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- Travel insurance and some credit cards can protect you from financial loss while traveling.
- Travel insurance offers more comprehensive coverage that includes emergency medical expenses.
- Credit card travel protection has more gaps but comes at no additional cost for cardholders.
Anything can happen while traveling. Flight delays, lost luggage, or even unexpected injury or illness can interrupt your vacation. When these things occur, travel insurance or the travel protections included with your premium credit card may be able to help, providing medical coverage, offsetting your financial losses, or even reimbursing you fully.
But do you need both travel insurance and credit card travel protections? Here are details on both and tips for deciding what the best travel protection is for you.
Introduction to credit card travel insurance and stand-alone travel insurance
Many credit cards offer travel protections that can help you in certain unexpected travel situations. But they aren't exactly the same as a separate travel insurance policy.
Here's how the two differ at a high level:
- Travel insurance:Travel insurance is coverage that you purchase for a single trip or multiple trips in a year. It typically covers the costs associated with trip cancellation, trip delays, medical emergencies, and other unforeseen events that may occur while traveling.
- Credit card travel protections:These are benefits automatically included with certain consumer credit cards. They often providecoverage for delays, lost baggage,rental car collisions, and other events during travel. Credit cards sometimes advertise these protections as a type of travel insurance, though they're not a separate insurance policy.
Generally speaking, designated travel insurance is more exhaustive than the protections offered by a credit card. Still, it's worth it to compare both options, particularly if you're taking an expensive trip.
"It is always wise to check your credit card protection against a travel insurance plan," says Carol Mueller, a vice president at Berkshire Hathaway Travel Protection. "Credit card protection may not include the full, bundled, comprehensive coverage a travel insurance plan would."
What is credit card travel insurance?
Many premium credit cards offer travel protections to cardholders, but the exact coverages depend on the credit card. Typically, only trips booked with that card qualify for coverage.
"Credit card travel insurance has one big advantage that interests travelers: it's usually free or included in the card's annual fee," says Daniel Durazo, director of external communications at Allianz Travel Insurance, a travel insurance provider. "Credit cards' travel benefits can be useful for smaller things, like travel delays or lost bags, but only travel insurance provides reliable protection in real emergencies, like expensive medical emergencies such as hospital visits and evacuations."
In some cases, however, a credit card may cover catastrophic accidents. The Chase Sapphire Reserve, for example, offers up to $1,000,000 worth of coverage for an accident that causes loss of life, speech, hearing, or use of a hand, among other life-altering injuries.
Additionally, credit card coverage limits tend to be much lower. The Chase Sapphire Reserve® offers up to $20,000 per trip in cancellation coverage, while a basic travel insurance plan from Travel Guard offers five times as much coverage.
Pros and cons of credit card travel protection
| Pros of Credit Card Travel Protections | Cons of Credit Card Travel Protections |
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What is stand-alone travel insurance?
Travel insurance protects you from financial losses related to travel. "There are three main areas of coverage: protecting yourself, protecting your personal items, and protecting your investment," says Christina Tunnah, general manager of Americas and global marketing at World Nomads Travel Insurance, a travel insurance and safety services provider.
Travel insurance worksmuch like any other insurance policy. When a covered event occurs, like your trip is canceled or you're hurt while traveling, you file a claim with your insurer. If accepted, the company reimburses you for the costs up to your coverage limits.
"Most people have no idea that their health insurance does not cover them abroad," says Shane Mahoney, founder of Lugos Travel, a travel advisory. "So, a broken arm from a slip and fall or a heart attack can be financially devastating."
Travel insurance customers typically have 90 days to file their claim. But once the event occurs, there's no waiting period, meaning travelers should file as soon as possible.
A major factor when filing a successful claim is proof of financial loss. You can use something as simple as a medical clinic receipt or a doctor's medical statement. Once the claim has been reviewed and approved, your insurer will reimburse you via check. Some modern travel insurance companies offer immediate payment via a debit card mailed to travelers before their trip.
Travel insurance providers go beyond your standard credit card or airline coverage. You can buy policies that cover sports equipment, medical, and other coverages. You can also buy Cancel for Any Reason insurance, which covers trip cancellations regardless of the reason. The best CFAR insurance can cover 100% of your costs, but many only cover a percentage.
