ADVERTISEMENT

Can you count on your credit card travel insurance?

By  and   |  Published: April 24, 2017

Can you count on your credit card travel insurance? Rob Goebel, Lana Kotioukova/CreditCards.com

 

Can you count on your credit card travel insurance? Rob Goebel, Lana Kotioukova/CreditCards.com

 

You’re ready to pack your bags for a big vacation when you catch the flu, break a leg or get stuck in a storm. Your trip may be ruined, but your credit card's travel insurance could help you get your money back.

In other cases, you may find your card will compensate you only if you’re dismembered while traveling on a “common carrier,” such as a plane or bus, or pay your beneficiary if you’re killed. 

Take a good look at what is covered on your credit card, says Megan Freedman, executive director of the US Travel Insurance Association (USTIA). “Then you’ll be able to assess what you may need covered.”

Credit cards that provide trip cancellation and interruption insurance can have wide variations in coverage, with some reimbursing only $1,500 in nonrefundable expenses. If you’ve booked a luxurious cruise or resort vacation, that $1,500 won’t go far.

Other cards, such as the Chase Sapphire Preferred, provide up to $10,000 in case your trip is canceled for everything from sickness to severe weather to jury duty. The Chase card also provides coverage if your trip is canceled or interrupted because of a terrorist attack – something that’s a growing concern for travelers.

Know what your card’s travel insurance covers
Your travel insurance is only as good as your card, and there are “vast differences” in the coverage from card to card, says George Hobica, a travel expert and creator of AirfareWatchdog.com.

Everything you want covered has to go on that card. If you just put your plane ticket on the card, your safari probably won’t be covered.

— George Hobica
Creator, AirfareWatchdog.com

Some of the best cards for trip coverage include the Chase Sapphire Preferred, the United MileagePlus Explorer and Citi AAdvantage cards, he says.

To determine what your card covers, check the fine print on the benefits details or call the card company to ask further questions, says Linda Kundell, a frequent traveler and public relations professional who specializes in travel.

Here are some types of travel coverage your credit card may offer:

1. Trip cancellation coverage.
If a car accident forces you to cancel your anniversary trip to Paris, your card may reimburse part or all of your trip cost. It all depends on the “covered reasons” in your card’s travel insurance.

The No. 1 reason why people cancel a trip is that they, or a travel companion or relative, get sick or injured before the trip, Hobica says. “Some credit cards offer very good protection for that scenario,” he adds.

Other common covered reasons may include a death in the family or a storm at your destination.

If your reason for staying home isn’t on the list, you’re probably out of luck, though. “If your girlfriend breaks up with you or your cat gets sick, you won’t be covered,” Hobica says.

Credit cards also put a dollar limit on coverage. For example, the Chase Sapphire Preferred card has a $10,000 limit per trip, while the Citi Prestige card has a $5,000 limit, and many other cards have lower limits.

TRAVEL CARD’S INSURANCE
OR TRAVEL INSURANCE POLICY?

Making sure your trip is covered is a balancing act. You don’t want to shell out for a travel insurance policy you don’t need, but you also want to make sure you’re covered.

A travel insurance plan costs about 4 to 8 percent of the trip cost, so a policy for a $4,000 trip would cost $160 to $320, according to Travel Insurance Review.

Here are four questions to ask when deciding whether you need travel insurance beyond what your credit card offers:

1. Are you leaving the country? 

In general, buying trip insurance makes less sense for a domestic trip than for an international one, says Damian Tysdal, founder of Travel Insurance Review.

For most domestic trips, you should be able to change your plane ticket for a few hundred dollars and cancel a hotel reservation with no penalty with a 24-hour notice, he says.

Also, you probably won’t need medical evacuation, he says.

2. How much money can you afford to lose? 

It may be worth buying a separate travel policy to cover a big-ticket item such as, say, a $5,000 cruise or a $10,000 safari, says George Hobica of AirfareWatchdog.com.

In fact, many travelers buy coverage for cruises simply because they’re paying a large lump sum to one company, and many cruise lines have strict cancellation policies.

Most travelers can’t afford to pay $100,000 for an air ambulance in a worst-case-scenario, so it’s probably worth buying a medical policy, Hobica says. That’s especially true if you’re traveling to a remote place without good medical care.

3. What are the chances you’ll need to cancel? 

Look at your individual risk level, Hobica says.

If you’re planning a tour of Europe while your grandma, grandpa and beloved Aunt Moe are all sick, you might want to buy travel insurance. And if you’re going on a group trip, the risk increases, Hobica says.

“If you’re traveling with your wife and four kids, the chances are exponentially larger that you’d need to cancel,” he says. That’s because you’ve got six people who could get sick or injured before the trip.

4. What activities do you have planned on your trip? 

“Do you plan to go hang-gliding in the Swiss Alps?” Hobica says.

If you’re planning to participate in risky activities, such as mountain climbing or scuba diving, you might want a policy that includes medical coverage.

However, make sure that your activity is covered. If it’s excluded, you might have to add coverage for that activity, which could increase your cost, Tysdal says.

If you do buy additional coverage, never buy it from your cruise line or tour company, Hobica says. “The coverage isn’t as good, and if they go bankrupt, you’re out of luck,” he says.

2Travel delay or interruption coverage.
If thunderstorms strand you in Tampa, Florida, when you should be soaking up the sun in Tahiti, your card may reimburse you for the cost of your hotel room and meals through trip delay and interruption coverage.

Kundell’s credit card issuer once reimbursed her for part of the cost of a pricey hotel room when a blizzard grounded her plane in Denver. “They really jack up the prices of hotel rooms during blizzards, so it softened the blow a little,” she says. However, the dollar limit on her coverage stuck her with part of the cost.

