When to buy travel insurance versus when to rely on credit card protections
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Like many eager travelers, I’m booking a lot of trips now. After all, I recently flew on a COVID-tested flight to Italy as a tourist and loved visiting Italy just as it reopened to tourism. So, I’m excited to travel more this summer and fall.
But, the reopening plans for many countries are still uncertain. And, even for countries accepting tourists, figuring out the entry, testing and quarantine requirements can be confusing. So travelers may want or need to cancel trips at the last minute. Plus, many other unexpected issues ranging from flight delays to delayed or missing baggage can lead to unforeseen expenses.
Booking fully refundable travel is a smart move whenever possible. And you can self-insure against most unexpected expenses by simply paying for costs as they arise. But you might end up with a sizeable bill that doesn’t fit within your budget. So, some travelers protect themselves financially by either purchasing independent travel insurance or putting trip expenses on a travel rewards credit card that may provide protection when they use the card for travel purchases.
Today I’ll consider an important question that I’ve asked myself many times: “When should I purchase travel insurance and when can I rely on credit card travel protections?” The answer to this question is complex and personal. As such, the answer will vary from traveler to traveler as well as from trip to trip. Let’s dive in so you can make an informed decision for yourself.
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What is travel insurance?
With travel insurance, you pay a modest amount and are protected for a more significant amount if your trip doesn’t go as planned. There are many different types of travel insurance that you can purchase. But, most publicly available policies provide two types of protection: medical protection and travel protection.
However, it’s possible to purchase travel insurance that only provides medical protection (such as GeoBlue). Likewise, you can also purchase travel insurance that allows you to select the protection you need (such as American Express Travel Insurance’s build-your-own option).
I’ve previously compared the best travel insurance policies and providers. So, check out that guide to find the provider and policy that fits your needs best. You can also check a travel insurance aggregator site, such as InsureMyTrip, to compare different policies quickly. As you compare policies, you’ll likely notice the following types of coverage are available on at least some policies:
- Trip cancellation: Reimburses your prepaid, nonrefundable expenses if you cancel your trip due to a covered reason. Most policies offer trip cancellation based on the cost of your prepaid, nonrefundable trip. However, many policies exclude cancellations due to pandemics or epidemics.
- Trip interruption: Reimburses you for the unused, non-refundable portion of your trip and/or the increased transportation costs it takes for you to return home due to a covered reason. Most policies offer trip interruption, but coverage is usually dependent on the cost of your prepaid, nonrefundable trip. Some policies may not cover the cost to rejoin an interrupted trip.
- Emergency medical: Provides benefits for losses due to covered medical and dental emergencies that occur during your trip. Most policies offer emergency medical coverage, but there’s usually a low cap on emergency dental care.
- Travel accident protection: Provides coverage if an accident on your trip results in death or dismemberment. Most policies offer this coverage.
- Emergency medical transportation: Arranges and pays for the cost to medically transport you to an appropriate medical facility to receive care when medically necessary. This coverage may also pay to get you home after receiving care. Most policies offer emergency medical transportation coverage, but it usually requires preapproval.
- Political evacuation: Transports you to the nearest safe place or your residence under specific conditions. Most policies don’t offer this benefit, and policies that do often have many exclusions.
- Baggage loss or damage: Covers loss, damage or theft of baggage and personal effects. Most policies offer this benefit, usually with a low cap on high-value items such as electronics.
- Baggage delay: Reimburses the purchase of essential items during your trip if your baggage is delayed or misdirected by a common carrier. Most policies offer this benefit, but some require up to a 24-hour delay.
- Travel delay: Reimburses you for additional expenses due to a covered delay. Some policies may also cover lost prepaid trip expenses due to a covered travel delay. Most policies offer this coverage after a six- to 12-hour delay.
- Change fee coverage: Provides reimbursement for fees to change the dates on your airline ticket under select circumstances. Only some policies offer this benefit.
- Loyalty program redeposit fee coverage: Reimburses frequent flyer mile redeposit fees for covered trip cancellations. Only some policies offer this benefit.
