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Read the fine print
Some credit cards come with complimentary travel insurance. They'll cover you for all the usual things like medical emergencies, cancellation and protection for baggage and items. But they do differ from standalone policies, so it's essential you check the fine print.
- Fees: You'll pay a premium for these credit cards, usually between $100 and $450 per year.
- Excess: The excess on credit card policies tends to be fixed at a higher rate (usually around $250). Excess rates on standalone policies are more variable.
- Age limits: Some credit card policies have no age limit, which can be handy for older travellers.
- Regions: Credit card travel insurance is not based on location, which means you can travel from Europe to the US without having to worry if your policy covers both areas. Keep in mind that travel to some countries such as Cuba, Iran or North Korea may be excluded.
- Baggage cover: Credit card insurance often offers higher coverage for baggage loss and damage.
- Trip duration: Credit card insurance policies vary in how many days of coverage they'll give you per trip – anywhere from a few weeks to 365 days – so check your limit if you're going on a long holiday.
- Pre-existing conditions: Chances are your credit card insurance won't automatically cover your pre-existing condition. You'll need to call your insurer and see if you need to pay an extra fee or premium.
- Domestic travel: Credit card insurance doesn't apply to domestic travel. Some cards will reimburse expenses associated with domestic flight delays and missed connections to international flights.
- Making a claim: You may not be able to claim reimbursement unless you pay for purchases – such as emergency items after a baggage delay – with the same credit card.
Is it activated?
Credit card insurance usually activates when you buy your air tickets (or sometimes other transport or accommodation expenses) using your card.
- Policies require a minimum spend to activate – usually around $500. So, if you bought your tickets on sale for $499, you won't be covered.
- If you want cover for your spouse or dependants, you must also buy their tickets on your card.
- Some policies only activate if you book a return ticket. A one-way flight, or even two one-way flights, will leave you uninsured.
- Some banks require you to notify them to get full coverage for each trip. While base coverage will still give you emergency medical treatment, you might not get coverage for property damage or luggage delays. Check whether you need to do anything to activate any extra features.
- Some cards will cover you if you use rewards points to buy your tickets. Others won't.
Case study
David booked a trip to North America for himself and his family, including his 11-year-old daughter Petra. The trip was cancelled because Petra got pneumonia.
Unfortunately, David only activated his credit card travel insurance about an hour before the family was scheduled to fly out of Australia. The travel insurer denied his claim for cancellation costs because he knew about his daughter's illness when he activated the policy.
Is a credit card's free travel insurance worth it?
If you already have a credit card and use it regularly, the free comprehensive travel insurance on your card can save you money. And if you're a regular traveller without a credit card, it's worth considering. Especially if you travel at least once a year or every second year internationally.