Guide to travel insurance with credit cards

Travel insurance has your back when the unexpected happens on a trip. In fact, many countries—from Anguilla to the United Arab Emirates—require visitors to have travel insurance upon arrival.

One way to protect your investment in a grand getaway or storybook honeymoon is through travel insurance. A number of credit cards offer travel insurance, covering everything from canceled or interrupted travel to lost luggage and damage to a rental car. That said, the type of coverage varies.

According to Carol Mueller, vice president of Berkshire Hathaway Travel Protection, about 25 percent to 30 percent of leisure travelers in the United States purchase travel insurance.

But before you purchase a travel insurance policy for your next vacation or hop on a flight assuming your credit card’s got you covered, here’s what you should know about travel insurance and how to pick the right coverage for you.

What is travel insurance?

Travel insurance (sometimes called trip insurance) will reimburse your prepaid travel expenses if things go awry or compensate you in the event of an emergency.

Depending on the type of coverage you have — either offered via a credit card or with a travel insurance policy you paid for — you may get your money back if you have to cancel the trip before you depart or if you cut your trip short for an unforeseen reason.

Credit cards may include types of coverage that you won’t find with a travel insurance policy you purchase, such as coverage for rental cars. And the travel insurance you purchase may offer coverage that your card doesn’t include, such as medical evacuation insurance.

Who needs travel insurance?

In some cases, the insurance benefits provided by your credit card may be enough. In other cases, you might want to boost your benefits by purchasing travel insurance. The difference may depend on where you’re headed and how much the trip costs.

If you spend $200 on an airline ticket to visit your parents one state over, you might not need additional travel insurance. But if you’re going on a cruise that costs thousands of dollars and need to make payments months in advance, you might want the extra protection that travel insurance offers.

To determine what kind of travel insurance you need, including how much coverage you need in terms of dollars, consider the following questions:

• Will you be traveling domestically or internationally?
• How long will you be traveling? Is it a short trip (seven days or less) or a long trip?
• Are you traveling for business, pleasure or an emergency?

For example, if you’re going on a quick business trip, you will likely not need the same level of travel insurance coverage as if you’re heading out on a weeklong vacation outside the U.S.

How much does travel insurance cost?

If you have a credit card that offers travel insurance, then there’s no extra cost. You generally need to just use that card to pay for the trip in order to be eligible for coverage.

If your cards don’t meet your travel insurance needs — or you just want to be covered for any contingency — you may want to supplement your coverage by purchasing a travel insurance policy.

A travel insurance policy usually costs about 5 percent to 7 percent of the cost of the trip, Mueller says.

The main factors in the price of a travel insurance policy are the type of trip, including cost, length and destination, and the traveler’s age and any existing medical conditions.

What are the types of travel insurance?

There can be big differences between credit card coverage and a travel insurance policy you pay for out of pocket. The types of coverage offered can also vary greatly from one credit card to another.

Trip cancellation and trip interruption insurance

Trip cancellation insurance can reimburse your nonrefundable travel costs if you need to cancel your trip for a covered reason, such as illness or injury, before you depart.

Trip interruption insurance can reimburse your costs when you’re already on the road and your trip is interrupted for a covered reason, such as an illness or a natural disaster.

Many credit cards provide either trip cancellation, trip interruption insurance or both. There can be wide variations in coverage limits for trip cancellation/interruption insurance, and premium cards usually offer more generous policies.

For example, the Chase Sapphire Reserve, which has a hefty $550 annual fee, offers both trip interruption and cancellation insurance that provides coverage of up to $10,000 per person (up to $20,000 per trip) for prepaid, nonrefundable travel expenses. Meanwhile, the no-annual-fee Wells Fargo Visa Signature credit card* provides up to $2,000 per person in trip cancellation or interruption insurance.

Travel accident insurance

Travel accident insurance (often called flight accident insurance or accidental death and dismemberment insurance) is included with several credit cards. This insurance can provide a payout if you are killed or lose a limb or one of your senses — such as sight or hearing — while traveling on a common carrier.

The Capital One Venture Rewards Credit Card, for example, provides up to $250,000 of such insurance.

Emergency medical and evacuation insurance

This type of insurance covers emergency evacuation if you or your spouse, domestic partner or dependent children become seriously injured or ill while you’re traveling. Both the Citi Prestige® Card* and Chase Sapphire Reserve cards cover emergency services and transportation up to $100,000.

Once you are evacuated to a hospital, though, you may have to foot your own medical bills.

