Airline-sold travel insurance: what's it worth?

Why do I even need additional insurance?
Many people believe that they already have plenty of coverage and that additional coverage isn't necessary.

Points to remember: People tend to think their credit cards include ample coverage. You may be right, but you may be wrong. Additionally, does your health insurance cover you outside the United States? Does it include an emergency evacuation plan?

While Travelocity's plan is flimsy, like Spirit's policy, you have to give Travelocity credit for at least one thing: addressing the matter of whether or not purchasing the coverage it sells is even necessary.

One notable point upon which Travelocity stumbles, though, is with its trip-cancellation policy —that is, if you have to cancel for some reason. Travelocity will refund the full cost of the trip — but only up to $2,000, as it points out incessantly throughout one policy document (note that it says "total trip cost" in one place and "total trip cost up to $2,000" in others). Other policies only cover up to $500 per flight domestically or $800 for international travel.

AIG's policy, detailed above, covers the entire quoted trip cost at the time of purchase. Even AirTran's otherwise fairly flimsy policy, sold via a company called Stonebridge, does not state a limit.

There are other important differences between Travelocity's policy and a typical travel insurance policy directly from the source. However, essentially you can see a pattern. At Travelocity, as elsewhere (say, at Orbitz), insurance purchased from a third party is always going to be cheaper than if you bought directly, but the policy will always be relatively weak — no matter which agency's name is attached to the plan that the third party is selling. (In Travelocity's case, it's selling through BerkleyCare, a division of Aon.)

Meet the rent-a-plan
It's easy to find the holes in third-party coverage. Sometimes you don't even have to look through the policy document, which is nearly always readily available for your reading pleasure. 

Deal of the Day Newfoundland and Labrador Explore World Heritage sites, glimpse into the life of the Vikings, more, from $1,635.

But things get a little more blurry when you're looking at the policies sold by the major carriers. These policies are typically a little meatier than those sold by low-fare airlines and online travel agencies. American, Continental, US Airways and United all partner with Access America. (So does Northwest.)

In American's case, not only do the plans seem like they're for real, but also, better still, they sell for as little as $16 to $17 per trip for an average domestic journey. American’s 'Comprehensive Trip Protector' sells for 6.25 percent of your total ticket cost. And it includes coverage such as $500 for baggage delay, which is along the lines of what you'd get directly from a major travel insurance company. Also, the maximum trip cancellation/interruption protection is $3,000 per trip, and emergency medical transport costs up to $50,000 are covered. But there’s no protection from default (not that American is likely to cease flying any time soon, so maybe it’s an irrelevant point).

As the old saying goes, you get what you pay for.

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