Is My Credit Card's Travel Insurance Enough?
By Eva Norlyk Smith Ph.D.
February 19, 2013
I'm planning a trip to Johannesburg, South Africa, with my cousin, and she was saying how her credit card (Citi ThankYou) gives her automatic travel insurance so that if she needs to cancel, or if we miss our flight and get stranded, she's covered. That sounds almost too good to be true, but this trip is expensive, so I'd like to know more about it. What kinds of things does trip insurance on your credit card usually cover? Do all credit cards cover this? — Emily
Sounds like a fun trip! With today's frequent dramatic weather patterns and travel delays, there can be good reason to seek out some type of coverage. But is it smart to rely on your credit card alone for travel insurance protection?
It is true that many credit cards offer additional perks, including automatic travel insurance. If yours does, all you have to do is to charge the full amount of the airfare and other travel costs to the credit card in question.
Depending on the credit card, services covered range from simple travel emergency assistance, which basically gives you access to a hotline you can call for help, to more comprehensive perks like lost baggage insurance, travel accident insurance and trip delay or cancellation insurance.
The idea is attractive because the savings can be considerable, compared to buying regular travel insurance coverage for your trip. Assuming a trip cost of $2,500 and a three-week trip, the base cost of travel insurance offered via Travel Guard, a leading travel insurance company, will run about $90 (that amount could be higher or lower, depending on your age). Add the option to cancel for any reason and an emergency evacuation upgrade, and the cost jumps to about $125, or about 5 percent of the trip cost.
With that kind of cost, the choice to use your credit card for travel protection may seem like a no-brainer. But as always, the devil is in the details. If you charge the trip to your credit card and think all is well and done, you might get disappointed, should issues arise that you need coverage for.
First of all, it's difficult to figure out exactly what a credit card will cover. Check out this chart, which lists the different types of travel insurance protections offered by different credit cards. As you can see, the Citi ThankYou card that your cousin is planning to use does offer key travel protections, including travel emergency assistance, travel accident insurance, trip delay insurance and trip cancellation coverage.
However, there are important exclusions, and this is where things get dicey. For example, trip delay insurance in theory would cover extra costs for hotel stays, meals and other expenses incurred if your flight gets delayed or canceled. However, the fine print differs from card to card as to which types of delays are covered. Some cards cover delays due to inclement weather — others do not. Many cards also specify a certain length of delay, such as 10 hours, before the insurance kicks in.
Similarly, trip cancellation insurance will insure you against losing the money you've spent on your trip, should you have to cancel. However, most credit cards policies have numerous restrictions on what is considered a valid cause of cancellation, such as illness or injury (for which you'll have to submit proof from a doctor) or the death of a close family member or travel companion.
Worse, it's difficult to determine exactly what is covered by your credit card and what is not. Descriptions of credit card insurance protections typically come with lots of footnotes indicating that exclusions and limitations apply. To find out exactly what the exclusions are, you have to refer back to your card membership agreement.
Exclusions will also vary depending on which type of card you have. Even within the Citi ThankYou family of cards, there are seven different types of cards, including Citi ThankYou, Citi ThankYou Preferred, Citi ThankYou Premier, and so on, and benefits vary between cards. Finally, if you paid for your flight with a credit card and prepaid a hotel stay with another means of payment, you're out of luck if anything goes awry with your hotel. The insurance covers only trip expenses paid with your card.
If you have the patience to read through the details of your credit card terms to see exactly what is covered, you can save some money by going with the travel protection benefits provided by your credit card. Still, separate travel insurance tends to be more customizable — you can increase luggage coverage limits, for example, or ensure that you're evacuated to a hospital of your choice. The coverage limits across the board may also be higher.
Particularly attractive is the cancel-for-any-reason option, an upgrade that insures you against all reasons you might have to cancel the trip — including if you just don't feel like going. This upgrade will add about 30 percent to the cost of insurance (in your case, an estimated $30 to $35). It probably won't cover the entire cost of your trip — Travel Guard's cancel-for-any-reason upgrade covers half the trip cost — but getting even half of your money back may be worthwhile.
Whether the cost of separate insurance is worth it depends on your situation. If the cost of insurance is a lot of money to you, the travel insurance benefits of a credit card, while not ideal, are likely your best choice. On the other hand, if you're willing to pay extra for a more extensive suite of benefits, the cost of a travel insurance plan could be well worth it.
If you'd like to compare prices of travel insurance plans, InsureMyTrip.com will let you see quotes from major travel insurance providers, including Travel Guard, Access America and CSA Travel Protection.