This guide features what’s included in travel insurance and how to assess what coverage you need based on your trip type, destination and length.
One way to protect your investment in a grand getaway or storybook honeymoon is through travel insurance. Rewards credit cards often offer varying degrees of travel insurance, covering everything from canceled or interrupted travel to lost luggage and damage to a rental car.
Carol Mueller, vice president of Berkshire Hathaway Travel Protection, suggests that travelers check their credit cards to determine “what coverage you do and you don’t have, and match it up against the concerns you have.”
To determine what kind of travel insurance you need, including how much coverage you need in terms of dollars, try answering the following questions:
- Will you be traveling domestically or internationally?
- How long will you be traveling? Is it a short stay of seven days or less or a long stay of seven days or more?
- What kind of travel are you planning? Is it a business trip, vacation or emergency trip (such as to get to the bedside of an ailing loved one)?
For example, if you’re going on a quick business trip, you will likely not need the same level of travel insurance coverage as if you’re heading out on a weeklong vacation in an exotic location outside the U.S.
Next, you should assess which credit cards you’d like to use to get the maximum coverage for all you are planning to do on your trip. If your cards don’t meet your travel insurance needs – or you just want to be covered for any contingency – you may want to supplement your coverage by purchasing a travel insurance policy.
According to recent data published in the Generali Global Assistance’s Holiday/2021 Travel Sentiment Survey, 58.1% of U.S. survey participants indicated they’re more apt to buy travel insurance for future trips, while 32.8% are already planning to buy travel insurance for their 2021 excursions.
See related:Best credit cards for travel insurance
What is travel insurance?
Travel insurance (sometimes called trip insurance) will reimburse your prepaid travel expenses if things go awry or compensate you in the event of an emergency.
Depending on the type of coverage you have – either offered via a credit card or with a travel insurance policy you paid for – you may get your money back if you have to cancel the trip before you depart (or if you cut your trip short for an unforeseen reason).
Credit cards may include types of coverage that you won’t find with a travel insurance policy you purchase, such as auto rental insurance. And the travel insurance you purchase may offer coverage that your card doesn’t include, such as medical evacuation insurance.
Who needs travel insurance?
In some cases, the insurance benefits provided by your credit card may be enough. In other cases, you might want to boost your benefits by purchasing travel insurance. The difference may depend on where you’re headed and how much the trip costs.
If you spend $200 on an airline ticket to visit your parents, you might not need additional travel insurance. But if you’re going on a cruise that costs thousands of dollars and need to make payments months in advance, you might want the extra protection that travel insurance offers.
“It’s really up to the individual and what type of risk tolerance they have for losing money,” Mueller says.
About 25% to 30% of leisure travelers in the United States purchase travel insurance, she says, and the number of people purchasing the insurance has increased “as people see how hurricanes and weather impact destinations.”
How much does travel insurance cost?
A travel insurance policy usually costs about 5% to 7% of the cost of the trip, Mueller says.
Price is determined by the cost of the trip, the length of the trip and the traveler’s age, says Steven Benna, spokesman for the travel insurance site Squaremouth.com.
If your trip costs $12,000 and your credit card provides $10,000 in trip interruption and trip cancellation insurance, you can save money by buying just $2,000 more in coverage from a travel insurer, Benna says.
See related:11 travel credit card insurance benefits
What are the types of travel insurance?
The types of coverage offered can vary greatly from card to card. There can also be big differences between credit card coverage and a travel insurance policy you pay for out of pocket.
Trip cancellation and/or trip interruption insurance
Trip cancellation insurance can reimburse your nonrefundable travel costs if you need to cancel your trip for a covered reason, such as illness or injury, before you depart. Trip interruption insurance can reimburse your costs when you’re already on the road and your trip is interrupted for a covered reason, such as an illness or a natural disaster.
Many credit cards provide either trip cancellation, trip interruption insurance or both. There can be wide variations in coverage limits for trip cancellation/interruption insurance, and premium cards usually offer more generous policies. For example, the Chase Sapphire Reserve card, which has a hefty $550 annual fee, offers both trip interruption and cancellation insurance that provides coverage of up to $10,000 per covered trip, with the maximum benefit limited to $40,000 per 12-month period.
Meanwhile, the no-annual-fee Wells Fargo Visa Signature credit card provides up to $2,000 in trip cancellation or interruption insurance.
Travel accident insurance
Travel accident insurance (often called flight accident insurance or accidental death and dismemberment insurance) is included with several credit cards. This insurance can provide a payout if you are killed or lose a limb or one of your senses – such as sight or hearing – while traveling on a common carrier.
Emergency medical and evacuation insurance
A handful of premium credit cards, such as the Citi Prestige® Card and Chase Sapphire Reserve, offer emergency evacuation insurance if you or your spouse, domestic partner or dependent children become seriously injured or ill while you’re traveling. Both cards cover emergency services and transportation for up to $100,000.
