By AARON HURD – Rolling Stone magazine
When you’re planning a trip you want to make sure you have the right financial protection for the money you’re putting down—as well as the money you’ll have to spend in a travel emergency.
Many credit cards, especially premium credit cards targeted toward frequent travelers, come with a suite of travel insurance protections that provide coverage if something goes wrong with your trip. But is coverage from a credit card as good as buying your own travel insurance policy?
Most travel insurance benefits through a credit card are provided by third-party benefits administrators. Before relying on a credit card travel insurance product, be sure to understand when your card provides coverage, what is covered and the limits of coverage. Similarly, if you buy a travel insurance policy, make sure to read it over so that you’re not caught by surprise later if a claim is denied.
Trip Cancellation Insurance
Trip cancellation insurance reimburses you 100% for any pre-paid, non-refundable travel expenses if your trip is canceled for certain reasons that are outside your control. Covered cancellation reasons frequently include sickness, injury, severe weather, military deployment and jury duty.
Trip cancellation insurance is usually provided by a credit card when you book your travel on a common carrier like an airline, cruise line, bus line or rail operator using your credit card.
Some credit cards require your entire round-trip travel be paid for with the card to be eligible for trip cancellation insurance, while others offer coverage even on one-way bookings. Coverage amounts from a credit card are usually limited to $10,000 per trip, with additional limits on the number of claims in a year.
A travel insurance policy will also reimburse you 100% for money you lose in pre-paid and non-refundable deposits, and it doesn’t matter how you paid for the trip. If you put your trip deposits on multiple credit cards, for example, you could still insure your entire trip cost with a travel insurance policy. This gives you more flexibility with how you pay for your trip deposits.
A travel insurance policy will allow you to fully insure expensive trips, without the relatively low maximums imposed by certain credit cards.
With travel insurance you can also add a feature that you won’t find with a credit card: “cancel for any reason” coverage. This optional upgrade gives you the ability to cancel your trip for any reason not listed in the base policy, such as fear of travel or simply changing your mind. You can generally get 50% or 75% reimbursement under a “cancel for any reason” claim, depending on the travel insurance company.
Trip Delay Reimbursement
Credit cards that have trip delay insurance can cover expenses when your travel is delayed due to a flight, cruise or train delay or cancellation. The credit card coverage can reimburse you for essential expenses like an overnight hotel accommodation, meals and transportation.
Most trip delay coverage provided by credit cards only covers you when there’s a delay of six to 12 hours or an overnight delay, and benefits are typically limited to $500 per person per covered trip.
Some credit cards also require that you book round-trip travel on a common carrier using your credit card in order to be eligible for coverage.
Travel insurance also requires a minimum delay time before you can use the coverage, but you can find policies with low time requirements.
For example, the Gold and Silver travel insurance plans from the John Hancock Insurance Agency have only a three-hour requirement for travel delay coverage. These policies also offer higher total maximum reimbursement than a typical credit card: $1,000 (Gold plan) and $750 (Silver plan). Other travel insurance plans offer even more generous travel delay coverage amounts, such as $2,000 from Trawick International’s Safe Travels Voyager plan.
Travel Medical Insurance
Credit cards do not typically provide travel medical insurance.
Travel medical insurance can be a highly valuable component in a comprehensive travel insurance plan. If you get sick or injured while traveling, travel medical insurance can pay for ambulance services, doctor and hospital bills and medication.
If you’re traveling internationally, check the coverage offered by your U.S.-based health plan. It may have limited or no coverage outside the U.S. And Medicare does not cover health care outside the U.S., making travel insurance a must for senior travelers.
You can buy travel insurance policies with high levels of medical coverage, such as $500,000 per person. If getting Covid abroad is a concern, make sure to buy a policy that covers Covid-related medical expenses.
Emergency Medical Evacuation
Emergency evacuation coverage typically pays for necessary emergency evacuation and transportation due to a severe medical emergency. This can include medevac transportation and medical services required to sustain life.
The exact services and coverage amounts available from credit cards vary widely. Some credit cards offer coverage with a limit of $10,000 for medical evacuation, while some offer coverage for up to $100,000.
Emergency evacuation services require preauthorization and coordination with your card’s benefits coordinator and do not necessarily cover repatriation back to your home country.
Travel insurance plans with generous levels of medical evacuation coverage are available, with limits much higher than what you’d get from a credit card. For example, plans with $1 million in medical evacuation coverage are available from AIG’s Travel Guard plans, Trawick International, Seven Corners and others.
These medical evacuation benefits include repatriation if your condition requires that you return to the U.S. for care.
Lost, Damaged and Delayed Baggage
Baggage insurance covers loss, delay or damage of items in checked or carry-on baggage while in transit to, at the terminal of or traveling on a common carrier.
Baggage loss and damage coverage from a credit card pays for the actual cash value of items damaged in checked or carry-on baggage while in transit, frequently up to $3,000 per person, per trip.
Baggage delay insurance from a credit card covers expenses incurred because of the delay, such as toiletries and replacement clothes. It’s typically limited to $100 per day, up to a maximum of five days.
Baggage insurance excludes normal wear and tear to luggage and certain high-value items. Excluded items include obvious valuables like jewelry, cash and fur coats but also items like sporting equipment, computers, eyeglasses and smartwatches.
Baggage insurance is usually secondary insurance, requiring you to submit a claim with your common carrier before it will pay claims.
Baggage and personal effects coverage from a travel insurance policy is similar to credit card coverage but better because it also covers your belongings even when they’re not in transit. For example, if your belongings are stolen from a hotel room you could make a claim under your baggage and personal effects coverage.
Watch out for per-item limits, which can be in the range of $50 to $250 per item.
And like credit card coverage, baggage insurance from a travel insurance plan is usually secondary, so you’d first have to make a claim under other existing coverage, such as your home insurance.
A comprehensive travel insurance plan can also include baggage delay insurance. And with a travel insurance plan you can get higher levels of coverage if desired. For example, April International’s VIP plan provides $750 per person for baggage delay, although a delay of 24 hours is required for a claim.
Travel Assistance Services
Many credit cards offer some form of global assistance services. These services can help you by expediting replacement credit cards, wiring money to you in an emergency, dispatching roadside assistance, providing emergency translation services or providing medical and legal referrals.
Many credit card travel assistance services also provide assistance with passport replacement and consular referrals. Although getting connected to help while traveling is valuable, most of these services are not insurance; they provide a referral but do not cover the cost of the services.
Some credit cards also offer concierge services that can be used while at home or traveling. A concierge may be able to help with restaurant reservations, event tickets and even recommendations on local activities.
Your travel insurance policy will come with access to a 24/7 global assistance helpline, much like a credit card. This assistance can help you locate a doctor or pharmacy during your trip, help you replace broken eyeglasses, assist with currency conversion and other services.
Some travel insurance plans also include concierge services. For example, ExactCare plans from Berkshire Hathaway Travel Protection can arrange floral services, restaurant reservations and tee times.
Should You Buy Travel Insurance or Rely on Credit Cards?
If you’re shopping for travel insurance, don’t forget that you may be able to get some of the coverage you need through credit cards. Even some no-annual-fee credit cards carry some combination of travel benefits. The annual fees of premium credit cards offering coverage might be offset if you can reduce a travel insurance purchase.
Still, travel insurance options frequently offer higher coverage limits than what you’ll find from a credit card. Travel insurance can also provide coverage for medical expenses, a crucial protection for any international traveler.