Does Credit Card Insurance Provide Sufficient Cover for Travelling?
Credit cards often come with perks. The banks want you to use their cards (they’re very profitable for them), and so they offer you as much ‘bang for your buck’ as they can.
A common benefit is the addition of travel insurance if you purchase your holiday using said credit card…but is it worth it? Below, we’re going to consider this in greater depth.
What does credit card travel insurance look like?
Well, on the surface it looks much like any other type of travel insurance. In fact, the same insurance companies that sell the standalone travel insurance packages often underwrite credit card travel insurance: Zurich, Allianz, Lloyds, and AIG.
They provide much the same cover: theft, lost luggage and belongings, curtailment and cancellation, medical expenses, repatriation, etc. As with any insurance package, the level of cover varies between insurers, so in this case, between credit card companies.
Furthermore, a ‘platinum’ or ‘gold’ card will afford you greater cover than a standard card. In fact, a standard credit card might not offer you travel insurance at all.
How does the industry view this type of insurance?
There are many concerns with the type of travel insurance offered via credit cards. Here are a few of the issues:
- Disclosure: credit cardholders are often unaware of the level of insurance offered by their policy. This is because they credit card issuers aren’t forthcoming with information. If you want to understand your insurance policy properly, you often have to spend a long time reading the policy and then comparing it with a comprehensive, standalone, policy. It’s not always clear to see what is and what isn’t covered by the policy.
- Terms & Conditions: the Ts&Cs of credit card travel insurance are frequently different to those of the standalone policies. This can catch people off guard. For example, the excess is often higher and has special conditions, such as the requirement to purchase all airfares before leaving your home country. Cover is often shorter and usually no more than three months; this means it’s unsuitable for gap-year students and travellers.
- Eligibility: if travelling with a family, you expect coverage for them too. This is the case with credit card travel insurance, but it comes with a number of caveats that don’t necessarily exist in standalone policies. For instance, there is usually cover for a spouse and two dependent children, so larger families will require separate insurance policies. Furthermore, cover is only applicable when travelling together. If the cardholder needs to return home for work, for instance, the rest of the family is no longer insured.
- Pre-existing medical conditions: insurance for pre existing medical conditions is highly specialised and often inadequately addressed by credit card insurance policies. If you require insurance for pre existing medical conditions then it’s better to search around for an appropriate standalone policy.
As you can now appreciate, there are several problems with this type of travel insurance. But, are there any perks?
Yes, it excels in several areas. For instance, it provides a much more comprehensive cover in the event of accidental death. It can allow for easier refunds of the holiday if the tour operator goes bust. It can be used to plug gaps in standalone policies; if the standalone policy does not offer specific cover, then you can claim of the credit card cover. However, you have to attempt to claim from the standalone policy first.
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