- 24-hour hotline assistance: Provides an assistance team to help you handle all kinds of travel emergencies. Most policies offer this benefit.
- Concierge: Provides personalized information about your destination and helps you obtain restaurant reservations, tee times and tickets to events. Only some policies offer this perk.
- Rental car damage protection: Provides primary collision and loss damage coverage for physical damage to a rental car. Some policies automatically include this coverage, but most offer this coverage for a per-day add-on fee.
- Cancel or interrupt for any reason: Provides trip cancellation and interruption coverage for any reason, although some policies have exclusions. Some policies automatically offer this coverage, while others may allow you to add this coverage for an additional fee.
- Cancel or interrupt for work: Provides trip cancellation and interruption coverage for covered work-related reasons. Some policies automatically offer this coverage, while others may allow you to add this coverage for an additional fee.
Most travel insurance policies exclude any loss incurred because of a preexisting medical condition that existed within a certain period of the coverage effective date (usually 60 to 180 days). However, most policies will waive the preexisting condition exclusion if you meet specific requirements. These requirements typically include purchasing the policy shortly after the first nonrefundable trip payment or deposit, as well as being medically able to travel when you buy the policy.
Likewise, all travel insurance policies have exclusions. For example, most plans exclude medical benefits for injuries caused while doing adventure activities such as sky diving or skiing outside of maintained trails.
What travel protections are provided by credit cards?
Some credit cards don’t provide any special travel protections, while others offer ample travel protections. Currently, my favorite consumer credit cards that offer travel protections are the Chase Sapphire Reserve ($550 annual fee), the Chase Sapphire Preferred Card ($95 annual fee) and The Platinum Card® from American Express ($695 annual fee, see rates and fees).
Here’s a quick overview of the travel protections provided by each of these cards:
|Benefit||Chase Sapphire Reserve||Chase Sapphire Preferred Card||The Platinum Card from American Express|
|Baggage delay protection||Delays over six hours by common carrier, up to $100 a day for five days||Delays over six hours by common carrier, up to $100 a day for five days||n/a|
|Lost or damaged baggage protection||Up to $3,000 per passenger per trip, but only up to $500 per passenger for jewelry and watches and up to $500 per passenger for cameras and other electronic equipment||Up to $3,000 per passenger per trip, but only up to $500 per passenger for jewelry and watches and up to $500 per passenger for cameras and other electronic equipment||Up to $3,000 per traveler for carry-on baggage and up to $2,000 per traveler for checked baggage, but only $1,000 per traveler for high-risk items. Note that you must pay the entire fare with your card (including Pay With Points).|
|Trip delay reimbursement||Delays of more than six hours or require an overnight stay, up to $500 per ticket||Delays of more than 12 hours or require an overnight stay, up to $500 per ticket||Up to $500 per covered trip and up to two claims per 12-month period per card if a common carrier delays you by more than six hours. Coverage only provided on round-trip travel purchased entirely with an eligible card (paying taxes and fees on award tickets or Pay With Points tickets is covered).|
|Trip cancellation and interruption protection||Up to $10,000 per person and $20,000 per trip for prepaid, non-refundable travel expenses||Up to $10,000 per person and $20,000 per trip for prepaid, non-refundable travel expenses||Up to $10,000 per covered trip and $20,000 per eligible card per 12-month period for prepaid, nonrefundable travel expenses. Coverage only provided on round-trip travel purchased entirely with an eligible card (paying taxes and fees on award tickets or Pay With Points tickets is covered).|
|Medical evacuation benefit||Up to $100,000 for necessary emergency evacuation and transportation when on a trip of five to 60 days and traveling more than 100 miles from home||n/a||At no cost to you if the Premium Global Assist Hotline medical department determines it is medically necessary and advisable due to inadequate local facilities. You must be traveling more than 100 miles from home on a trip of 90 days or less.|
|Travel accident insurance||Accidental death or dismemberment coverage up to $100,000 (up to $1,000,000 for common carrier travel)||Accidental death or dismemberment coverage of up to $100,000 (up to $500,000 for common carrier travel)||n/a|
|Emergency medical and dental benefit||Up to $2,500 for medical expenses (subject to a $50 deductible) when on a trip arranged by a travel agency and traveling more than 100 miles from home||n/a||n/a|
|Auto rental collision damage waiver||Primary coverage for damages caused by theft or collision up to $75,000 on rentals of 31 days or less||Primary coverage for damages caused by theft or collision up to the actual cash value of most rented cars on rentals of 31 days or less||Secondary coverage for damages caused by theft or collision up to $75,000 on rentals of 30 days or less when you pay for the entire rental with an eligible card (including Pay With Points). You can pay per rental to upgrade to primary coverage through the American Express Premium Car Rental Protection program.|
|Roadside assistance||Covers up to $50 per incident four times a year while traveling in the U.S. and Canada||Will dispatch, but you’re responsible for the roadside service fees||n/a|
|Benefits guide links||Sapphire Reserve benefits||Sapphire Preferred benefits||Amex benefits|
There are extensive guides for each of these cards describing the benefits in detail. Be sure to study these guides and understand the benefits and the associated exclusions. Note, some benefits require you to enroll.
