I get this question all the time: “Do I need to buy travel insurance?” It’s not easy to answer, but one thing I always say: you may already have it and don’t know it. Your credit card may already provide it.
If your son breaks his leg in a soccer match days before a family cruise vacation, if you forgot your phone on the plane, if your flight was delayed or canceled, or your bag lost or delayed, you may be covered.....
Depending on the card you used to pay for your trip, your issuer's built-in, free travel insurance might have compensated you for at least part of your loss.
I recently left a valuable item in the overhead bin and it was never found. Bingo, my credit card covered me because I bought the airfare with it.
And not long after, my checked bag was delayed for five days. My card offered $100 per day up to five days for “essentials” (yes, that includes whatever you decide is essential). Interestingly, I booked that flight with frequent flier miles, but because I paid the airline’s frequent flier “fee” and taxes with the card, I was covered.
Of course, the details of that coverage are going to be buried in fine print, in documents you probably threw away when your card showed up in the mail. Not to worry – it's easy to go back and check because it's all on line.
There are three main categories of air travel insurance included with credit cards, although not all cards offer all of them:
Trip interruption or delay
Your flight is interrupted or delayed after departure due to a "covered reason"—typically one or more (but not always all) of the following: illness, injury, labor strikes, equipment failure, or weather. Needless to say, no card covers all possible causes of a delay. If it's not in the "covered reasons" (for example, a crew showing up late for your flight or congestion-related air traffic control delays) you're on your own.
Trip cancellation (i.e., when you have to cancel a trip before departure)
You or a traveling companion or immediate family member (definitions of "immediate" vary widely) becomes ill or injured before departure and you need to cancel your plans. For example, your son breaks his leg a week before your trip and you have $4,000 in non-refundable trip arrangements, many credit cards cover that. But in all cases, pre-existing conditions are not covered.
Lost or delayed baggage
The airline loses your checked bag; someone steals something from your carry-on bag in flight or you leave something on the plane or train; or your bag is not lost but merely delayed upon arrival. Different cards define a delay differently: for some it's just four hours, for another it might be 12 hours. And in almost all cases, lost bag coverage is in "excess" of whatever you collect from your airline or any other insurance you might have, such as homeowners insurance (although if your policy deductible is $1500 and the loss is $1000, you might not have to make a claim if you present your policy's declaration page to the credit card company's representative).
Even computers, cell phones, and jewelry are covered by some credit cards, although for no more than $500 per incident. But at least it's something, and airlines don’t cover these things at all.
Cards vary in their deadline for making a claim, so in some cases if you've had a recent loss but didn't know you had coverage, you may still have time to file a claim retroactively to your credit card issuer (some claims can be made a full year after the loss). However, some cards require that you pay the entire cost of your trip on the card to qualify for coverage, while others settle for just a portion of the trip. One card we checked, oddly, only pays for round-trip transportation, not one-way trips. Some cards cover trips of up to 30 days, another might cover up to 60.
This free coverage will never be as extensive as a policy you purchase separately from a company like Travel Guard or Access America, but neither is it something to ignore and if you've had a recent loss you even might be able to file a claim retroactively.
You can compare credit card offers here but if travel insurance is your primary focus, be sure to read what each one offers before applying, because they’re not all the same.