Is the travel insurance offered through my credit card enough?

If you are lucky enough to be going on an overseas holiday, make sure you don’t leave home without two things: your passport and travel insurance.

Nothing will make a trip take a turn like finding yourself in a bind without travel insurance. While we usually like to keep our opinions on the necessity of certain types of insurance to ourselves, we have no such tendencies when it comes to travel insurance.

Did you know: Travel Insurance generates the largest percentage of complaints to the insurance and savings ombudsman of all insurance policies every year

Now that we’ve settled the argument of whether you should get travel insurance, let’s investigate this whole “travel insurance offered through a credit card” thing and assess what the deal is, including the pros and cons.

How does travel insurance through your credit card work?

Firstly, you have to meet some eligibility criteria, which may differ depending on which banking institution you are with. However, the criteria tend to vary only slightly, so the following criteria (how many more times can we say “criteria”?) are typically pretty standard across the board.

  • Obviously, you can only get travel insurance via a credit card if you have a credit card. Travel insurance obtained via a credit card is complimentary — freebie for the win.
  • Not all credit cards will snag you the free stuff; it’s mainly restricted to premium and platinum cards.
  • You have to use your credit card to pay for the overseas travel — and in most cases you have to pay for it before you take off for overseas.
  • It’s not classified as travel if you’re only going one way, so to be eligible for insurance through your credit card, you need to purchase a return ticket.
  • There is typically a minimum spend required. In most cases, you have to spend at least $1,000 on prepaid travel costs. Prepaid travel costs include things like flights, tours, car hire, accommodation, etc.
  • Not only is there typically a minimum travel spend required, but some credit cards require cardholders to meet a minimum monthly spend in general in order to be eligible for travel insurance.
  • With some credit card rewards programs, cardholders will not be eligible for travel insurance cover if they used rewards points to pay for the travel.

What does it cover?

In terms, of who it covers, credit card travel insurance will typically cover you, your spouse and dependent children. However, this is not always the case. Some credit card schemes will only offer cover to one person — and that person may not be you if you are a supplementary cardholder (as opposed to the primary cardholder). So, always check to confirm who is eligible for cover.

In terms of the what, the types of things credit card travel insurance policies cover are pretty standard. They typically include the following, up to certain limits and with some caveats:

  • Unexpected cancellation of travel
  • Travel delays
  • Having to restart your journey
  • Loss or damage to your belongings
  • Replacement of travel documents, credit cards and travelers cheques
  • Emergency replacement of clothes and toiletries
  • Medical and hospital expenses.

These policies will also cover you for some darker stuff (accidental death, legal liability, hijack and funeral expenses) — again, up to certain limits and with some caveats. Um, so, have a nice trip?

What doesn’t it cover?

We know we’re starting to sound monotonous, but again, while these policies do vary, most of them have broader exclusions or conditions than standalone wordings. This means that you may have limited or no cover if you:

  • Are traveling while pregnant
  • Are planning a trip that is longer than 1 month
  • Lose an item because you left it unattended or accidentally left them behind
  • Want to participate in "Dangerous activities" while overseas such skiing or snowboarding.
  • Have pre-existing medical conditions. (typically most insurers have some conditions around this but credit card policies have lengthier exclusions than a standard wording and will not allow you to apply for extra cover.)
  • Travel taken in order to seek medical advice (you know, like those trips some people take to Thailand where they come back and they look different to when they left — and sometimes not different in a good way)

The main difference here is that a standalone travel insurance policy will include these items or at least give you the option to extend the cover if you need it.

So, I won’t need travel insurance, as well, then?

Not exactly. While your credit card insurance can function as your travel insurance, we highly recommend you compare the actual policy offered by your credit card travel insurance with stand-alone travel insurance policies to make sure you’re getting cover that you’re happy with.

Some key things to compare include the list of general exclusions — so all of the things the policy won’t cover. If you enjoy a few wines, make sure the policy you go with will cover you if you injure yourself while you’re buzzed. Some types of illnesses are also not covered (like particular strains of flu), and injuries sustained while you’re being adventurous (you know, like jumping out of a plane or snowboarding) may not be covered.

If you have a pre-existing medical condition, you’ll also want to be sure that your policy covers you if something happens and is related to that condition. And if you’re taking valuables with you (think that super-duper fancy camera you splurged on or laptops, phones, etc.), check to see that they will be covered, as well.

We’re not saying that all of these things will be covered on a stand-alone travel insurance policy. In fact, they probably won’t be among your standard cover, but the difference between credit card travel insurance and stand-alone travel insurance is that the latter can, at times, be subject to negotiation between the traveler and the insurer.

Also remember, you need to have paid for the travel using your credit card. It won’t cover you for anything if you used cash money.

But regardless of whether you are going with travel insurance offered through a credit card or you purchase a stand-alone policy, we cannot stress enough how important it is that you check the terms and conditions of your policy so that you can be confident you have cover that is appropriate for your needs.

How do I go about making a claim?

Much like a standalone product provided by a broker, you can either do it while you’re overseas or you can make the claim within a certain period after you return home (usually 30 days). The main difference with a standalone product is that a broker will be there to support your claim in help identify any issues throughout the process.

You will need supporting documentation to make your claim and you will need to pay an excess (if you make more than one claim relating to a single event, you’ll only have to pay the excess once).

So what are some of the benefits in using a standalone travel policy?

Well in most cases the policy will respond differently and with higher limits than the free credit card policy. It will also be able to handle some more complex travel plans.

Some of the common features included:

  • Specialised Emergency and Medical Assistance
  • Options for Private Hospital Cover
  • Cover for your rental vehicle excess
  • Tailored cover for high value items
  • Recreational Sports cover

If you're traveling this year think twice about where you buy your travel insurance and what you need it to cover. Get in touch with us or contact your insurance broker if you have a query they'll be able to talk you through the options and provide a suitable cover from one of their insurers. 

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