Is Credit Card Insurance Enough?

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"Does my credit card provide enough free travel insurance?" We often hear that question, and the answer, as with many questions, is, "It depends."

Many credit cards these days—especially premium cards—include substantial travel insurance benefits when you use the card to buy tickets or arrange accommodations. In most cases, the top-dollar benefits are trip-cancellation/interruption (TCI) and medical coverage. Chase Sapphire Reserve offers up to $1 million in travel accident coverage and $10,000 in trip cancellation coverage. That's more than enough for many travelers, but not all travelers. Whether those benefits are enough for you depends on you, your card, and your trip.

1. Dollar amount: A million dollars or so of medical is probably enough for most travelers. But whether $10,000 per person is enough TCI depends on your trip. It is probably enough if your exposure is mainly in airline tickets and prepaid hotel accommodations. But it might not completely cover a high-end luxury cruise. And many cards offer less than $10,000. But as long as your exposure to cancellation penalties is less than the maximum credit card payment, the credit card coverage should be all you need.

2. Covered reason: However you arrange it, TCI is a "named peril" insurance, which means it will pay off only in case of a covered reason—an event or contingency that is specified in the contract. If you hope to rely on your credit card's insurance, make sure you're comfortable with the policy's list of covered reasons. For the most part, as far as we can tell, credit card lists are about the same as separate-policy lists, although some may be a bit less inclusive. If the list covers your needs, the credit card coverage should be all you need.

3. Pre-existing conditions: With any TCI, pre-existing medical conditions are a major point of contention. Most TCI policies, from any source, exclude medical and TCI coverage due to a recurrence of flare-up of a medical condition which you knew about or for which you had been treated within a specified period up to 12 months prior to your buying the policy or paying for the trip. You can arrange for many separate policies to waive that exclusion if you buy the insurance within a short time after making your first trip payment. But, as far as we know, no credit card policy allows you to waive the exclusion for pre-existing conditions. This should be no problem if you're in good health and haven't been seeing doctors, but if not, this is a deal-breaker for credit card medical insurance.

4. Geographical: Credit-card TCI and medical coverage is typically limited to travel outside your country of residence. That's also true for most separate policies. If you need insurance for a domestic trip, you need to buy a separate policy; otherwise, your credit card is good.

5. Age: Credit card medical and TCI may impose an age limit on coverage. A typical premium card, for example, can cut medical coverage off at age 80. Clearly, if you're over that age, you can't rely on the credit card—although you'll probably face really stiff premiums when you try to buy a third-party policy, too. But if you're under that age, go for the credit card.    

6. The small stuff: Many cards include coverage for lost, delayed, or damaged baggage; many provide payments for expenses if your flight is cancelled or delayed. These contingencies are included in most separate travel insurance, too, but the credit card values should be useful enough to rely on the card.

7. Secondary coverage:
Except for a very few premium cards, most card-based coverages are secondary, meaning the card covers only those expenses that you cannot first recover from an airline, cruiseline, tour operator, or your regular medical and property insurance policies. Rental car collision coverage on most cards is also secondary. Some separate policies provide primary medical coverage, which can be a big plus. But the credit card is good if you can handle the process of paying or charging to the card and claiming from some other source later.

Chase Sapphire Reserve

  • Annual fee: $450
  • Provides emergency evacuation and transportation if you are injured or become ill during your trip and it results in a necessary emergency evacuation when the covered trip has been purchased with an eligible Chase card or with rewards earned on an eligible Chase card and trip includes travel on a common carrier such as an airline, bus, cruise ship or train
  • Provides reimbursement of up to $500 for each purchased ticket for expenses such as meals and lodging if your common carrier (airline, bus, cruise ship, train) travel is delayed more than 6 hours or requires an overnight stay
  • Provides reimbursement of up to $100 per day for the emergency purchase of essential items like toiletries and clothing, when baggage is delayed or misdirected for more than six hours by a common carrier, such as an airline, bus, cruise ship or train, while on covered trip
  • Prescription Assistance and Valuable Document Delivery Arrangements can help get prescriptions filled locally and can arrange pick up or delivery.  It can also help transport vital documents the Cardholder may have left at home

 Citi® / AAdvantage® Platinum Select® World Elite™ Mastercard®

  • Annual fee: $95, waived the first 12 months
  • Trip Delay Protection covers up to $500 for meals, lodging, ground transportation, toiletries for card member and other travelers flying on the same ticket
  • Trip Cancellation/Interruption Protection up to $5,000 per passengers traveling on the same ticket paid for with the same card
  • Lost/Delayed Baggage Protection of up to $100 per covered traveler per trip
  • *Disclosure: Citi is an Airfarewatchdog advertiser.

Chase Sapphire Preferred® Card

  • Annual fee: $0 Intro for the first 12 months, then $95
  • Provides reimbursement of up to $500 for each purchased ticket for expenses such as meals and lodging if your common carrier (airline, bus, cruise ship, train) travel is delayed more than 12 hours or requires an overnight stay
  • Provides reimbursement of up to $100 per day (for a maximum of 5 days) for the emergency purchase of essential items like toiletries and clothing, when baggage is delayed or misdirected for more than six hours by a common carrier, such as an airline, bus, cruise ship or train, while on covered trip
  • Prescription Assistance and Valuable Document Delivery Arrangements can help get prescriptions filled locally and can arrange pick up or delivery.  It can also help transport vital documents the Cardholder may have left at home

Editor's Note: This content is not provided by any bank, credit card issuer, airline, or hotel chain. Any opinions, analyses, reviews or recommendations expressed here are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by the aforementioned entities.

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