Some travelers may also want to consider the U.S. Bank Altitude Reserve Visa Infinite® Card‘s protections. The Chase Sapphire Reserve will generally be a better option for cardholders willing to pay a high annual fee. Still, the Altitude Reserve is a good option if you aren’t eligible for a Chase credit card due to being over Chase’s 5/24 rule.
The information for the U.S. Bank Altitude Reserve has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
When should I purchase travel insurance?
There are many different travel insurance providers and policies, making it challenging to compare independent travel insurance and credit card travel protections head-to-head. So, instead of comparing travel insurance with credit card travel protections, I’ll consider when you should purchase travel insurance in this section. Then, I’ll consider when credit card protections may be enough in the next section.
Here are some reasons you may want to purchase travel insurance for a trip.
Travel protections aren’t offered
As discussed above, not all travel credit cards provide extensive travel protections when you book travel using the card. So, if you’re using a card without travel protections or a card that only offers limited travel protections, you may want to purchase travel insurance.
You may want coverage for pandemic-related reasons
Most travel insurance doesn’t cover pandemics. However, some policies may cover you if you’re diagnosed with COVID-19 and have proof of illness from a doctor. And some policies may even cover other types of pandemic-related expenses and cancellations. But, most policies exclude losses related to pandemics.
So, if you’re booking travel that you aren’t sure you’ll want to take or even be able to take, you should consider purchasing cancel for any reason insurance due to the ongoing pandemic. Alternatively, you could buy a travel insurance policy that explicitly includes COVID-19 coverage. Although these policies are still rare, experts expect travel insurance will cover future pandemics.
Some travelers aren’t covered
Just because a card offers travel protections doesn’t mean everyone traveling with you on a trip will be covered. In particular, travel protections usually only extend to select relatives of the cardholder. So, friends, employees and relatives may not be covered.
If you’re planning to partake in an activity that most insurance policies exclude, you may want to purchase a travel insurance policy that explicitly includes your activity of choice.
For example, many policies exclude adventure sports such as base jumping, sky diving, free soloing, diving, mountaineering and paragliding. You may want to consider purchasing insurance from an association involved in your adventure activity, such as Divers Alert Network (DAN) if you’re a diver or German Alpine Group (DAV) if you partake in alpine sports.
You’re concerned about preexisting conditions
Most credit card trip interruption and cancellation insurance policies exclude cancellations or interruptions caused by preexisting conditions. So, you’ll want to purchase travel insurance — and ensure you satisfy the insurance’s preexisting condition exclusion waiver conditions — if you need trip cancellation and interruption insurance that covers preexisting conditions.
Nonmedical evacuation insurance
If you want evacuation insurance for nonmedical reasons, you’ll want to purchase travel insurance covering nonmedical evacuations. Just be sure to read the benefits guide closely, as even nonmedical evacuation benefits may not cover every type of evacuation you might need.
