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You may not have known this, but many credit cards offer buyer protections. That means if you make a purchase and pay with your card, you may be covered by insurance or a refund guarantee. One perk associated with many travel rewards cards and some other cards is travel insurance.
Let’s dig into what travel insurance on a credit card is and how you can use it.
What Is Travel Insurance, and Why Should You Use It?
Travel insurance is coverage that helps cover various types of losses that are related to potential issues you can run into when traveling. If you buy travel insurance when booking a trip, for example, you may be able to get all or most of your money back if the trip is canceled due to a natural disaster.
You can sometimes buy travel insurance when you book through an agent or travel site. But if you pay with your credit card, you may not need to. Some credit cards offer automatic travel insurance as a perk for cardholders.
Different Types of Coverage
Not all travel insurance is the same, so you have to know what exactly is covered under your plan. Below is a rundown of some of the most common types of coverage and what they include. Read the fine print regarding your credit card benefits to find out what might be covered if you pay with your card.
Trip Delay
Trip delay covers costs that you might incur because a trip on a common carrier was delayed. A common carrier can refer to an airline, a train, a cruise ship or a bus carrying passengers long distances.
So, if you’re in the middle of a trip and your flight to the next destination is delayed, you may end up paying for meals and hotel rooms you wouldn’t otherwise. That could be covered with trip delay insurance.
Trip Cancellation or Interruption
Trip cancellation or interruption can be useful if your vacation or travel plans are cut short or canceled but the tickets and other bookings are nonrefundable. If the cancellation is for a covered reason, you may be able to get compensation under the insurance plan.
Covered reasons vary by card but might include events such as natural disasters or weather cancellations, illness or injury or political unrest.
Baggage Delay
If your baggage doesn’t arrive when you do, you may need to make a few purchases to get by while you wait. Baggage delay coverage may provide a monetary benefit in this case to help you cover those costs.
Lost or Damaged Baggage
In cases where your baggage never shows or your items are damaged in transit, insurance might kick in to help cover those losses. This can sometimes include coverage for items that are stolen from your baggage during transport.
Rental Car Insurance
Many rental car insurance companies offer coverage that helps protect you if your rental car is stolen or damaged while in your care. But if you pay with a credit card that has rental car insurance, you can waive the coverage—and the cost—at the rental counter.
Credit card rental car insurance may work alongside your own auto insurance or act as a primary insurance when you’re driving a rental car, so make sure you know the details of your coverage.
Medical Treatment or Evacuation
Medical treatment insurance helps cover the cost of healthcare if you’re sick or injured while traveling. This can be a good benefit if you travel outside of areas where your own medical insurance is accepted, such as internationally. If you need to be evacuated from a travel location to be treated elsewhere, medical evacuation insurance might cover some or all of those costs.
Tips for Using Travel Insurance
Like any insurance, credit card travel insurance can be complex. It’s important to educate yourself, act proactively and stay organized when using travel insurance. Here are some tips for getting the best results from your credit card coverage.
1. Always Read the Fine Print
Before you travel and rely on the coverage, read all the fine print. Look at the benefits and cardholder documents that arrived with your credit card to find out what coverage comes with your account. You may also be able to find this via your online account access. If you can’t find details about coverage or aren’t sure you understand what you do find, call the credit card customer service line to get an explanation of your coverage.
2. Get Preapproved to Be Safe
If something does happen when you’re traveling and you need to use your coverage, don’t assume you’re in the clear. Before you start paying for things or buying items assuming that your credit card insurance will cover it, check in with your credit card benefits administrator. Call the customer service line and let them know what happened and what you need. Find out the best way to proceed to guarantee you’re reimbursed for eligible costs.
3. Keep and Photograph All Receipts
When you do proceed, keep a record of the events leading up to the issue and the spending you had to do. For example, take photographs of an injury that cut your vacation short or screenshots of a cancellation email from a travel booking site. If you buy new clothing because your baggage was lost, save the receipts. You may need this documentation to file a claim.
4. Consider Getting Additional Coverage
Credit card travel insurance is typically limited. That means reimbursement amounts are allowed only up to a certain dollar figure. The total allowed is usually different for each type of coverage. Common baggage delay coverage, for example, typically tops out around $100. Trip cancellation policies might cover a certain amount per person or trip.
Check the limits on your coverage to understand whether it’s enough. If your trip costs $15,000 for four people and the cancellation insurance only covers a total of $5,000 per trip or $1,000 per person, you’re still out a chunk of change if something happens. Understanding these numbers helps you decide if you need to purchase additional coverage when you book your trip.
Want to Apply for a Travel Credit Card?
Travel insurance is typically a perk reserved for top-line credit cards. That means you’ll usually need good or excellent credit to get approved for such a card.
Check your credit before you apply for a travel credit card to find out whether you’re likely to qualify. If your credit is good but not excellent, avoid applying for cards with excellent credit score requirements. Applying only to get denied simply adds a hard inquiry on your credit report, which can bring your score down a bit more.
If you check your credit and discover that it’s not high enough for approval with any travel credit card, don’t worry. Instead, take the time and effort to work on your credit so you can apply for these beneficial cards in the future. If you need help improving your credit standing by removing questionable negative items from your credit reports, contact CreditRepair.com for information about our services.
