Why You Might Want to Get a Premium Credit Card Instead of Buying Travel Insurance
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After seeing posts in various online travel communities about instances where travel insurance saved the day after long hospital stays or required medical evacuations — as well as posts of travelers lamenting financial troubles caused by not having insurance — I was convinced it would simply be irresponsible to travel without travel insurance.
However, when my multi-trip annual trip insurance lapsed recently, I considered whether it made sense to purchase a new policy. In short, it didn’t. In this guide, I describe why we decided to forego travel insurance going forward — and why you may not need travel insurance either if you have and use a card like the Chase Sapphire Reserve.
What Travel Insurance Covers
The benefits provided by most popular travel insurance plans generally fall into the following categories:
- Trip and Transit Protections (trip delay, delayed baggage, lost/damaged baggage, trip cancellation, trip interruption, travel accident insurance, 24h assistance service)
- Emergency Medical / Dental Coverage
- Evacuation Protection (medical and/or non-medical)
- Collision Damage Waiver for Rental Cars
As full-time nomads, if JT and I bought a new travel insurance policy, we’d opt for the Alltrips Premier plan from Allianz. This plan would cover both of us for a year for $450 and is comparable to what we bought last year.
Allianz has annual multi-trip travel insurance plans available to us as Florida residents who are 32 and 33 years old. However, as noted above, we decided to skip travel insurance. In the rest of this article, I describe how we are insuring ourselves against the various aspects that the Allianz travel insurance plan would cover, and how you can do the same for both short and long trips.
Trip and Transit Protections
In order to get the trip and transit protections usually offered by travel insurance plans, pay for at least part of your flights, trains and other types of common carrier transportation fare using your Chase Sapphire Reserve.
As a reminder, the Chase Sapphire Reserve offers the following trip and transit protections:
- Trip delay reimbursement: Up to $500 per ticket for reasonable expenses during a delay of more than six hours or overnight. You must currently be on a round-trip from your primary residence of 365 days or less. The cardholder, cardholder’s spouse and cardholder’s dependent children under 22 are covered.
- Baggage delay benefit: Reimbursement of up to $100 per day for up to five days for emergency purchase of essential items when baggage is delayed or misdirected for more than six hours. The cardholder and the cardholder’s immediate family are covered.
- Lost luggage benefit: Reimbursement for repair or replacement of checked baggage and/or carry-on baggage that is lost or damaged. Up to $3,000 per covered person, but only up to $500 per person for electronics and jewelery. The cardholder and the cardholder’s immediate family are covered.
- Trip cancellation insurance: Reimbursement of up to $10,000 when a covered loss prevents you or your immediate family from departing on a covered trip of 60 days or less. The cardholder and the cardholder’s immediate family are covered.
- Trip interruption insurance: Reimbursement of up to $10,000 when a covered trip of 60 days or less is interrupted by a covered loss. The cardholder and the cardholder’s immediate family are covered.
- 24-hour travel and emergency assistance services: Assistance and referral services for emergency services. The cardholder, cardholder’s spouse and cardholder’s dependent children under 22 may use this benefit.
These benefits cover you on short trips and long trips that are both domestic and international as long as you use your Chase Sapphire Reserve to pay for at least part of your common carrier travel. Long-term travelers like us only need to be aware of the 60-day trip maximum for trip cancellation and interruption insurance as well as the 365-day trip maximum for trip delay insurance.
One additional benefit of not purchasing travel insurance: Only one claim needs to be filed with Chase Card Benefits instead of needing to first file with the travel insurance and then file with Chase for any uncovered expenses.
Emergency Medical / Dental Coverage
If you use your Chase Sapphire Reserve to purchase at least part of your common carrier fare, you and your immediate family can use the card’s emergency medical and dental benefit for emergency treatment expenses on trips between six and 59 days. This benefit provides $2,500 (subject to a $50 deductible) for medical expenses not paid by your insurance as a result of emergency treatment of a sickness or accidental injury.