Buyers can also price out annual travel insurance plans, which cover all of your trips within a 12-month period. Meghan Walch, director of the InsureMyTrip website, estimates a 4% and 10% travel insurance cost based on your total prepaid, nonrefundable trip costs. If you're buying an annual policy, this figure will change.
Pros and cons of stand-alone travel insurance
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Credit card travel protection vs. stand-alone travel insurance
Deciding between stand-alone travel insurance and credit card travel protection can be difficult. That said, it's worth mentioning that these choices aren't mutually exclusive. Even if you have a credit card that provides travel protection, you can still opt for additional coverage with a stand-alone travel insurance policy.
Cost considerations
The obvious difference between credit card insurance and a stand-alone policy is the cost. While credit card insurance is usually included in the cost of the card, traditional travel insurance is an additional expense, usually between 5% to 6% of the trip's worth, though rates can range from 4% to 12%.
However, travel insurance may pay for itself, covering emergency medical expenses and evacuation."Most people have no idea that their health insurance does not cover them abroad," says Shane Mahoney, founder of travel advisory companyLugos Travel. "So, a broken arm from a slip and fall or a heart attack can be financially devastating."
On the other hand, credit card travel protections don't come at any additional costs. However, many of the best travel credit cards come with annual fees. Additionally, a credit card's travel protection only applies to trips you book with that credit card. If you don't pay off the credit card immediately, you'll pay interest on your trip.
If you don't already have a credit card with travel insurance included, you'll also have to determine if the coverage is worth applying for a new credit card.
Comparing coverage and benefits
In most instances, traditional travel insurance policies will have more comprehensive coverage than credit card travel insurance. They'll cover more reasons for trip cancellation, and some may cover cancellations for no reason. They'll also cover medical emergencies, while credit card travel protections don't.
"Some travel insurance policies also provide epidemic coverage endorsem*nts, which provide coverage to customers who become ill with COVID-19 or a future epidemic, are individually ordered to quarantine, or are denied boarding due to a suspected illness," says Durazo.
Separate travel insurance policies also tend to offer more robust cancellation coverage. Credit card protections often cap reimbursem*nt at just $10,000 a trip, while travel insurance usually goes up to $100,000. Most credit cards will only cover trips purchased with the card or reward points.
Situations best suited for each
Both travel insurance and credit card protections can prove helpful if your trip is canceled or you experience some other loss while traveling, but the right choice will depend on the specifics of your exact trip and budget. "Every trip is different, and every traveler has different needs and concerns," Walch says.
For example, travelers with more health concerns may opt for stand-alone travel insurance. Longer, more expensive, and international trips may also warrant greater coverage that credit card travel insurance can't provide. Additionally, it may be a good idea to insure trips to high-risk areas, either politically unstable regions or areas with inclement weather.
On the other hand, Walch says, "For a short trip to a family member's house in the US, the travel insurance offered through the credit card may suffice."
Credit card travel insurance comparison frequently asked questions
Does credit card travel insurance provide sufficient coverage for international trips?
Credit card travel insurance may offer basic coverage for international trips, but it often lacks comprehensive medical coverage.
Can I use both credit card travel insurance and a stand-alone policy for the same trip?
Yes, you can use both for the same trip. Stand-alone policies can supplement areas where credit card insurance is limited, such as medical coverage.
Are pre-existing medical conditions covered under credit card travel insurance?
Most credit card travel insurance does not cover pre-existing medical conditions. Many stand-alone policies don't cover pre-existing conditions, but you may find some coverage with certain stipulations.
How do I activate travel insurance on my credit card?
Credit card travel insurance is usually automatically activated when you pay for a trip using that card. However, it's important to read the card's policy for specific activation requirements.
Is it more cost-effective to rely on credit card travel insurance?
While credit card travel insurance can be more cost-effective since it's a benefit of the card, it may not provide as comprehensive coverage as a stand-alone policy. In the long run, you may end up losing money if you solely rely on credit card travel insurance.
Aly J. Yale is a freelance writer, specializing in real estate, mortgage, and the housing market. Her work has been published in Forbes, Money Magazine, Bankrate, The Motley Fool, The Balance, Money Under 30, and more. Prior to freelancing, she served as an editor and reporter for The Dallas Morning News. She graduated from TCU's Bob Schieffer College of Communication with a focus on radio-TV-film and news-editorial journalism. Connect with her on TwitterorLinkedIn.
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