A few years ago in Cyprus, a local bus tour operator was offering trips at a good price and if you booked say 3, you got another one for free. Very good if you wanted to see the island. The holiday rep advised against using local firms because of the insurance issue. At the time we had 2 young kids with us so the local firms' prices were better for us and so we booked. The trips were superb, with an English speaking guide and nearly new, air-conditioned coaches. What was interesting, was that those who had booked through the rep (and paid an awful lot more) were on the same trips - same guide, same coaches!!!
The same happened with car hire, we were advised to book through the rep, however a local firm's prices were better (including full insurance). When we went to book a car the person at the car hire company said "I bet your rep advised you against booking with us". When we said that she had we were told that they supply cars for bookings made through our rep. Same cars, same insurance, higher price!!!
On the question of insurance, it always pays to ask what is covered and to be satisfied with the risk before entering into an agreement. What someone describes as "full insurance" might only be the barest minimum and often an extra payment can provide fuller protection.
Steve