travel insurance vs.  Credit Cards: How Travel Coverage Compares

travel insurance vs. Credit Cards: How Travel Coverage Compares

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  • Travel insurance and some credit cards can protect you from financial loss while traveling.
  • Travel insurance offers more comprehensive coverage that protects you on one or multiple trips.
  • Credit cards can cover trip cancellations, lost luggage, and other events during trips booked with your card.

Anything can happen during the trip. Flight delays, lost luggage, or even unexpected injuries or illnesses. When these things happen, the travel insurance or travel protections included with your premium credit card can help, providing medical coverage, offsetting your financial losses, or even reimbursing you in full.

But do you need both travel insurance and credit card travel protections? Here are details on both and tips for deciding which is right for your trip.

Travel Insurance vs. Credit Card Travel Protections: At a Glance

Many credit cards offer travel protections that can help you in certain unexpected travel situations. But they are not exactly the same as a separate travel insurance policy.

Here’s how the two differ on a high level:

  • Travel insurance: Travel insurance is coverage you buy for a single trip or for multiple trips in a year. It typically covers costs associated with trip cancellation, trip delay, a medical emergency, and other unforeseen events that may occur while traveling.
  • Credit card travel protections: These are benefits automatically included with certain consumer credit cards. They often provide coverage for delays, lost luggage, collisions with rental cars, and other events during the trip. Credit cards sometimes advertise these protections as a type of travel insurance, even though they are not actually a separate insurance policy.

Generally speaking, designated travel insurance is more comprehensive than the protections offered by a credit card. Still, it’s worth comparing both options, especially if you’re going on an expensive trip.

“It’s always wise to compare your credit card protection to a travel insurance plan,” says Carol Mueller, vice president of Berkshire Hathaway Travel Protection. “Credit card protection may not include the full, complete, comprehensive coverage that a travel insurance plan would.”

What is travel insurance?

Travel insurance protects you from financial losses related to travel. “There are three main areas of coverage: protect yourself, protect your personal items, and protect your investment,” says Christina Tunnah, general manager of Americas and global marketing for World Nomads, a provider of travel insurance and security services.

Travel insurance works like any other insurance policy. When a covered event occurs, such as your trip being canceled or you are injured while traveling, you file a claim with your insurer. If accepted, the company reimburses you for costs up to the limits of your coverage.

“Most people have no idea that their health insurance doesn’t cover them abroad,” says Shane Mahoney, founder of Lugos Travel, a travel agency. “So a broken arm from a slip and fall or a heart attack can be financially devastating.”

There are single trip travel insurance policies and annual travel insurance plans, which cover all your trips within a 12-month period. According to Meghan Walch, product manager for insurance comparison site InsureMyTrip, single-trip policies tend to cost between 4% and 10% of total trip costs, prepaid and non-refundable. So, on a trip that costs you $10,000 to book, you’d pay around $400 to $1,000 for insurance, depending on what coverages you want.

Aside from the added cost of travel insurance, the main difference between these policies and credit card protections is that an insurance policy will generally cover emergency medical expenses and the costs of evacuating a traveler for medical care. necessary.

“Some travel insurance policies also provide epidemic coverage endorsements, which provide coverage for customers who become ill with COVID-19 or a future epidemic, are individually ordered to quarantine, or are denied boarding due to suspected illness. ”, says Daniel Durazo, director. of external communications at Allianz Partners, a provider of travel insurance.

Separate travel insurance policies also tend to offer stronger cancellation coverage. In many cases, credit card protections limit reimbursement to just $10,000 per trip, while travel insurance often goes up to $100,000. Most credit cards will only cover trips purchased with the card or your rewards points.

travel insurance example

According to Tunnah, the medical protections that come with travel insurance “cover accidental injuries and illnesses, such as tripping on a cobblestone street in Croatia or getting food poisoning in Thailand.”

If any of the above were to happen to you while traveling, you would file a claim with your insurance company, either by calling an agent, mailing or faxing a claim, or using the insurer’s website or mobile app. Generally, you must do this within 90 days of the event, although the sooner you can apply, the better.

When filing a claim, you must also provide proof of your financial loss: a receipt from the medical clinic you used or a medical statement from the doctor. Once the claim has been reviewed and approved, you will receive a reimbursement payment, usually in the form of a check mailed to your home address.

What are they credit card travel protections?

Many premium credit cards offer travel protections to cardholders, but the exact coverages depend on the credit card. Generally, only trips booked on that card qualify for coverage.

“Credit card travel insurance has a great advantage that interests travelers: it’s usually free or included in the card’s annual fee,” says Durazo. “Credit card travel benefits can be useful for smaller things like travel delays or lost luggage, but only travel insurance provides reliable protection in real emergencies, like expensive medical emergencies like hospital visits and evacuations.”

In some cases, however, a credit card can cover catastrophic accidents. Chase Sapphire, for example, offers $100,000 in coverage for an accident that causes loss of life, speech, hearing, or use of a hand, among other life-altering injuries.

Also, credit card coverage limits tend to be much lower. The Sapphire card offers up to $20,000 per trip in cancellation coverage, while a basic travel insurance plan from Travel Guard offers five times more coverage.

Example of credit card travel protections

Your credit card’s travel protections could come in handy if an airline loses your luggage. In this scenario, you would file a claim with the carrier and then with your credit card issuer. Once approved, you will be reimbursed for the full value of the lost items, less any reimbursement you may have received from the carrier.

For these types of claims, you will typically need to submit your claim form along with a travel itinerary, proof of your claim with the carrier, copies of associated receipts (for your checked baggage fee, for example), and copies of receipts from any replacement items such as a new suitcase, wallet, or anything else lost by the carrier.

The bottom line

Both travel insurance and credit card protection can come in handy if your trip is canceled or you experience some other loss while traveling, but the right choice will depend on the specifics of your trip and budget.

“Every trip is different and every traveler has different needs and concerns,” says Walch. “For a short trip to a relative’s house in the US, travel insurance offered through a credit card may suffice. However, if you’re traveling abroad or going on a longer vacation and If you’re worried about unknown emergency medical expenses or losing money due to a cancellation, you may want to consider a traditional travel insurance policy.”

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