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Credit Cards and Trip Insurance: Read the Fine Print!

Travel Team | Dec 21, 2020

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Anyone who is a frequent flyer or traveler knows that certain credit cards come with travel perks.

These perks could include rental car insurance, travel points, and more. Some may assume that major credit cards also provide trip insurance, but this may not always be the case. Before cutting corners by passing on travel insurance, be sure to review your credit card’s terms and conditions.

Yes, some major credit cards can make little emergencies a touch easier to stomach, but not fully. Credit card perks are secondary insurance, meaning that it is a supplement, not a replacement, for more comprehensive coverage. Most credit card coverage is of exclusions, so read the fine print and make sure it's absolutely clear what coverage is available through your card.

Here’s a breakdown of some of the perks that major credit cards provide and where you may need extra coverage.

Rental car collision coverage

Hate paying an $30 a day for rental car company’s insurance? Most major credit cards do provide automatic accident coverage.

This includes collision repair, meaning that if you rent the car with your card, plus decline the car company's insurance, your card will cover the cost of repairing a car you damage, but oftentimes through a lengthy process.

The catch: Liability and injuries aren't included in this perk, so if you hit someone else, your credit card company won't cover you. Someone stole your wallet or luggage out of your rental car? Again, this will not be reimbursed by your card.

Travel accident coverage

This is a perk that often catches people off guard: the belief that they’re getting comprehensive travel insurance coverage through their credit card. This is absolutely not the case! At the very most, it provides a secondary “lite” life insurance policy. If the worst case scenario happens while you're traveling, your credit card will give a pay out to you or your survivors.

The catch:  Traveling to or from your job and get into an accident? Even if you pay for the transportation on your credit card, you likely will not be covered. Unless you die or lose a limb, you will not have assistance with any other health problems (ex. a stroke or seizure). This is why you should always purchase an outside travel insurance plan that will protect you in the event of a larger range of medical problems and issues, including medical evacuation.

Trip cancellation insurance

If an emergency or an illness keeps you from using those nonrefundable plane tickets you paid for with your credit card, your card company may reimburse you for them.

This perk is rare to find on a credit card -- only about 15% of cards offer it. It reimburses you the cost of nonrefundable flights if an emergency or illness derails your travel plans.

The catch: This service is only offered on a very limited number of cards with strict requirements. For example, if you have to cancel your travel plans because of a pre-existing illness, you won't be covered. Of the 15% of cards that do offer this perk, an even smaller number of that cover weather-related delays. If you’re stuck because of a storm, you’re on your own.

Lost luggage

Several credit cards will reimburse you for the items in your luggage should they get lost along your travels. The good news? If your luggage is stolen or lost by the carrier and you bought your tickets with your credit card, you may be eligible for up to $3,000 of coverage to replace your lost goods

The catchAgain, this can’t be stressed enough: Read. The. Fine. Print. There are credit cards that offer this perk but have a list of items they will not insure if stolen. Some of the items found on these lists include glasses, travelers checks, skis, tennis rackets, hearing aids, and cameras. Luggage just delayed, not stolen? You’ve got to pay for those replacement bathing suits while you wait on your own. Also, these benefits can only be received after you've filed a claim with both the travel carrier and sometimes even with your homeowner's or renter's insurance.

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