To qualify, a delay typically has to go on for a certain time period, such as four hours, eight hours or overnight, says says Gary Leff, a frequent travel expert who writes at View from the Wing. This coverage also has dollar limits. For example, Chase Sapphire Preferred and Citi Prestige cards both cap coverage at $500 per ticket or trip.

3. Lost and delayed luggage coverage.
If you arrive in Athens and find your luggage has been misrouted to Rome, your card might pay for a change of clothes, a toothbrush and other essentials you need to buy.

The limit for lost luggage typically is quite a bit higher than delayed luggage. For example, Chase Sapphire Reserve and Citi Prestige both offer coverage of up to $3,000 for lost luggage and up to $500 for delayed baggage. Some credit cards cap baggage delay coverage at just $100, Kundell says.

4. Travel accident insurance.
Despite the name, this coverage won’t pay your hospital bills if you get injured while on vacation. Instead, it typically pays you or your survivors a certain amount if you’re killed or maimed – such as losing an arm, leg or eye – while traveling on a “common carrier” such as a plane or train. For example, the USAA World MasterCard offers $500,000 in travel accident insurance.

In addition to or instead of travel insurance, many cards offer travel perks, such as help replacing a lost passport, referral to a local doctor abroad and assistance getting a prescription medication you forgot at home, Kundell says.

Credit card travel insurance can fall short
Credit card coverage isn’t perfect, though, and the dollar limits sometimes leave the cardholder stuck with part of the bill, says Damian Tysdal, founder of Travel Insurance Review, a travel insurance comparison and information site. For example, a credit card with a $2,500 trip cancellation limit might cover only half of what you paid for a $5,000 cruise, he says.

However, you can purchase a separate travel insurance policy that will cover the entire cost of your trip, he says.

Also, credit cards almost never offer medical and medical evacuation travel coverage. “That’s an important part of standalone travel policies,” Tysdal says.

So if you get hit by a car in Cairo, the travel insurance on your credit card won’t cover your hospital bill. Your U.S. medical insurance might cover you, but you should check on that before you travel. And if your medical insurance does cover you, you’ll have to pay upfront and then request reimbursement, Kundell says. Also, a foreign hospital may require you to guarantee payment by handing over your credit card before you will be admitted, she says.

However, if you bought a travel insurance policy, the insurance company should guarantee payment upfront and should help you navigate the process of getting care in a foreign country, she says. “That can be helpful, especially if you don’t speak the language,” she says.

Credit cards also don’t cover medical evacuation, while travel policies do, she says. Transport in an international air ambulance can cost $100,000 or more, Kundell says. “If you get injured or have a heart attack in a remote location, you’re talking about a lot of money,” she says.

However, travel insurance can cost hundreds of dollars, and it’s not always worth the price, says Leff. The free credit card coverage is a nice perk. “For most trips, buying coverage doesn’t make sense,” Leff says.​

TRAVEL CARD’S INSURANCE
OR TRAVEL INSURANCE POLICY?

Making sure your trip is covered is a balancing act. You don’t want to shell out for a travel insurance policy you don’t need, but you also want to make sure you’re covered.

A travel insurance plan costs about 4 to 8 percent of the trip cost, so a policy for a $4,000 trip would cost $160 to $320, according to Travel Insurance Review.

Here are four questions to ask when deciding whether you need travel insurance beyond what your credit card offers:

1. Are you leaving the country? 

In general, buying trip insurance makes less sense for a domestic trip than for an international one, says Damian Tysdal, founder of Travel Insurance Review.

For most domestic trips, you should be able to change your plane ticket for a few hundred dollars and cancel a hotel reservation with no penalty with a 24-hour notice, he says.

Also, you probably won’t need medical evacuation, he says.

2. How much money can you afford to lose? 

It may be worth buying a separate travel policy to cover a big-ticket item such as, say, a $5,000 cruise or a $10,000 safari, says George Hobica of AirfareWatchdog.com.

In fact, many travelers buy coverage for cruises simply because they’re paying a large lump sum to one company, and many cruise lines have strict cancellation policies.

Most travelers can’t afford to pay $100,000 for an air ambulance in a worst-case-scenario, so it’s probably worth buying a medical policy, Hobica says. That’s especially true if you’re traveling to a remote place without good medical care.

3. What are the chances you’ll need to cancel? 

Look at your individual risk level, Hobica says.

If you’re planning a tour of Europe while your grandma, grandpa and beloved Aunt Moe are all sick, you might want to buy travel insurance. And if you’re going on a group trip, the risk increases, Hobica says.

“If you’re traveling with your wife and four kids, the chances are exponentially larger that you’d need to cancel,” he says. That’s because you’ve got six people who could get sick or injured before the trip.

4. What activities do you have planned on your trip? 

“Do you plan to go hang-gliding in the Swiss Alps?” Hobica says.

If you’re planning to participate in risky activities, such as mountain climbing or scuba diving, you might want a policy that includes medical coverage.

However, make sure that your activity is covered. If it’s excluded, you might have to add coverage for that activity, which could increase your cost, Tysdal says.

If you do buy additional coverage, never buy it from your cruise line or tour company, Hobica says. “The coverage isn’t as good, and if they go bankrupt, you’re out of luck,” he says.

See related: 10 credit card perks you didn't know you had, Renting a car? Know whether your card adds insurance

ADVERTISEMENT
ADVERTISEMENT

Join the discussion
We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, do not disclose confidential or personal information such as bank account numbers or social security numbers. Anything you post may be disclosed, published, transmitted or reused.

If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.

The editorial content on CreditCards.com is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company's business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.




Updated: 08-20-2017

ADVERTISEMENT


Weekly newsletter
Get the latest news, advice, articles and tips delivered to your inbox. It's FREE.


ADVERTISEMENT