to trip cancellation piece too. I was thinking of trip cancellation coverage once in case of issues arising with an elderly parent (none expected but isn’t that the point) and not all the insurers I looked at included cancellation due to a non-traveling parent’s health in insuring my trip. I think one did. Wish I could remember which one!

  • MMS

    Do you have any info on the quality of serve each insurance carrier provides? For example, might one handle claims quickly with a minimum of red tape while another might make claimants jump through all sorts of unreasonable hoops?

  • ceesiren

    In my experience (as a travel agent) they all require quite a bit of red tape. One thing you should do when anything that will result in a claim occurs is to call the phone number provided IMMEDIATELY…before you do anything else. It will make the claim process MUCH easier and most of the big insurance companies have networks of providers and helpers they will hook you up with to rebook flights, find doctors, etc. This will not only make your situation easier, it will expedite your claim later.

  • ceesiren

    I only deal with the major travel insurance providers, but in my experience they ALL cover cancellation when close family members not traveling with you cause cancellation because of illness, injury or death. This would have to be immediate family… child, parents, grandparents. I might be wrong, but I don’t believe aunts, uncles, nieces, nephews would count, for example. Also, cancellation coverage will cover your cancellation if your traveling companion who is sharing your room has to cancel. However, you can also choose to go even if they cancel.

  • iris97

    My husband and I bought airline tickets with our Chase Sapphire Preferred card. My husband was ill and required surgery shortly before our trip. We had to cancel, and after providing requested documentation, we received full reimbursement for all of our transportation costs (they do not cover lodging). This is a wonderful free service and because of this feature, we book all of our flights on this card.

  • http://saverocity.com/ Matt from Saverocity

    Oops- looks like my comment vanished

  • Ray

    One should also pay attention that if you need to come home early (prior to your scheduled return trip) that the policy specifically states that you will be booked in the SAME class of service as your original ticket (especially important if you are flying in First or Business class). Rules vary by state and also by insruance carrier, so be sure to read the policy. I compared a few different policies and not all said you could rebook in the same class of service.

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