Travel Insurance Vs. Credit Cards: How Trip Coverage Compares

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

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

But do you need both travel insurance and credit card travel protection? Here are details on both and tips to help you decide which is right for your trip.

Travel insurance vs. credit card travel protection: at a glance

Many credit cards offer travel protection that can help you in certain unexpected travel situations. But they’re not exactly the same as separate travel insurance.

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

  • Travel insurance: Travel insurance is coverage that you buy for either a single trip or for multiple trips in a year. It usually covers the costs related to a trip cancellation, a trip delay, a medical emergency and certain other unforeseen events that may occur during the trip.
  • Travel protection for credit cards: These benefits are automatically included with certain consumer credit cards. They often offer insurance coverage for delays, lost luggage, collisions with rental cars, and other incidents during the trip. Sometimes credit cards advertise this protection as a form of travel insurance, when in fact it is not a separate insurance policy.

In general, certified travel insurance is more comprehensive than the protection offered by a credit card. Still, it’s worth comparing both options, especially if you’re going on an expensive trip.

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

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what is travel insurance?

Travel insurance protects you against financial losses related to the trip. “There are three main areas of coverage: protecting you, protecting your personal belongings, and protecting your investment,” said Christina Tunnah, general manager of Americas and global marketing for World Nomads, a travel insurance and security services provider.

Travel insurance works much like any other insurance policy. If an insured event occurs, e.g. B. If your trip is canceled or you are injured during the trip, file a claim with your insurer. If accepted, the company will reimburse you up to your coverage limit.

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

There is single trip travel insurance and annual travel insurance that will cover all your trips within a 12 month period. According to Meghan Walch, director of product for insurance comparison site InsureMyTrip, single trip policies typically cost between 4% and 10% of your total prepaid non-refundable travel expenses. So, for a trip that costs you $10,000 to book, you’ll be paying around $400 to $1,000 for insurance, depending on the coverages you want.

Aside from the additional costs that come with travel insurance, the main difference between these policies and credit card protection is that an insurance policy usually covers emergency medical expenses and the cost of evacuating the traveler for necessary medical care.

“Some travel insurance policies also offer epidemic coverage, which protects customers who contract COVID-19 or a future epidemic, are individually quarantined, or are denied boarding due to suspected illness,” said Daniel Durazo, Director of External Communications at Allianz Partners. a travel insurance provider.

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Separate travel insurance policies also tend to offer more robust cancellation protection. In many cases, credit card protection limits reimbursements to just $10,000 per trip, while travel insurance is often as high as $100,000. Most credit cards also only cover travel purchased with the card or its rewards points.

Example travel insurance

According to Tunnah, the medical protection that comes with travel insurance “covers accidental injuries and illnesses — like stumbling on a cobblestone street in Croatia or getting food poisoning in Thailand.”

If any of the above happened to you while travelling, you would make a claim with your insurance company – either by calling a representative, submitting a claim by mail or fax, or through the insurer’s website or mobile app. Typically you must do this within 90 days of the event, but the sooner you can submit the better.

When you apply, you must also provide evidence of your financial loss – a receipt from the medical clinic you used or a medical certificate. Once the claim has been reviewed and approved, you will receive a refund payment, usually by check, sent to your home address.

What are Travel protection for credit cards?

Many premium credit cards offer cardholders travel protection, but the exact coverage depends on the credit card. As a rule, only trips booked with this card are eligible for cover.

“Travel insurance with credit cards has one major benefit that travelers care about: It’s usually free or included in the card’s annual fee,” says Durazo. “The travel benefits of credit cards can be useful for minor things like travel delays or lost luggage, but only travel insurance offers 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. For example, Chase Sapphire offers $100,000 coverage for an accident resulting in loss of life, speech, hearing, or use of a hand, among other life-altering injuries.

In addition, credit card coverage limits are usually much lower. The Sapphire card offers up to $20,000 in cancellation protection per trip, while basic travel insurance from Travel Guard offers five times as much coverage.

Example of credit card travel protection

Your credit card travel protection 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, they will refund you the total value of the lost items minus any refunds you received from the carrier.

For these types of claims, you will typically need to present your claim form along with an itinerary, proof of your claim with the airline, copies of any related receipts (e.g. for your checked baggage charges) and copies of receipts for any replacement items such as a new suitcase , a wallet or other items lost by the carrier.

The final result

Both travel insurance and credit card protection can prove helpful if your trip is canceled or you suffer some other loss during the trip, but making the right choice depends on the specifics of your exact trip and your budget.

“Every trip is different and every traveler has different needs and concerns,” says Walch. “For a short trip to a family member’s home in the US, the travel insurance offered through the credit card may be sufficient. However, if you are traveling abroad or on an extended vacation and are concerned about unknown emergency medical expenses or loss of money due to cancellation, then consider traditional travel insurance.”

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