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 more comprehensive coverage that protects you on one or multiple trips.
• Credit cards may cover trip cancellations, lost bags, and other events during trips booked with your card.

Anything can happen while traveling. Flight delays, lost luggage, or even unexpected injury or illness. When these things occur, travel insurance or the travel protections included with your premium credit card may be able to help, providing medical coverage, offsetting your financial losses, or even reimbursing you fully.

But do you need both travel insurance and credit card travel protections? Here are details on both and tips for deciding which one 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 aren’t exactly the same as a separate travel insurance policy.

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

• Travel insurance: Travel insurance is coverage that you purchase either for a single trip or for multiple trips in a year. It typically covers the costs associated with a trip cancellation, trip delay, medical emergency, and certain 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 baggage, rental car collisions, and other events during travel. Sometimes credit cards advertise these protections as a type of travel insurance, though they’re not actually a separate insurance policy.

Generally speaking, designated travel insurance is more exhaustive than the protections offered by a credit card. Still, it’s worth it to compare both options, particularly if you’re taking an expensive trip.

“It is always wise to check your credit card protection against a travel insurance plan,” says Carol Mueller, a vice president at Berkshire Hathaway Travel Protection. “Credit card protection may not include the full, bundled, comprehensive coverage 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: Protecting yourself, protecting your personal items, and protecting your investment,” says Christina Tunnah, general manager of Americas and global marketing at World Nomads, a travel insurance and safety services provider.

Travel insurance works much like any other insurance policy. When a covered event occurs, like your trip is canceled or you’re hurt while traveling, you file a claim with your insurer. If it’s accepted, the company reimburses you for the costs up to your coverage limits.

“Most people have no idea that their health insurance does not cover them abroad,” says Shane Mahoney, founder of Lugos Travel, a travel advisory. “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 of your trips within a 12-month period. According to Meghan Walch, director of product for insurance comparison site InsureMyTrip, single-trip policies tend to cost between 4% to 10% of your total prepaid, nonrefundable trip costs. So, on a trip that costs you $10,000 to book, you’d pay around $400 to $1,000 for insurance, depending on which coverages you want.

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

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

Separate travel insurance policies also tend to offer more robust cancellation coverage. In many cases, credit card protections cap reimbursement at just $10,000 a trip, while travel insurance often goes up to $100,000. Most credit cards will also only cover trips purchased with the card or its reward points.

Example of travel insurance

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

If one of the above were to happen to you while traveling, you’d file a claim with your insurance company — either by calling an agent, submitting a claim via mail or fax, or using the insurer’s website or mobile app. You usually need to do this within 90 days of the event, though the sooner you can file, the better.

When submitting a claim, you also need to 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’ll receive a reimbursement payment, usually via a check mailed to your home address.

What are credit card travel protections?

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

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

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

Additionally, 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 as much coverage.

Example of credit card travel protections

Your credit card 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 your credit card issuer. Once approved, they’d reimburse you for the total value of the items lost, minus any reimbursement you 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 any associated receipts (for your checked baggage fee, for example), and copies of receipts for any replacement items like a new suitcase, wallet, or anything else lost by the carrier.

The bottom line

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

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