Credit Cards

Credit Card Travel Insurance: Is It Enough?

Find out whether you can rely on your credit card for travel insurance benefits. We go over what’s typically covered, what you need to do to be successful, and when it makes sense to purchase a separate policy.

Many credit card users may be unaware they have access to travel insurance benefits. With it, they may be able to receive compensation in the event something goes wrong with your planned trip, as long as you paid for it using a credit card. You don’t necessarily need a credit card that is specifically geared towards travel. After reviewing over 40 credit card contracts, we found that even some cash back credit cards come with some level of travel insurance.

The one question consumers need to ask themselves before relying on a credit card's travel insurance policy. Does it give you enough coverage?

In general, credit card travel insurance is fairly limited. You can receive compensation for a handful of unforeseen expenses, provided you adhere to all the rules outlined in the cardmember agreement. This brief guide goes over what you can expect in terms of coverage, and when it makes sense to consider purchasing a separate policy.

What Credit Card Travel Insurance Protects You Against

Credit card travel insurance varies wildly issuer-to-issuer and network-to-network. Therefore, you should never assume that your card has a particular set of benefits. Instead, contact your bank and find out exactly what your individual policy entails. Only then will you be able to make good decisions on whether the benefits you get are to your satisfaction.

After reading through dozens of credit card contracts, we found the most frequently included benefit is travel accident insurance. It acts as a sort-of life insurance policy, in the event you suffer loss of life during a common carrier trip. Do not mistake this for medical insurance. A credit card's accident insurance will not pay for hospital stays or doctor visits.

The second most commonly included travel insurance benefits pay out in the event you lose your luggage or your trip is delayed or interrupted. These two are among the most common perils travelers face. As always, it's a good idea to read the fine print before entirely relying on these benefits. For example, not all items in your carry-on will be covered by lost luggage insurance. Most policies only account for common, inexpensive items. If you were transporting a case of precious jewels in your carry-on, don't expect to receive compensation.

Where Credit Card Travel Insurance Falls Short

Because it's free, credit card travel insurance is not very extensive. It's typically filled with gaps and low claim limits. While it's better than having nothing at all, those who want comprehensive coverage should look for other options. For example, as we mentioned above, medical emergencies are not covered by most credit card policies. This can be especially crucial for individuals who are travelling for extended periods of time.

Also, not all cards come with all the benefits one might want. In our experience, as the probability of an event happening increases, fewer credit cards will actually cover it. We found lost luggage insurance on 32 out of 42 card contracts. While the benefit is fairly common, less than 1% of travelers report being affected. More customers experience having their flight cancelled. At the same time, less than half the cards we examined had benefits that would cover such a scenario.

If you're worried about a particular event ruining your trip, and your card doesn't cover it, you should consider buying a separate travel insurance policy. These tend to be relatively inexpensive, especially as a percentage of the total cost of a vacation. Two passengers flying domestically out of New York can be covered for less than $70.

The Most Important Takeaway

You can have all the coverage in the world, and it won’t matter if you fail to adhere to your credit card company's rules. We can’t stress enough the importance of going over your benefits booklet.

Pay particular attention to what's required of you in the event you have to file a claim. Some credit card contracts we’ve seen require cardholders to call a benefits coordinator immediately after something goes wrong. Others, have very narrow windows for when you can submit all the necessary paperwork. Failing to comply with their rules will result in your claim being denied, thus rendering your benefit useless.

Robert Harrow

Robert is the head of the Credit Card vertical at ValuePenguin and has been covering the card industry since 2014. His work has been featured in Reuters, Marketwatch, the New York Times and more.