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Can I Rely on My Credit Card for Travel Insurance?

Grace Lower | Feb 17, 2023

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This blog post was updated February 3, 2020.

 

Credit cards. Love ‘em or hate ‘em, they’re a valuable tool for today’s financially-savvy traveler. 

There are dozens of travel rewards credit cards on the market, each promising the same outcome: with just a swipe, your travel experience will be cheaper, more glamorous, and hassle-free. But the truth is a little more complex, especially when it comes to trip insurance perks. 
You may have heard that some credit cards offer travel insurance. That alone can be an attractive benefit for adventurous cardholders. But it’s important to remember that not all cards are created equal, and the travel insurance provided by a credit card often doesn’t measure up to the coverage a travel insurance company offers. 
That being said, some travel rewards cards provide full coverage for a last-minute cancellation, while other cards’ benefits are limited to accidental death or dismemberment. Those terms and conditions are found in the cards’ fine print, and many travelers don’t bother to read them. 

As you gear up for your next big trip, it’s time to take that fine print seriously. Think through any benefits offered by your credit card and consider the limitations of that coverage. Not sure if your credit card company will have your back while you travel? Here are a few questions to keep in mind.

Does my credit card provide travel insurance?

Most credit cards aren’t a true substitute for a comprehensive travel insurance plan. Instead, different cards offer different combinations of benefits. The simplest way to learn about insurance offerings is by calling the number on the back of your card. Not a fan of hold music? Try visiting your credit card company’s website for a detailed breakdown of your coverage.
Personal finance and travel websites are another great way to learn about the travel insurance provided by different cards. Some of these sites post regular roundups of top travel cards, and they describe key benefits in a concise, easy-to-understand way.

A word of caution: online articles are a great starting point, but they aren’t always written by financial professionals. These resources can also become outdated as products change. Refer back to your credit card’s website for the latest information and talk to a product specialist if anything seems unclear.

Does a travel rewards credit card make sense for me?

Let’s say you’ve done your research, and you find that your current credit card has pitiful travel benefits. If you’re a frequent traveler, does it make sense to upgrade to a travel rewards card for the insurance? In most cases, probably not.
The top travel rewards credit cards come with impressive perks, but those benefits come at a premium. Annual fees alone can cost as much as $550, and most top cards require a “Good” to “Excellent” credit score. When you take into consideration the costs associated with these top-tier cards, the so-called “free” travel insurance doesn’t seem so free.  

Unfortunately, even the best card benefits are subject to change. In some cases, popular rewards cards from Citi and Bank of America have stopped offering insurance coverage on their cards altogether. Make sure any resources you use are up to date before assuming your trip is fully covered.

What exactly does my card cover?

Maybe your credit card provides travel insurance and maybe that travel insurance seems adequate. You’ll be covered, right? Maybe not. Before you get too comfortable, make sure you understand what those benefits entail. 
Here are a few key terms you might encounter:
  • Trip cancellation: this kind of coverage is only available on select credit cards. A trip cancellation benefit can reimburse you for non-refundable prepaid trip expenses if you cancel your trip for a covered reason.
  • Trip delay: this benefit can cover your nonrefundable and unused prepaid trip expenses and the cost of necessary expenses, such as food and lodging if your flight is delayed. 
  • Baggage loss or delay: this coverage can reimburse you for essential purchases, like clothing and toiletries, if your luggage is delayed by the carrier. It can also cover the cost of any lost luggage and belongings, up to a defined maximum. 
  • Rental car collision coverage: many cards will cover some portion of the cost if a rental car is stolen or damaged. 
  • Travel accident insurance: if you’re in an accident on a common carrier, like a plane, cruise ship, or train, your card may provide benefits to you or your loved ones. 

Of course, coverage can vary by product and company. Make sure to review your card’s details to learn what’s available.

Where does that coverage fall short?

All of those benefits might sound fantastic, but you should always read the fine print before making any major decisions. Remember that trip cancellation coverage? It may come in handy if you have a life-threatening illness, but not so much if you suddenly have a mandatory meeting at work. And while travel accident insurance might sound like a great benefit, it typically only covers death or major dismemberment — like loss of a limb or an eye — when you’re traveling on a common carrier. If you break your leg in a hiking accident and need emergency medical care, your travel accident coverage won’t apply. 

Another key detail: most cards only offer coverage if the ticket or experience was purchased with the card. While your flight might be covered if you paid for it using your travel card, the hotel fare that you and your friends split on Venmo is probably out of the question.

What risks are associated with my trip?

No two travelers are the same, and neither are their trips. That’s why it’s important to think through any risks you could encounter when you’re on the road. After all, a visit to a hot spring in Iceland has very different risks than a cross-country skiing trip to the same destination. Understanding what health, safety, climate, and geopolitical events could impact your trip will help you make an informed decision about the kind of trip insurance coverage you might need.

Isn’t there a better way?

After walking through the questions above, you might be wondering if there are other ways to keep yourself safe, without breaking the bank. That’s where a comprehensive travel insurance plan could make all the difference. 
Seven Corners’ RoundTrip travel insurance has many of the same benefits your credit card offers, plus more — all at a lower cost than you might expect.
One of the main reasons to consider buying travel insurance is the medical insurance it can offer. If you get into a car accident in Peru, your credit card’s insurance typically won’t cover your emergency medical bills. Beyond that, your personal medical insurance typically won’t carry over outside of the United States, leaving you responsible for a hefty bill. Medical coverage is an important measure to ensure that a ruined trip doesn’t lead to financial ruin. 
In the event of a life-threatening situation, Seven Corners’ RoundTrip insurance also offers emergency evacuation coverage. If medically necessary, this ensures you’re transported to a facility where you receive appropriate care, and a loved one can be flown to your bedside while you recover. 
While credit cards can offer plenty of appealing benefits, only a dedicated insurance plan can give full coverage. Travel can be unpredictable — why leave the outcomes up to your credit card company’s fine print? If your travels are taking you far away from home, a dedicated travel insurance plan is a purchase worth making.

 

    Guest contributor: Grace Lower

About the Author

Grace Lower has a love for all things writing and travel. When she's not exploring new places, Grace enjoys teaching English as a Second Language, making terrible puns, and running incredibly long distances at incredibly slow speeds.

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