A lot of mid to high-end credit cards offer various travel insurance benefits to their cardmembers. Before I talk about the drawbacks, let’s take a look at the different kinds of coverage that being offered:
Travel Accident Insurance: This benefit typically provides coverage of up to $100,000 to $500,000 in the event of accidental death or dismemberment during eligible Common Carrier Conveyance travel purchased with the credit card.
But what is Common Carrier Conveyance you ask? Well, it’s an insurance-industry term that is used to refer to travel as a ticketed passenger on planes, trains, ships, and buses. And what is dismemberment? It’s the loss (detachment) of a limb, finger, or toe.
Trip Delay Insurance: Now that they’re packing us in planes like sardines and it’s not uncommon to get bumped and/or a delayed flight, I think this credit card travel insurance benefit is a good perk to have. If an unexpected delay occurs, it will typically reimburse you up to a certain amount per day (like $150) to pay for your meals, hotel room, and other expenses incurred during the delay.
Trip Cancellation Insurance: If your nonrefundable trip that was paid for with the card is canceled due to a “covered event” then you will be reimbursed for it, up to the coverage amount (like $2,500).
Of course the question is… what is considered a covered event? The definition varies by issuer, but it’s usually things like an unexpected illness/injury or death of a family member that prevents you from taking your trip.
Luggage Insurance: Insurance coverage for lost/stolen/damaged luggage as a ticketed passenger. On some cards it only applies to checked luggage and on others it applies to both checked and carry-ons.
This coverage is almost always secondary insurance. That means if your suitcase and its contents were worth $700 and the airline’s coverage will reimburse you for that amount, you can’t make a claim on your credit card. You make a claim under your card when your losses are more than the airline’s provided coverage.
Hotel/Motel Burglary Insurance: This applies to eligible personal property stolen from a hotel room. I have seen this benefit on some Canadian and Australian credit cards, but here in the United States I’ve only seen it on a couple premium MasterCards.
Car Rental Collision Damage Waiver (Secondary): More commonly known as credit card car rental insurance, this benefit provides collision coverage on eligible rental vehicles. This coverage is secondary so it won’t apply if your regular auto insurance covers you while driving a rental.
Car Rental Collision Damage Waiver (Primary): Same as the above, but coverage is primary, meaning it will be the first to pay out. What’s nice about this is that it won’t require the eligible collision bill to be charged to your regular insurance (which of course might cause your premiums to go up). Very few credit cards offer this and the ones that do all charge an annual fee.
What are the drawbacks?
If the circumstances are right, travel insurance on credit cards can be extremely valuable. However like they say, the devil is in the details. As you would expect, there are all sorts of rules, limitations, and exclusions for each benefit. To further complicate matters, each card and issuer has different criteria. For this reason, it’s extremely important to read all that fine print on your credit card travel benefits guide.
With that said, here are a couple things in particular I want to warn you about…
Car Rentals: There are all sorts of tricks and traps when it comes to this. For example, coverage may apply to collisions, but vandalism probably won’t be covered. You also may not be covered for administrative costs, loss of vehicle use, and the list goes on. Please see my article about credit card car rental insurance to find out more.
Travel Accident: It’s nice to know I might be insured for say, $250,000 in the event of death as a Common Carrier ticketed passenger, but it won’t be benefiting me directly if I’m not here!
However my heirs/spouse might get a payout, but they definitely won’t if they aren’t aware of this benefit! I always say it’s not a bad idea to mention something in your will about this – i.e. “If my death occurred while traveling as a ticketed passenger, check if my credit card travel accident insurance is applicable.” I wonder how many eligible claims go unanswered, simply because the cardholder’s family never thought of this benefit?
Which cards are best for travel protection in 2013?
These sponsored selections are definitely worth looking to if you want a wide array of travel insurance benefits…
Chase Sapphire – There’s a no annual fee version and an $95 fee version. Both have decent travel benefits.
American Express Gold – This “Premier Rewards” version offers a nice selection of travel insurance services and perks, as well as great rewards. The annual fee is $175.
This article was updated for 2013. Although I’ll do my best to update this page whenever needed, please realize the benefits listed above may have changed since time of writing. For the cards listed above, please consult the issuers for current benefit details, exclusions, and limitations.