According to Steven Benna, spokesperson for the travel insurance site Squaremouth.com, Medicare generally does not pay if you have a medical emergency outside of the United States, and many private health insurance plans may not cover you if you’re traveling abroad.

Travel insurance policies you purchase on your own can include both emergency evacuation insurance and emergency medical insurance.

‘Cancel for any reason’ insurance

Cancel for any reason (CFAR) insurance will allow you to earn refunds on hotels and flights even if you cancel these reservations for reasons not included by traditional travel insurance policies.

These policies can be expensive, with most carriers who provide them offering them as an upgrade to a traditional travel insurance policy. Not all CFAR policies reimburse all your travel costs. Some policies, for instance, only reimburse you for 75 percent of your costs.

Trip delay insurance

Both comprehensive travel insurance policies and many credit cards, including some airline credit cards, will cover your expenses if your trip is delayed for a certain amount of time. The United Explorer Card, for example, will cover expenses such as meals or lodging if your trip is delayed more than 12 hours or if an overnight stay is required.

Lost or delayed baggage

Comprehensive travel insurance will typically cover the purchase of clothing and other essentials if your baggage is delayed. Some credit cards will also cover lost or delayed luggage. The Capital One Venture Rewards Card, for example, reimburses you for up to $3,000 if your luggage is lost.

Auto insurance

Credit cards may also offer travel protections that extend beyond flights, hotels and cruises. A number of credit cards, including the American Express® Gold Card, will cover you if you decline the collision damage waiver when renting a car and your rental vehicle is damaged or stolen.

Comprehensive insurance

Comprehensive insurance is by far the most popular type of coverage sold by travel insurance companies, Mueller says.

It bundles different coverages for one flat fee and can include trip interruption and cancellation insurance, accidental death and dismemberment insurance, travel delay insurance, emergency medical, dental and evacuation insurance and baggage delay insurance.

Who is covered by travel insurance?

Benefits provided by your credit card may cover you, your spouse or domestic partner and your dependent children. If you purchase travel insurance, you can buy a policy just for yourself or for your whole family if you are traveling together.

Be sure to check your benefit details or clearly communicate with an insurance provider when purchasing a policy to ensure your travel insurance offers sufficient coverage for all travelers in your party who need it.

How to find travel insurance

If you’ve got a trip coming up, first check your credit cards to see which types of coverage they provide. Travel insurance benefits on Chase cards, for example, tend to be impressive, especially on cards with a higher annual fee. You can also find solid travel insurance benefits with American Express and other issuers.

If you’re in the market for a new card and you’ve got a big trip on the horizon, you might want to check the travel benefits offered before applying for the card. You might even land a sweet sign-up bonus that will help cover some of your travel costs.

If you want to supplement your card benefits with other coverage, reach out to your current provider for home or auto insurance or check out travel insurance aggregators such as InsureMyTrip or SquareMouth.

Mueller recommends buying travel insurance within 15 days of making a deposit or paying for your trip.

Considering many policies have exclusions for preexisting conditions, you don’t want to be diagnosed with a disease and then be unable to buy travel insurance. Another reason to buy insurance well ahead of your trip includes the potential for unforeseen circumstances, such as a natural disaster or terrorist attack near or at your trip’s destination.

What to look out for with travel insurance

Changes to your credit card benefits

Even if one of your credit cards offered travel insurance when you initially signed up, card issuers can change or remove benefits, so be sure to check your coverage before you depart. By the same token, perhaps you’re unaware of coverage offered by a card or, less commonly, one of your existing cards may also start offering travel insurance, so it’s wise to check the offerings on all your cards before a trip.

Exclusions and fine print

Both travel insurance that comes with your credit card and coverage you purchase will have exclusions, so read the fine print. For example, travel insurance typically won’t cover you for preexisting medical conditions or if you’re traveling against the advice of a physician.

Accidents arising from certain activities may also be excluded from coverage — if you’re participating in a competitive sport, for example, or a high-risk activity like sky diving. If your itinerary includes such activities, you might be able to purchase a special policy, often tagged as an “adventurer” package.

Bottom line

Whatever you do and wherever you go on your next trip, you’ll want to be prepared. To be safe, be sure your next trip’s planning involves checking your credit card travel insurance benefits and purchasing additional travel insurance if you feel it’s needed.

*All information about Wells Fargo Visa Signature and Citi Prestige has been collected independently by CreditCards.com. The issuer did not provide the content, nor is it responsible for its accuracy.