Squaremouth’s Guide to Credit Card Travel Insurance

Squaremouth’s Guide to Credit Card Travel Insurance

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Many credit cards include travel insurance to attract travelers and provide built-in protection for cardholders spending money on trips. Depending on each traveler and their trip, this built-in coverage may be exactly what they need, or it may not provide the right benefits or coverage amounts. Squaremouth breaks down credit card travel insurance coverage, and how it compares to third-party travel insurance.

Cancellation Benefits

Trip Cancellation coverage is one of the main reasons travelers buy travel insurance. Many popular travel credit cards include this coverage as part of their package of perks, covering canceled trips for reasons such as illness, injury, death, inclement weather, or terrorism, among others.

There are two primary differences between Trip Cancellation coverage offered by credit cards and third-party providers:

  1. Most credit cards only cover trips purchased on that card, typically between $1,500 and $10,000 per trip, while third-party travel insurance can cover 100% of prepaid and non-refundable trip costs.
  2. Some third-party policies offer the Cancel For Any Reason upgrade, which partially refunds travelers who cancel for a reason that is not otherwise covered by their policy

Medical Benefits

The biggest difference between credit card travel insurance and third-party travel insurance is medical coverage. Only some credit cards include medical coverage, and it’s typically a low benefit amount.

Most third-party policies offer a higher amount of comprehensive medical coverage. With a third-party policy, the medical benefits typically start at $10,000 for Emergency Medical and $100,000 for Medical Evacuation.

Luggage Benefits

Credit cards often offer more coverage for lost or damaged luggage, typically reimbursing up to $3,000. While a select few third-party travel insurance policies can cover up to $3,000, most offer between $250 and $1,000.

Although credit cards tend to offer a higher benefit amount, this coverage is usually limited to items that are lost or damaged while traveling with a common carrier, such as an airline. Third-party policies can cover items that are lost at any point during a trip.

Delay Benefits

Credit cards and third-party policies offer comparable coverage to reimburse travelers for meals and hotel accommodations during a delay. This Travel Delay coverage varies by policy, but is often between $100 and $1,000 per traveler.

Credit Card Annual Fees vs. The Cost of Travel Insurance

Many popular travel credit cards come with an annual fee. The cards that include built-in travel insurance typically have a fee ranging from $95 to $450 per year, depending on the other benefits the card offers.

Typically, a comprehensive travel insurance policy, with coverage for cancellations, medical emergencies, travel delays, and luggage, will cost between 5% and 10% of your total trip cost. In 2018, the average cost of a comprehensive policy is $352. An average policy without Trip Cancellation coverage is significantly less expensive, at $78.