For example, some policies don’t cover evacuation from an area that had a travel warning when you booked your trip or evacuation from a place that’s suddenly inaccessible due to a landslide or other environmental incident.
Cancel for any reason
Suppose you are uncertain whether you’ll be able to take your trip. And you suspect credit card trip interruption or cancellation protections won’t cover why you may need to cancel or interrupt. In that case, you may want to purchase travel insurance that offers a cancel-for-any-reason benefit.
My friend once purchased this type of insurance when he bought a flight to a country where he needed a visa but wasn’t sure his visa application would be successful. After all, most trip cancellation and interruption insurance won’t provide coverage if you don’t meet the entry requirements for your destination. So, especially since it’s unclear when and how some countries will reopen to tourism, cancel for any reason policies can be helpful if you want to make nonrefundable travel plans.
However, some policies have exclusions for the cancel-for-any-reason benefit. So, be sure your policy doesn’t exclude the reason for which you may need to cancel.
If you want extra assurance that you’ll be covered for a wide variety of potential issues, then purchasing travel insurance may provide comfort that is worth the policy’s price. However, you may find that each insurance wants you to file with the other insurance first if you have multiple coverage options.
When are credit card travel protections enough?
Suppose you don’t fall into any of the categories above and use a credit card that provides extensive travel protections — such as the Chase Sapphire Reserve — when making travel purchases. In that case, you may determine that credit card protections are enough for some (or all) of your trips. However, I only recommend relying on credit card protections if you also have medical insurance that provides adequate coverage at your destination.
Below is a collection of reasons you may be able to rely on credit card protections instead of purchasing travel insurance. All of these reasons don’t need to apply for you to forgo travel insurance. But if some or most of these reasons apply to your trip, you may want to rely on credit card protections:
- You have personal health insurance that will cover you on your trip, even if treatment is out of network.
- You have a premium travel rewards credit card that provides travel protections, and you use this card to book your travels.
- You have a premium credit card that provides medical evacuation protection on your trip.
- You book refundable travel, including award flights and/or nights that can be canceled free of charge.
- You tend to change your plans frequently or make travel plans at the last minute.
- You have an emergency fund that could cover unexpected expenses if needed.
- You have airline miles or transferrable points you can use to leave the area or return home if needed.
- You avoid especially high-risk activities.
Why credit card travel insurance is usually good enough for me
After researching the best travel insurance policies and providers, I purchased travel insurance for one specific trip because I wanted political evacuation coverage. But, for most of my trips, credit card protections provide enough protection. After all, my travel usually looks like the following:
- My flights are often award flights that I can cancel and redeposit free of charge or carry minimal change and cancellation fees.
- My lodging is almost always cancelable without a penalty until shortly before my stay.
- If I book a tour or activity, it’s usually within 24 hours of the tour or activity.
- My health insurance covers me well, so travel insurance would only pay for my deductible. And, my out-of-network deductible is low enough that I’m willing and able to cover it using my emergency fund.
- I book flights or pay for the taxes and fees for award flights using the Chase Sapphire Reserve or Ink Business Preferred.
- I have ample airline miles and transferrable points that I could use to cover a last-minute one-way flight.
So, as you can see, the benefits of purchasing travel insurance would be minimal for most of my trips. Although I live on the road as a digital nomad, I visit my legal residence frequently enough to be covered by credit card protections with a 60-day or 90-day trip-length limitation. But, depending on how you travel, you may come to a different conclusion regarding travel insurance for your trips.
As you book trips for the summer and fall, you may wonder whether you should purchase travel insurance. This decision is personal. And often, there isn’t one correct answer.
One way to think about it is whether you’d be adequately covered without purchasing travel insurance if the worst happens. If you’re willing and able to cover the costs in this situation — or you feel confident you’d be adequately covered by the travel protections offered by your credit card and health insurance — then you can safely proceed without purchasing travel insurance. Otherwise, I recommend purchasing travel insurance shortly after you pay for the initial expenses for your trip.
For rates and fees of the Amex Platinum Card, please click here.
Featured photo of the Hyatt Zilara Rose Hall by Benji Stawski/The Points Guy.
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