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Does your credit card travel insurance really cover you?

Some banks and credit institutions offer “free” travel insurance when you book a trip using their premium credit cards. This ready-to-go cover is very convenient, but can you depend on it?

Credit versus standalone cover

Most credit card travel insurance policies cover you for all the usual things like medical emergencies, cancellation and protection for baggage and items. But they do differ from standalone policies, so it’s essential you check the small print.

  • Chances are your credit card insurance won’t automatically cover your pre-existing condition. You’ll need to call your insurer and arrange to pay an extra fee or premium.
  • Standalone policies usually have a variable excess, but the excess on credit card policies tends to be fixed at a higher rate.
  • Most credit card insurance policies only cover short trips of less than three months.
  • Credit card travel insurance often has no age limits, which will be a benefit for some.
  • Credit card travel insurance is not based on location (unlike regular travel insurance), which means you can travel from Europe to the US without having to worry if your policy covers both areas.
  • Credit card insurance doesn’t apply to domestic travel, although some platinum cards will reimburse expenses associated with domestic flight delays and missed connections.
  • Credit card policies tend to deliver better cash coverage (up to $1000), while most standalone policies only cover $100-200.
  • You may not be able to claim reimbursement unless you pay for purchases with your credit card, such as buying emergency items after a baggage delay.

Ask for a copy of the policy wording from your bank or credit card provider, and make sure it meets your personal needs and situation.

Activating your card’s insurance

Your travel insurance should activate automatically when you use your credit card to book a trip. But there are plenty of traps in the small print to watch out for here, too.

  • In most cases, complementary insurance only activates if you book return travel.
  • If you want cover for your spouse or dependants, you must also purchase their tickets on your card.
  • You’ll need to spend a minimum amount on travel costs (usually $500-$1000) to activate your insurance, so if you’re booking bargain-basement flights you could miss out.
  • Some insurance providers only require you to pay a portion of the travel costs on the card, which is handy if you’re using frequent flyer points to pay for part of the ticket.
  • Some allow you to pay with rewards points as long as they were accumulated on programs directly linked with your credit card.

If in doubt, call you credit card provider to confirm your insurance has been activated.

Case study: Sean*

Sean found a great deal online for a trip to Bali, Indonesia, and paid for the flight with his credit card. Sean’s credit card also offered complementary travel insurance, so he assumed he was automatically covered because he had used his credit card for the ticket. Unfortunately, when Sean landed in Bali, a taxi driver drove off with his suitcase and surfboard already loaded into the van.

Sean submitted a claim for lost luggage, but because he hadn’t exceeded the minimum required pre-departure spending on his credit card, he wasn’t insured at all. He lost more than $2000 as a result.

Premium fees

Most premium credit cards (gold and platinum cards with extra features) have hefty annual fees. If you regularly take advantage of the extra features, including travel insurance, then the expense may be worth it. But if you only travel occasionally, buying standalone insurance and using a low-fee credit card could be more cost-effective.


Source: Smart Traveller

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