If you have health insurance that provides coverage outside the US after an “out of pocket maximum,” then supplementing this coverage with the Chase Sapphire Reserve‘s emergency medical and dental benefit may provide adequate protection against catastrophic medical expenses for you as it does for JT and me.
Evacuation protection is the main reason we initially bought travel insurance. However, by purchasing at least part of your common carrier transport using the Chase Sapphire Reserve, you and your immediate family will be covered on trips of five to 60 days for up to $100,000 in emergency medical evacuation coverage. The main requirements are that the trip is at least 100 miles from your primary residence and Chase’s Benefit Administrator must make the medical transportation arrangements. Evacuation within twelve countries — and additional countries that are determined by the US Government to be unsafe for travel — is excluded, but pre-existing conditions aren’t excluded.
The evacuation coverage provided by the Chase Sapphire Reserve should be adequate for most travelers. However, if your trips tend to last more than 60 days or less than five days — or to areas where an emergency medical evacuation could cost more than $100,000 — having The Platinum Card® from American Express may be useful.
The Platinum Card‘s emergency medical transportation benefit covers the cardmember and other covered family members (spouse or domestic partner, dependent up to age 23, or age 26 if full-time student traveling on the same itinerary as the cardmember) if they become injured or suffer an illness while traveling on a trip of less than 90 days. As with the Chase Sapphire Reserve benefit, the Premium Global Assist Hotline medical department must assess your medical needs and coordinate your transportation. Although there is no cap on the coverage, pre-existing conditions are excluded.
Collision Damage Waiver for Rental Cars
Various credit cards provide primary or secondary collision damage waivers for rental cars. In most cases, all you have to do is pay for the rental car with the credit card and decline the rental company’s collision loss/damage insurance.
We usually use the Chase Sapphire Reserve to pay for car rentals because it provides primary collision damage waiver insurance for most types of rental cars, while also earning 3x points on the rental car (after $300 travel credit exhausted). Specifically, it provides reimbursement for damage due to collision or theft of most rental vehicles up to $75,000 when rented for less than 31 days. Most types of rental vehicles are eligible but antique automobiles, certain vans, vehicles that have an open cargo bed, trucks, motorcycles, mopeds, motorbikes, limousines and recreational vehicles are explicitly excluded.
We would have paid $450 for an annual multi-trip travel insurance policy. Instead of buying this travel insurance policy, the $450 is much better used toward paying the annual fee on the Chase Sapphire Reserve. Besides the benefits that effectively replace our need for travel insurance, we’re also getting many other excellent perks and significant earning potential.
Most travelers could simply rely on the Sapphire Reserve card’s benefits, as long as they always put their common carrier fares on the card. However, long-term travelers like us may find having the The Platinum Card from American Express essential as well, due to its uncapped emergency medical evacuation benefit on trips of less than 90 days regardless of whether you used the card to pay for the trip.
This card from Bank of America gets really interesting if you have a BofA checking, savings or investment account. Depending on the value of your combined accounts you can potentially get as much as 3.5x points on travel/dining and 2.625x points on other purchases making it the richest consumer banking bonus out there.
- Receive 50,000 bonus points – a $500 value – after you make at least $3,000 in purchases in the first 90 days of account opening
- Earn unlimited 2 points for every $1 spent on travel and dining purchases and unlimited 1.5 points per $1 spent on all other purchases
- If you're a Bank of America Preferred Rewards member, you can earn 25%-75% more points on every purchase
- No limit to the points you can earn and your points don't expire
- Redeem for cash back as a statement credit, deposit into eligible Bank of America® accounts, credit to eligible Merrill accounts, or gift cards or purchases at the Bank of America Travel Center
- Get up to $200 in combined airline incidental and airport expedited screening statement credits + valuable travel insurance protections
- No Foreign Transaction Fees
- Low $95 annual fee