Once you are evacuated to a hospital, though, you may have to foot your own medical bills if you become ill or injured while traveling.
In general, Medicare does not pay if you have a medical emergency outside of the United States, and many private health insurance plans may not cover you if you’re traveling abroad, Benna says.
Travel insurance policies you purchase on your own can include both emergency evacuation insurance and emergency medical insurance.
‘Cancel for any reason’ insurance: Expensive and limited
- Cancel for any reason (CFAR) insurance will allow you to earn refunds on hotels and flights even if you cancel these reservations for reasons not included by traditional travel insurance policies.
- These policies can be expensive, with most carriers who provide them offering them as an upgrade to a traditional travel insurance policy.
- You can expect to pay about $150 on average for a CFAR addition to your policy, according to a search of different policies online.
- Not all CFAR policies reimburse all your travel costs. Some policies, for instance, only reimburse you for 75% of your costs.
Trip delay insurance
Both comprehensive travel insurance policies and some credit cards will cover your unreimbursed expenses if your trip is delayed for a certain amount of time. The United Explorer Card, for example, will cover expenses such as meals or lodging if your trip is delayed more than 12 hours or if an overnight stay is required. Reimbursement is up to $500 per ticket.
Lost or delayed baggage
Comprehensive travel insurance will typically cover the purchase of clothing and other essentials if your baggage is delayed. Some credit cards will also cover lost or delayed luggage. The Capital One Venture card, for example, reimburses you for up to $3,000 if your luggage is lost.
Credit cards may also offer travel protections that extend beyond flights, hotels and cruises. A number of credit cards, including the American Express® Gold Card, will cover you if you decline the collision damage waiver when renting a car and your rental vehicle is damaged or stolen.
Comprehensive insurance is by far the most popular type of coverage sold by travel insurance companies, Mueller says.
It bundles different coverages for one flat fee and can include trip interruption and cancellation insurance, accidental death and dismemberment insurance, travel delay insurance, emergency medical, dental and evacuation insurance and baggage delay insurance.
Who is covered?
Benefits provided by your credit card may cover you, your spouse or domestic partner and your dependent children. If you purchase travel insurance, you can buy a policy just for yourself or for your whole family if you are traveling together.
Watch for changes and benefit removals
Even if your current card has travel benefits, be sure to check your coverage before you depart.
Discover, for example, eliminated five credit card benefits – including flight accident and auto rental insurance – in early 2018.
Meanwhile, Citi also changed its benefit limits on some cards in 2018. Trip cancellation and interruption protection for the Citi Simplicity® Card fell from $3,000 per person per trip with no annual limit to $1,500 per trip and $5,000 per year, according to spokeswoman Jennifer Bombardier.
Citi made the changes, Bombardier said, “so that we can continue providing key benefits that our customers use and value most at no additional cost.”
Where can you get travel insurance?
If you’ve got a trip coming up, first check your credit cards to see which types of coverage they provide. Travel insurance benefits on Chase cards, for example, tend to be impressive, especially if you’re willing to pay a higher annual fee. You can also find solid travel insurance benefits with American Express and other issuers.
If you’re in the market for a new card and you’ve got a big trip on the horizon, you might want to check the travel benefits offered before applying for the card. You might even land a sweet sign-up bonus that will help cover some of your travel costs.
Watch for exclusions
Both travel insurance that comes with your credit card and coverage you purchase will have exclusions, so read the fine print.
For example, travel insurance typically won’t cover preexisting medical conditions or high-risk sport participation, such as sky diving. You also may not be covered if you’re traveling against the advice of a physician, if you’re participating in a competitive sport or you’re in the third trimester of pregnancy.
For high-risk sports, in particular, you might be able to purchase a special policy that covers those activities, Benna says.
When should you buy travel insurance?
Mueller recommends buying travel insurance within 15 days of making a deposit or paying for your trip.
Considering many policies have exclusions for preexisting conditions, you don’t want to be diagnosed with a disease and then be unable to buy travel insurance.
Another reason to buy insurance well ahead of your trip includes the potential for unforeseen circumstances, such as a natural disaster or terrorist attack near or at your trip’s destination.
Whatever you do and wherever you go on your next trip, you’ll want to be prepared – especially as more and more U.S. citizens receive the COVID-19 vaccination and as travel potentially upticks this summer.
To be safe, be sure your next trip’s planning involves checking your credit card travel insurance benefits and purchasing additional travel insurance if you feel it’s needed.
Information about Wells Fargo Visa Signature, Chase Freedom and Citi Prestige has been collected independently by CreditCards.com. The issuer did not provide the content, nor is it responsible for its accuracy.