When Your Credit Card's Travel Insurance Coverage Isn't Enough

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When Your Credit Card’s Travel Insurance Coverage Isn’t Enough

Many credit cards offer travel insurance as a perk, but the limited coverage may not be adequate if you are taking an expensive trip.

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QI 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?

AIf you’re taking a short, inexpensive domestic trip – say, a $200 flight followed by a stay at your aunt’s house – the cancellation and delay protections folded into a travel credit card will probably suffice. But if you’re plunking down a large deposit on a blowout vacation or if you are heading abroad, an independent travel insurance plan is the safest option.

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Independent travel insurance policies are more comprehensive than the coverages rolled into your credit card as a free perk. A policy will cover under more circumstances if you must cancel or interrupt a trip, and you can customize your policy in a variety of ways. For example, you can add riders that cover adventure activities, allow you to cancel for any reason or include coverage of preexisting health conditions. Or you can choose a policy that allows you to cancel based on a hurricane warning at your destination instead of only if the storm directly hits the locale. You can insure the entire prepaid, nonrefundable portion of your trip, whereas a credit card carries an annual or per-trip limit. Plus, you’ll need to pay for all or part of your trip with that card, depending on the issuer’s terms and conditions.

Travel credit cards are especially weak when it comes to medical care and medical evacuation. Although many include travel accident insurance, which provides reimbursement if you or someone in your party dies or is dismembered on a trip, few cards will cover you for unexpected illnesses, injuries and medevac. But a third-party policy will cover these emergencies at limits you specify.

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Even premium credit cards with fairly strong insurance benefits have gaps. Katherine Fan, senior travel features reporter at ThePointsGuy.com, says the Chase Sapphire Reserve ($450 annual fee) and Citi Prestige ($495 annual fee) consistently rank well among credit credits for travel insurance benefits. The Reserve card offers up to $10,000 per person in cancellation and interruption insurance, reimbursement of up to $500 per ticket for expenses related to a delayed trip of more than six hours, up to $3,000 per passenger for lost luggage and up to $100 a day for five days for essentials in delayed baggage. The Reserve also provides up to $100,000 in evacuation coverage for injury or illness, plus reimbursement for emergency medical or dental expenses – but only up to $2,500. The Citi Prestige card provides up to $5,000 per trip in cancellation and interruption insurance, reimbursement of up to $500 for expenses related to a delayed trip, up to $3,000 per passenger for lost luggage, up to $500 for delayed baggage and up to $100,000 in medical evacuation coverage, but no coverage for medical expenses. But one complaint with the Citi Prestige is that it does not cover costs relating to missed connections if the delay that caused you to miss your connection was less than six hours, says Fan.

To find an independent policy, start your search at www.insuremytrip.com or www.squaremouth.com. List your prepaid, nonrefundable costs, sort the results from least to most expensive, then start at the bottom and work your way up to find the most economical plan with adequate coverage limits (we recommend a minimum of $50,000 for medical care and $100,000 for medevac). A comprehensive policy will typically run 5% to 10% of your total trip cost. Alternatively, you can insure only for emergency medical and medevac for a lower premium.

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Got a question? Ask Kiplinger at askkip@kiplinger.com.