Buying Travel Insurance from a 3rd party company vs. through a Travel Agent

Many travelers like the idea of purchasing their travel and travel protection as a single purchase with one company; however, this convenience and perceived cost savings may come at a price.

The term ‘travel insurance’ is often used loosely by travel agents and it can be confusing to travelers who want to purchase travel insurance. These plans may be referred to as ‘benefit services’, ‘waiver plans’ or ‘travel protection’, but they are not 100% travel insurance.

4 Reasons to be wary of purchasing travel insurance from your travel agent

There are a number of reasons to be wary when offered a protection plan by your travel agent, including:

1. Travel agents earn extra money by selling travel insurance, but they may only offer the travel insurance plans that earn the best commissions
2. Travel agents may have only a few plans to offer from a limited number of travel insurance providers
3. While some travel agencies have at least one agent that is licensed to sell travel insurance, many travel agents are not licensed insurance agents
4. A travel agent’s protection plans may or may not be backed by a legitimate underwriter

Travelers purchasing a ‘travel protection plan’ may not be aware of the differences between a travel protection or waiver plan purchased through a travel agent and a travel insurance plan purchased through a licensed travel insurance agent.

Differences between purchasing from a 3rd party company vs. a travel agent

	TRAVEL INSURANCE PLANS	TRAVEL AGENT PROTECTION
In the event of a claim, how are you paid?	By a check in U.S. dollars.	Payment depends on the reason you have a claim – some payments may be in the form of future travel credits with expiration dates.
Are independent travel arrangements covered?	Yes, all non refundable pre-paid travel costs are covered, including third-party airline tickets, side trips, tours, and excursions.	No, only the arrangements made and purchased through the travel agent are covered.
Is bankruptcy or financial default covered?	Yes, as long as you’ve purchased a plan with that coverage and met the plan rules.	No coverage
Are cancellations for reasons of terrorism or political unrest covered?	Yes, depending on the plan.	May or may not be covered
Does it include emergency medical coverage?	Yes, depending on the plan you choose; coverage limits as high as $1,000,000 are available.	Often, but coverage limits are usually quite limited ($10,000 – $25,000).
Is there ‘cancel for any reason’ coverage?	Yes, depending on the plan.	No coverage
Is trip cancellation for schedule conflicts (jury duty, work, school year extensions) covered?	Yes, depending on the plan.	May or may not be covered
Does trip cancellation extend to my departure?	Yes, trip cancellations are covered until the moment you leave home.	No, cancellation coverage often ends 1-3 days prior to your scheduled departure.
Is there coverage for pre-existing medical conditions?	Yes, depending on the plan.	May or may not be covered
Is there an official body regulating the plans?	Yes, travel insurance plans are regulated by each state’s Insurance Licensing Department.	No, if you have a dispute, your only recourse is to file legal action which will likely cost additional money.

While some travel agencies combine forces with a licensed travel insurance agent, it’s important to be sure the plan you are purchasing is what you really need. One way travel insurance supports this is by providing a free look period (usually 10-15 days), which you can use to review the policy and be sure you have the coverage you need. During this period, you can also make changes to the coverage or cancel the coverage (for a small fee).

How to avoid purchasing a fake travel plan

1. First, it’s important to understand that travel insurance is a state-regulated industry, so you’ll have legal protection when you purchase from a state-licensed agent. Real travel insurance companies are backed by regulated underwriters and are rated by A.M. Best, a worldwide insurance rating and information agency.
2. Second, it’s important to shop around. This is true of any one-click-to-buy-now plan you find online. Taking the time to compare the benefits and prices for plans offered by your travel agent with the plans offered by independent travel insurance companies is simple with a comparison engine (see How to Compare Quotes with a Travel Insurance Comparison Site).
3. Last, it’s important to read the policy carefully (this is also recommended of travel insurance plans) before you commit to buying it. Most travel insurance companies offer a free review period (typically 10-14 days) and allow you to cancel for a refund (usually your plan cost minus a small processing fee). Travel agent protection plans may not allow the same review period.

If you decide to purchase through your travel agent, be sure to ask who you are to call while on your trip if you run into trouble. All travel insurance plans have 24/7 worldwide assistance services that can help travelers in a number of ways.

Summary

• Some plans offered by travel agents may not be 100% travel insurance and those plans don’t provide the same level of coverage
• 3rd party travel insurance companies have a number of plans that can be compared side-by-side with a comparison engine

Related topics

• What is the buying process?
• How much does travel insurance cost?
• 9 Coverages that might surprise you