During my time as a travel insurance professional, one of the most frequently asked questions I received was about the difference in where travelers buy insurance products from. In many cases, the traveler's common carrier or tour operator offered a travel insurance product that offered basic trip cancellation benefits. If all travel insurance policies were basically the same, why would it matter where they purchased a plan from a third party provider, or from their carrier?
As I've previously outlined, travel insurance policies can be as different from each other as night and day, and serve completely different purposes. Because of this, different policies may be written to cover you in certain situations, and exclude you from others.
Depending on where you purchase your travel insurance from, the benefit levels you think you're buying may not be what you're actually getting. Here are the pros and cons of purchasing a travel insurance policy directly from your travel provider, versus purchasing your travel insurance from a third-party provider.
Travel Insurance from your travel provider
Many times, when you purchase common carrier transportation tickets (like airplane tickets), you will be offered the option to purchase travel insurance from them for a relatively small fee. In a travel world that adds up more and more fees. it may look like the only one that comes at a value. For just a little more, you're offered a plan that can add on protection in case your trip gets delayed or cancelled along the way.
For those who do not have basic travel insurance before they travel, this insurance could be the first opportunity to obtain a level of protection for their trips. And for the additional cost, this travel insurance offers very basic-level coverage for the portion of their trip. For travelers who are not looking for a whole lot of coverage, or just intend on utilizing one segment of travel (such as a flight only), purchasing directly through your travel provider may be able to provide basic assistance in the worst case scenario.
That being said, these products are not intended to be, nor are written to be comprehensive in nature. While your trip may involve many other pieces (including a hotel stay and maybe a rental car), an insurance plan through your travel provider may only cover one individual portion of your bigger adventure. Should your trip get interrupted or delayed elsewhere, or you have a medical emergency during your travels, you could be entirely on your own. In addition, many of these policies are written to heavily favor the travel provider, and provide very narrow qualifications for your benefits. This means unless your situation fits exactly in the written definition of your policy, you may not be able to get assistance from your travel insurance policy.
Travel insurance from a third party provider
If you do not decide to purchase a travel insurance plan from your carrier, there are many third party insurance companies that offer coverage when you're a long way from home. And in some situations - such as traveling to a country that requires travel insurance, or traveling as part of a tour group - you may need to purchase a third party policy.
Third party providers are often insurance specialists, that offer many plans to fit your unique situation and needs. Unlike provider-based plans, third party travel insurance companies usually offer comprehensive plans with benefits for trip cancellation, trip delay, medical incidents, and other common situations you may face. In addition, a third party travel insurance plan can cover you regardless of where you are in your travel.
One of the biggest downsides of purchasing a travel insurance policy from a third party provider is the cost. Many times, your travel insurance from a third party provider will cost significantly more than a plan purchased from your carrier.Additionally, shopping for travel insurance can be a confusing ordeal. Unlike other forms of insurance, trip insurance has it's own language that is not commonly encountered. If you do decide to purchase travel insurance from a third party provider, I recommend shopping on a comparison site that explains the importance of each benefit, such as InsureMyTrip or Squaremouth.
Whether it's from your travel provider or through a third party, a travel insurance plan can help you during the worst case scenarios on your trip. Knowing the difference in plan offerings allows you to make a better educated decision on which policy makes the most sense for your needs.