Trip canceled? Your credit card may reimburse you
Many cards offer free, but limited, alternative to trip cancellation insurance
Hurricanes, tropical storms, strong winds and heavy rains delay flights and make it dangerous to drive, leaving some would-be travelers stranded. If you were one of the travelers counting on a big vacation, you may be looking for a way to get back the money you may have lost.
Look no further, because your credit card could refund what you've already paid.
A stack of different credit cards reimburse your prepaid expenses if you've charged them to your card when your trip has been canceled or interrupted, but you need to be clear on exactly what circumstances your credit card insurance covers, and how much of your cash you'll get back.
Cards' coverage free, but limited
Some will reimburse only $1,500; others will cover up to $10,000 of your costs. Some will only help out if you're ill or your airline files for bankruptcy; others will cover a whole host of reasons, including terrorism, bad weather, and even a jury duty summons.
Depending on your credit card, your insurance may reimburse you for the airline tickets, train tickets, hotels and rental cars that you've already paid for using that particular credit card.
"To begin to be comparable to travel insurance, your card needs to provide trip cancellation and trip interruption coverage. Those are the ones that reimburse costs when an injury, illness or death arise, or when weather or natural disaster derail a trip. Just be sure to check your policy, as it varies from card to card," says Melisse Hinkle, Head of Content and Social Media at Cheapflights.
Fuller coverage, for a cost
But the coverage through your credit card is likely to fall short of what you can receive if you purchase travel insurance on your own.
Consumers spent close to $2.8 billion on all types of travel protection in 2016, a 19 percent increase from the previous year, according to the U.S. Travel Insurance Association.
- Comprehensive coverage is by far the most popular travel insurance, and typically includes such things as trip cancellation coverage, which covers all prepaid expenses if you need to cancel your trip, trip interruption coverage if you need to cut short your trip, medical coverage and emergency medical evacuation coverage. These policies usually cost 4 to 10 percent of the cost of your trip, according to InsureMyTrip.com. The policy you choose should spell out exactly what situations are and aren't included.
- You can also buy cancel-for-any-reason policies, which allow you to cancel your trip for any reason up to 48 hours before your scheduled departure. They generally cost 8 percent to 12 percent of your trip's cost.
"It's more expensive, but it gives you control over whether you want to go or not," said Jim Grace, Founder and CEO of InsureMyTrip.com. Depending on the policy, only 50 to 90 percent of your costs are refunded so travelers don't cancel at the last minute.
Card coverage varies
If you're relying on your credit card for coverage, perhaps the most generous coverage comes through Chase.
- Depending on the card, Chase will provide $5,000 or $10,000 worth of trip cancellation and trip interruption coverage as long as you charged your trip to one of those cards.
- There are also a multitude of reasons your trip is canceled that could be covered. For example, a number of Citi credit cards cover injury or illness of a pet.
- However, most credit cards offer far lower levels of trip cancellation and interruption coverage, and it's granted for fewer reasons. A typical cap is $5,000, and you might only be covered if you or your immediate family member is injured or ill, a family member dies, or the airline you're flying becomes financially insolvent.
Expect exclusions, paperwork
You also need to be aware of exclusions to your coverage.
- If you have a pre-existing medical condition, it's unlikely you'll be reimbursed if you need to cancel your trip because of that health issue.
- If you need to file a claim because your trip is canceled or cut short, you'll have to provide proof to your credit card company. Many cards require proof from a physician of illness or injury and some require government decrees for health emergencies.
Ed Perkins, contributing editor at SmarterTravel.com, says consumers probably choose their travel credit cards based on the miles or points they can earn, but it's worth your while to see if your credit card provides free trip cancellation and interruption coverage.
"There's no downside," Perkins says. "As long as it comes with the credit card, as the saying goes, 'it couldn't hurt'" to make use of it.
Which to rely on?
Because of the limitations and caps on coverage through your credit card, you still might consider purchasing travel insurance to have a greater level of security.
Travel insurance can be worth the money "anytime you have a large prepayment with severe or substantial cancellation penalty if you cancel the trip," Perkins says.
Airlines and online travel sites often will offer travel insurance when you book a flight or cruise, but that coverage is usually extremely limited, with plenty of exclusions.
"They don't really have your back like an insurance company would or even a credit card would," says Jason Clampet, co-founder of the travel news site Skift.com. With the insurance through your credit card, "You are their customer. They want you to keep using their credit card. You're their primary concern."
If you're purchasing insurance, look at offerings from independent companies or aggregators that offers multiple policies, Clampet says.
Even travel insurance you buy on your own can come with plenty of exclusions, so you need to be sure to do your homework before you purchase a policy, Hinkle says. "Make sure you get enough coverage, that it truly covers what you plan to do and that you know and understand what reasons are covered for canceling or cutting a trip short."
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