If you are a proud owner of a platinum or rewards credit card, you may have access to a complimentary travel insurance program. These are popular enticements to get people on board their credit card. The premise is simple – every time you buy overseas (sometimes domestic) travel with your credit card, you are covered by travel insurance. This might even extend to your entire family, such as your spouse and children.
Though it sounds like a great deal, what does your “free” travel insurance cover? Is it cheaper? Should you consider buying a travel insurance policy above what your credit card offers? We attempt to answer all these questions below.
How much coverage do you get?
This is a “how long is a piece of string” question. Some cards, even platinum and black cards include baggage insurance, smartphone insurance, travel delay insurance, public liability, roadside assistance, car rental damage waiver and much more. However, the amount of cover may be capped compared with taking out a standalone policy. A cap, especially in countries like the United States, may leave you out of pocket. Some card policies may not cover adventure sports or risky activities such as rock climbing, for example.
Costs – before and after
Complimentary travel insurance with your credit card costs nothing – upfront. This is all provided without additional cost when you purchase airline tickets or travel using the card which offers the insurance. If you take a few trips a year, you may get more value out of your card’s annual fee than not. The only downside is the excess – credit card travel insurance excesses (or deductibles) can top out at $500, while standalone policies cost about a fifth of that ($100 at most.)
Convenience and flexibility
Though credit card insurance is complimentary, the onus is on the cardholder to activate the coverage before they depart. Standalone cover kicks in on your nominated date and expires when your trip ends. Sometimes credit card travel insurance may only cover you for a limited time, which expires whether you’re back or not. Credit card policies may not be altered; while standalone policies may allow you to adjust your level of cover, cover pre-existing conditions, and give allowances for variable excess fees.
Domestic vs. international travel
Complimentary credit card travel insurance covers your trip worldwide, no matter where you tend to go. Standalone policies (and their costs) will depend on where you travel to – US travel insurance is much higher than Europe for example. Domestic travel is usually not covered by your credit card policy. Some cards might offer inconvenience insurance or rental car insurance, but doesn’t cover medical or liability bills.