Have you ever wondered what kind of travel insurance is provided through credit card, if any?
Travel insurance through credit card may be minimal or non-existent. Many travelers taking domestic or international trips think that their credit card provides them with the travel insurance coverage they need; therefore, they don't think they need to purchase a stand alone travel insurance plan. The fact is that the majority of credit cards do not provide any travel insurance coverage. Among the ones that do provide it, the coverage is often very limited, with low amounts and coverage only under a very specific set of conditions and with many restrictions.
It is always recommended to purchase a stand alone travel insurance plan. Of course, you should read the fine print anyway to make sure you have the necessary coverage that you might need.
This article describes the general features (or lack thereof) of travel insurance through a credit card. Every credit card is different, be sure to check with your credit card company for the exact terms and conditions.
Most credit card companies provide only secondary insurance, which is meant as a supplement to more comprehensive coverage, such as: stand alone travel insurance, your homeowner's or renter's insurance, or the coverage available through an airline. Because it is secondary, it is not a replacement for such coverage.
The majority of credit cards that provide travel insurance coverage will require that you pay for your trip with that specific credit card in order for there to be coverage. If you have multiple credit cards it may become difficult when trying to decide which one to use as the amount of coverage, type of coverage and exclusion of coverage may vary depending on the credit card.
Normally, credit cards that provide some type of travel insurance coverage come with an annual fee, and sometimes, that fee may be a few hundred dollars per year.
Trip Cancellation Insurance
Most credit cards don't offer any trip cancellation insurance, but among the few that do, they provide this coverage only in very limited circumstances. They usually will not cover trip cancellation due to pre-existing conditions, weather related trip delays, or trips to war zones.
If you get sick or injured while you are not on your trip, you will usually not be covered by the insurance provided through a credit card.
Rental Car Insurance
If your credit card provides a benefit for rental car collision, it is certainly better than paying around $30/day to your rental car company's insurance. While a credit card may provide collision repair up to certain amount such as $35,000, it will most likely not provide any coverage for any liability if you hit someone else or you get injured in a car accident. If any valuables such as cell phones, laptops or a suitcase is stolen from your rental car, the credit card company will not reimburse you. Also, if you have an accident with the rental car, the rental car company can not use that car and will most likely charge you a daily fee while the rental car is being repaired in the body shop. A credit card company would not pay for the same.
Travel Accident Insurance
You may get coverage for Accidental Death & Dismemberment (AD&D) around $100,000 or may be $200,000. That means, if you die in an accident while riding in a common carrier (such as bus, train, airplane etc.), your family will receive the death benefit amount. Additionally, if you lose your leg(s), hand(s) or eye(s) while in such accident, you may get a smaller percentage of that, such as 50% or 25%.
Loss of Checked Luggage Insurance
If your checked luggage is stolen or lost by the carrier (airline, cruise etc.), you may be eligible up to a certain amount of coverage for the replacement value of the items you lose. However, there are many restrictions regarding what is excluded such as skis, tennis rackets, cameras, hearing aids, glasses, travelers check and so on. However, if your luggage is delayed, even if for the complete duration of your trip and you end up buying an entire set of new clothes, the credit card company will not pay for them.
Credit card companies typically provide coverage for a smaller duration, while the stand alone travel insurance companies can provide the coverage for a much longer duration.
Credit card companies typically exclude coverage for adventure sports such as skiing. However, you would typically be able to purchase for such sports in a stand alone travel insurance by paying additional amount.
While stand alone travel insurance can come with a low deductible or even $0 deductible, travel insurance through credit card companies may have a higher deductible such as $500 or more.
While stand alone travel insurance can provide coverage for domestic as well as international travel, many credit card companies may only cover international trips.
Many travel insurance companies provide the coverage only to the card holder, and exclude family members traveling together. Stand alone travel insurance companies can cover all travelers, but of course, you will have to pay for the insurance for each person.
It is the best not to rely on the limited travel insurance coverage provided by your credit card. It is always advisable to purchase a separate travel insurance. It will cost you additional money but it will give you the peace of mind knowing you're covered if something were to happen before or during the trip.