Credit Cards

The Travel Insurance Coverage You Can Expect From Credit Cards

Most travelers are aware that credit cards typically have features that allow them to skip some insurance-related fees for car rentals charged to the card. But even some savvy card holders may not realize that their cards may also offer travel insurance coverage. These perks can save you money if you typically pay for third-party travel insurance, or offer protection you may never have had against canceling a trip, becoming ill during it or losing your bags.

Here’s a rundown of what you can expect. Needless to say, coverage isn’t universal for all cards, and provisions vary among the cards that do provide it. (As a rule, as with other perks, issuers’ premium cards that have an annual fee tend to offer more coverage than regular cards.) Be sure to read through the specific terms of your cards before you book, even if you did so for your last trip--since these are always subject to change.

Travel Accident Insurance

Travel accident insurance through credit cards typically provides coverage in the event of death or dismemberment during the course of common carrier travel – that is, travel on a vehicle that’s open to anyone who pays a fare or buys a ticket and runs on a regular schedule (e.g. planes, trains, ferries, and cruise ships).

This coverage works much like a life insurance policy. For example, if you were to suffer loss of life, a claims adjuster would determine your expected future earnings, and pay out the amount to your beneficiary, up to the maximum limit. The amount of money this benefit can pay out will typically vary between $100,000 and $500,000.

Typically, the coverage is only extended to the cardholder and their immediate family. How immediate family is defined varies from issuer to issuer. In a ValuePenguin analysis, we found that Chase has one of the most inclusive definitions, encompassing your spouse or domestic partner and their children, including adopted children or stepchildren; legal guardians or wards; and a sibling or siblings.

Mind you, the list of exclusions on travel accident insurance is hefty. For one, you must truly be the victim of an accident. Most credit cards will not provide any payout in the event of physical illness, disease, pregnancy, childbirth or miscarriage, bacterial or viral infection, bodily malfunctions, or medical or surgical treatment.

Baggage Insurance

If your credit card provides lost luggage insurance, you’ll likely be covered for loss or damage sustained to carry-on or checked in baggage. There are, however, limits on this benefit. The total claim is typically capped at a few thousand dollars per person per trip, and some issuers have separate (and often lower) limits on certain categories of item, such as jewelry.

The payout for this benefit will be equal to the replacement value of the items lost or damaged, up to the maximum payout amount. That means if the covered items you lost were valued at $300, and your maximum payout amount is $500, you will receive just the $300. If you lost $700 worth of items, in that same scenario, you would be eligible to receive just $500.

In certain cases, your card may also cover damages that result from your bags being delayed - though only for items that are deemed vitally important. Interim purchases of replacement toothbrushes, laptops or even contact lenses are often excluded from claims, for example. But you might be able to get reimbursed for, say, renting a tuxedo if your lost bag was carrying your own tux, and it showed up after the gala event for which you needed it.

Trip Cancellation Insurance

This the rarest type of travel insurance provided by credit cards. When we last surveyed cards’ travel insurance offerings, Citicard was notable for offering it on all its cards, and American Express, Capital One and Discover providing it on none of theirs.

This coverage protects individuals against damages resulting from trip cancellation or interruption. If your flight is cancelled by the carrier as a result of inclement weather, or if you miss a non-refundable flight due to a covered reason, you may be eligible to receive money back through your card company.

However, this coverage will commonly only reimburse for the cost of the flight you missed; if you book on another airline at a higher fare, then, the card issuer will not reimburse you for the difference. Also, any damages that result from the interruption, such as losing a night at hotel, will not be covered in most cases. (Some premium credit cards do offer limited covered for this type of loss, though limits are usually set pretty low.)

Joe Resendiz

Joe Resendiz is a former investment banking analyst for Goldman Sachs, where he covered public sector and infrastructure financing. During his time on Wall Street, Joe worked closely with the debt capital markets team, which allowed him to gain unique insights into the credit market. Joe is currently a research analyst who covers credit cards and the payments industry. He earned a bachelor’s degree from the University of Texas at Austin, where he majored in finance.

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How We Calculate Rewards: ValuePenguin calculates the value of rewards by estimating the dollar value of any points, miles or bonuses earned using the card less any associated annual fees. These estimates here are ValuePenguin's alone, not those of the card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer.

Example of how we calculate the rewards rates: When redeemed for travel through Ultimate Rewards, Chase Sapphire Preferred points are worth $0.0125 each. The card awards 2 points on travel and dining and 1 point on everything else. Therefore, we say the card has a 2.5% rewards rate on dining and travel (2 x $0.0125) and a 1.25% rewards rate on everything else (1 x $0.0125).

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