Should you buy travel insurance from your airline or online travel agent?

If you've bought airfares from an airline or online travel agency web site, you've probably been offered the option of adding travel insurance to your purchase.

The prices seem reasonable, often as little as $12 per flight. But exactly what are you covered for, and why is this insurance so much cheaper than buying a policy from a third-party travel insurance stalwart such as Access America or Travel Guard?

Travelocity, for example, offered "Travel Protection" on a recent Detroit to Washington flight for $19.95. Coverage included trip cancellation or interruption insurance up to the cost of the air ticket for "covered reasons" and coverage for lost, stolen or damaged luggage up to $250 (but US DOT regulations cover luggage for up to $3300, so this seems of little value). Also included is $250 in trip delay protection, such as to pay for lodging, but only if the delay is more than 12 hours. One of the covered reasons is trip cancellation due to inclement weather, but airlines typically refund the purchase of an airline ticket if a flight is cancelled and you haven't begun your journey, even if the ticket is "nonrefundable." Read the policy's fine print.

American Airlines offers insurance through Access America, with a minimum fee of $18.75 and a maximum of $187.50, depending on the price of your airfare. Trip interruption/cancellation coverage maxes out at $3000 per trip; travel or baggage delay is covered up to $500.

There's also "missed connection" coverage up to $300, but only if you missed your flight because of a traffic accident on the way to the airport  (how often does that happen) or because of "bad weather" on the way to the airport, or if your flight was cancelled due to bad weather for at least three hours and you miss your cruise (no wording in the contract if you miss your connecting flight and you're stuck in Atlanta for a few days). In other words, there are lots of exclusions. Read the fine print.

One thing no travel insurance policy will cover you for is this increasingly common scenario: the airline changes your flight schedule so that you now have a forced overnight stay in, say, San Juan. You have the option of paying for your hotel and meals yourself, or, if you haven't started your outbound journey, asking for a refund and booking a much more expensive (often last minute) ticket on another airline, assuming seats are available.

And if you buy trip insurance from an airline, Access America and other insurers will not protect you if that airline ceases flying. You'll only get coverage if you buy from the insurer directly.

Travel insurance in general is full of loopholes. And although buying from an airline or online travel agency such as Orbitz or Travelocity is cheaper and very convenient, those policies have even more loopholes than those sold directly by insurers. So it's buyer beware.