Will Credit Card Travel Insurance Offer Sufficient Cover for Your Next Trip?

Many modern credit cards offer benefits that we’ve all become accustomed to using regularly, such as cashback programs, signing bonuses and other rewards. But, there are certain travel-related credit card issuers that also include travel insurance as an incentive to sign up for their cards. Many travelers will wonder if this kind of coverage would be sufficient to meet their travel needs, would it be enough in isolation or is more cover necessary? In this article, we take a closer look at what’s covered and what may be missing in the travel insurance policy that comes with a credit card. This will be important to help you consider your options for supplementary travel insurance if you feel that you need it. 

Is Credit Card Travel Insurance a Common Incentive?

No, most credit cards don’t offer travel insurance and it tends to be limited to specialist cards related to traveling. There are some credit cards that offer travel insurance as an option to protect travel investments, but these tend to be very limited in scope. This type of insurance tends to come from a pair of sources, the bank or some type of travel related businesses, such as airlines, hotels and others. Most banks do have at least one credit card that offers travel insurance benefits alongside the usual cashback programs. The travel-related business may promote their own credit card that includes travel insurance benefits and incentives geared towards travel. The goal is to encourage travelers to use their credit card when they take their next vacation or business trip. Restricting use to a comprehensive credit card for traveling is a great way to rack up air miles quickly for frequent travelers too. 

What Type of Insurance Coverage Can I Expect?

The type of travel insurance coverage offered by credit cards can vary a great deal depending on the issuer. This variation in benefits needs to be investigated thoroughly to ensure that you're getting the right card to meet your needs. Perhaps you need specific insurance that may or may not be covered by a card. That said, there are certain benefits that are commonly included with credit card travel insurance. They are:

• Trip Cancellation Cover: This cover is for nonrefundable trip expenses incurred if you need to cancel a trip for a reason that’s covered in the policy. This is a useful benefit, but at this time only around 15-20% of credit cards offer this type of coverage. Trip cancellation cover is sometimes referred to as interruption protection and the reasons are limited to injury, illness or death. There are a handful of credit cards that cover more events that could affect the travel plans of customers, such as: jury duty, job loss, school year extension, terrorism and more. 

• Trip interruption Cover: This works as cancellation cover above if the trip is interrupted due to an event that’s covered by the credit card insurance policy.

• Delayed or Lost Baggage: This is cover for luggage that may be delayed or lost in transit that may cause problems during your trip. Onely 19% of credit cards offer any protection for luggage delays and this rises to 23% for lost luggage. 

What are the Gaps in Credit Card Travel Cover?

Although a credit card may have certain travel insurance coverage it’s not likely to match up against a comprehensive travel insurance plan. If you’re sourcing your own travel insurance, you have more freedom to choose a specific insurance plan that meets your needs. Let’s take a look at a few reasons why a credit card travel insurance plan is unlikely to meet your needs.

• Card Benefit Limits: Most credit cards have capped benefit limits related to trip cancellation coverage and these are set at lower amounts than travel insurance plans. Any purchases made using the credit card would be covered, but paying for trips using cash or a check are not. 

• Individual Coverage: A credit card will usually cover the cardholder with no provision for people traveling together. A comprehensive travel insurance plan could cover up to ten people which offers more protections.

• Full Trip Cost Reimbursement: If an unexpected event delays or ruins a trip there is limited coverage from a credit card insurance plan. With comprehensive travel insurance it may be possible to reimburse the entire cost of the trip if sufficient coverage has been purchased. 

• Medical Evacuation Charges: A credit card will not offer the same level of insurance coverage as comprehensive travel insurance for emergency medical transportation and expenses. This can be extremely expensive if a traveler is caught out in a medical emergency without sufficient insurance cover. To put this into some perspective the CDC has estimated that the cost of an air ambulance medical evacuation is from $50,000 up to $100,000. 

• Pre-Existing Medical Conditions: If a traveler has a pre-existing medical condition, they should never rely on a credit card insurance plan. To qualify for coverage with most insurance plans the traveler must prove that they are fit to travel with the insurance purchased. All trip costs that could be subject to restrictions or cancellation penalties must be insured.

Understanding Comprehensive Travel Insurance

A comprehensive travel insurance policy will provide some essential benefits that you will need when you’re traveling. This will include cancellation reimbursement and medical emergencies which can be extremely expensive. This insurance coverage will go far beyond what basic credit card insurance would cover. Some of the typical benefits might include trip interruption, travel delay, medical evacuation, repatriation of remains, pre-existing medical condition waiver, emergency accident, trip cancellation (for more reasons) and more. In most cases, comprehensive travel insurance will outperform and offer more coverage than credit card based alternatives. If you’re not boxed into an insurance plan it’s always a good idea to investigate your options to find better insurance. This will allow you to find the right insurance plan that meets your specific needs when you take your next trip.