According to our recent cruise insurance survey, 66% of passengers buy coverage for their vacation.
That’s great. Hooray, us! We’re so responsible!
But, there’s a caveat. While it’s true that we understand the risks of not buying insurance, we’re constantly fooled into buying the wrong kind of coverage.
The cruise lines make it super easy. While buying your cruise on their sites, you’re only one click away from being a responsible human. That simple click will have you sleeping well at night, right? Well, wakey wakey – that one click left you with an expensive, inefficient, and inadequate insurance plan .
In the best case scenario, you’ll spend more money by booking insurance through the cruise line and will never need to actually use it. In the worse case scenario, something unfortunate happens during your cruise and you wind up owing hundreds of thousands of dollars.
Let’s talk specifics on why you should never buy cruise insurance from the cruise lines. Here are our four main reasons why you should use an outside provider.
#1) The Cruise Line Isn’t Actually Insuring You
When you buy cruise insurance from Carnival, Royal Caribbean, Princess, or other, they’re not actually directly insuring your trip.
The cruise lines are simply handing you off to another agency or insurance provider. This isn’t nefarious – cruise companies know nothing about insurance. They have enough to worry about without trying to help you get your sprained ankle fixed.
When you think about it, you’d never want to call a cruise company to help you settle medical bills. You want to call Holland America to ask for a cabin upgrade, not to argue about a copayment.
#2) Bad Incentives
In point #1 we stated that cruise lines’ actions “aren’t nefarious.” But, we may need to take that back based on recent news.
A class-action lawsuit is in the works accusing cruise lines of misleading customers. It’ll alleged that they’re intentionally misleading you and I to get a piece of that sweet insurance money.
According to the Sun Sentinel, most major cruise lines were getting “kickbacks” for selling you coverage. That’s right – straight up mafia-style. Rather than pointing you to the insurer with the best coverage, they’d pawn you off to the group kicking back the most money.
That’s the accusation anyway.
The entire scam went like this. Cruise lines say to the insurance companies, “hey, who will pay us the most per plan sold?” Cruise insurance company A says, “We’ll pay you $10 per plan and it will cost your customers $100.” And company B says, “We’ll pay you $20 per plan sold and it’ll cost your customers $105.” And ding, ding, ding, we have a winner (hint… it’s not the customer).
Again, this is the accusation. Whether they’re guilty or not, we’ll wait until the dust settles.
In the meantime, however, we prefer to err on the side of caution.
#3) Cruise Insurance from the Cruise Line is More Expensive
If looking at points #1 and #2, it’s not surprising that cruise insurance will cost more when purchased directly from the cruise line.
The cruise lines are a “middle man.” They’re not connecting you with the actual insurance company out of the kindness in their hearts. They’re getting paid. That extra cost is passed to you.
We wanted to see what a typical cruise insurance plan would cost. We got free quotes from three of the most trusted cruise insurance providers out there (Allianz, Travel Guard, and Travelex). We compared these to what we’d pay if purchased directly from Carnival, Royal Caribbean and other cruise lines.
We put together a post showing detail on this process. You can find that here, “Cruise Travel Insurance – What You’ll Pay in 2019.” We include video of us collecting those quotes.
We tested this for multiple itineraries and for varying destinations. We changed our age, departure port, itinerary and more.
Every time we ran quotes, the cruise lines were significantly more expensive when compared to the third-party providers. In some cases, they were nearly 2x the cost!
#4) Your Cruise Line Insurance has Terrible Coverage
You might assume that the cruise lines offer better coverage for this large increase in cost?
That’s not the case, however. You’ll get significantly worse coverage with the cruise lines’ policies when compared to the other providers.
Arguably, the most important piece of cruise insurance coverage includes “medical protection.”
Medical injuries pose the biggest risk. Associated expenses can balloon into the tens (or even hundreds) of thousands of dollars. It costs a LOT of money when things go wrong on a cruise ship.
It’s a bummer when you lose your luggage. Or, when you get delayed. But when you have a heart attack in the middle of the Caribbean, that’s a completely different situation. During these unfortunate events, we NEED to be covered. Otherwise, it could result in decades of debt trying to back these expenses.
All major cruise lines’ policies provide inadequate coverage. Here’s what you can expect from the cruise lines vs. what we recommend.
Medical Accident: cruise lines offer $10k – we recommend $50k
Medical Evacuation: cruise lines offer $25k – we recommend at least $200k
You can see that their coverage isn’t even in the same ballpark as the level at which we feel comfortable.
We did a full comparison of cruise lines’ coverage vs third-party provider insurance plans here.
#5) Less Efficiency with “Middle Man”
Typically, a “middle man” adds value. That’s why most people use a travel agent to book their cruise.
Your agent can help provide the best cabin, ideal dinner times, convenient airfare, and some helpful advice along the way. These professionals are experts at cruising.
This is not at all the case when buying insurance through a cruise line representative.
Cruise line sales reps know very little about insurance. They won’t know how much coverage you should have. They won’t be able to provide more or less protection for particular risks. If you ask them about pre-existing conditions or “lookback periods,” they’ll refer to a script.
And worst off, you’ll pay more for this poor service.
If you eventually have to collect on your policy, don’t think the cruise lines will be of any assistance. You’ll be connected directly to the cruise insurance policy’s actual provider.
If there are any good reasons for booking with the cruise line directly we’re unaware of those.
The solution is simple. Don’t use your cruise line to book your travel insurance. If you have a favorite insurance company, check to see if they offer travel insurance. Compare their rates with the most popular Cruise Insurance providers
Whether you use these three or not, they should provide helpful info regarding prices and coverage to expect for the cost.
We hate to see our community buy inadequate and over-priced coverage due to a lack of information. Please help us to share this info so we can all get sufficient insurance coverage while also saving money!