Question: I see the need for travel insurance, and some credit cards offer protection that I think is pretty comparable to what one could purchase in the marketplace. Do I still need travel insurance if I have coverage through a credit card?
Answer: The short answer is maybe not. Depending on which travel credit card you have and how expensive the trip you've booked is, the coverage you already get through your card can be enough to protect your investment.
There are limitations and exclusions that you need to be aware of so you can make the right choice about your travel insurance needs before you get on that flight.
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To understand when your card's coverage might be enough and when you might need to buy separate travel insurance, let's take a closer look at some examples of how credit cards with travel insurance work.
How a credit card's travel insurance works
For an example of how your credit card might protect you if your trip goes awry, let's look at the American Express Platinum Card.
All cardholders automatically receive the following benefits just by paying for that trip with their Amex Platinum:
- Emergency medical insurance (for cardholders under 65 when traveling out of the country)
- Trip cancellation insurance
- Trip interruption insurance
- Flight delay insurance
- Baggage delay insurance
- Lost or stolen baggage insurance
- Car rental theft and damage insurance
- Hotel burglary insurance
- Travel accident insurance worth up to $500,000
While that sounds like a pretty comprehensive package of coverages, it's important to read the fine print to make sure you can use those benefits when you need them.
To have emergency medical expenses covered, for example, you need to call the card's Global Excel claims service provider before receiving any treatment (unless it's medically impossible to do so). If you get treatment first, then call after, it might not be covered.
This can be true when purchasing travel insurance directly from a provider, as well. Part of getting coverage is reading through the policy carefully to understand what's included, what's excluded and what hoops you'll need to jump through to get your claim paid out.
With credit card travel insurance, you often must try, then fail to get compensation from the airline, hotel or whichever party is responsible for the issue.
It's also worth noting that coverage often only applies to the portion of the trip paid for with the credit card in question. If you booked your flight with your Amex Platinum, that's covered.
But if you used your World of Hyatt card to book your hotel, that booking wouldn't be covered under the Amex Platinum's travel insurance.
That means you're limited to using a single card to pay for your entire trip if you want all of it to be protected by those benefits. With a separate travel insurance policy, you'd be able to use any combination of credit cards to maximize your point earning and redemption potential.
Most travel cards have limited coverage
The Amex Platinum used in the example above is a bit of an outlier. With the $895 annual fee, it makes sense that a premium travel card would offer such robust travel insurance.
But if you're using a lower-tier travel card, the benefits are likely more limited. Typically, you'll only see trip cancellation insurance and possibly lost baggage protection. Many credit cards also come with rental car insurance as a standard perk now, too.
These are definitely useful and can be more than enough coverage for shorter, inexpensive trips.
Read through the terms and conditions carefully before your trip to understand any exclusions or limitations.
Some circumstances might require extra coverage
Depending on the coverage your card offers, there are situations where you might want to look into separate travel insurance. There are some types of coverage that you can get in a separate travel insurance policy but are less commonly found in the coverage offered by credit cards. Examples include:
- Cancel for any reason. Even when a credit card includes "trip cancellation protection," this is usually limited to a narrow set of reasons, such as the airline canceled your flight or a prolonged government shutdown grounded most flights. It won't pay out if you cancel your trip because your daughter went into labor a week earlier than expected or because you changed your mind. If you think there's a risk that you might need to cancel the trip, "cancel for any reason" travel insurance can make sure you get your money back.
- Travel medical insurance: Except for premium cards like the Amex Platinum, most travel credit cards don't include any kind of supplemental health coverage. Moreover, for older travelers, you might need a separate policy if the credit card's coverage has an age limit.
- Annual travel insurance: If you travel frequently, you can get multitrip or annual travel insurance. These are longer-lasting policies that give you the comprehensive coverage of a separate policy at a lower price than you'd pay if you bought short-term coverage for each trip. At this point, it's worth comparing the cost and coverage of an annual policy with the cost and overall benefits package of a premium travel card, which might have great travel insurance and other travel perks.
Always check your credit card's travel insurance first
The bottom line is that most travel cards offer at least some degree of trip protection. In many cases, that included protection might already be enough. Even if you want more coverage than you get with your card, knowing what you've already got can help you avoid overpaying for overlapping travel insurance.
Finally, if you travel often, it's worth looking into a premium travel credit card such as the American Express Platinum card or the Chase Sapphire Reserve. The annual fees are high but the more comprehensive travel insurance and many other perks can more than make up for those fees for a frequent flyer.
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