When to buy travel insurance versus when to rely on credit card protections

Oct 10, 2020

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Unexpected overnight stays caused by severe flight delays or cancellations. Buying clothes and other personal items when your checked bags are delayed or missing. Emergency room visits in foreign countries.

Sometimes, trips don’t go as planned. And, the troubles listed above aren’t all that uncommon — my husband and I have dealt with each of these issues multiple times in the last three years while traveling as digital nomads.

You can self-insure against these sorts of incidents by simply paying for expenses when they arise. But, if things go downhill, you may be stuck with a massive bill. So, some travelers choose to protect themselves financially by either purchasing individual travel insurance or putting trip expenses on a travel rewards credit card that may provide protection when the card is used for travel purchases.

In this guide, I 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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In This Post

What is travel insurance?

(Photo by Seth K. Hughes/Getty Images)
Travel insurance may provide benefits if your trip doesn’t go as expected. (Photo by Seth K. Hughes/Getty Images)

With travel insurance, you pay a modest amount and are protected for a larger 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.

It’s possible, however, to purchase travel insurance that only provides medical protection (such as GeoBlue) as well as travel insurance that allows you to only purchase the protections 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. As you’ll see, the coverage offered by each policy differs, but 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. Offered by most policies, it’s usually based on the cost of your prepaid, nonrefundable trip. Note that most policies exclude cancellations due to pandemics or epidemics unless you have personally been diagnosed.
  • Trip interruption: Reimburses you for the unused, nonrefundable portion of your trip and/or for the increased transportation costs it takes for you to return home due to a covered reason. It’s offered by most policies, but 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. Offered by most policies, usually with a low cap on emergency dental care.
  • Travel accident protection: Coverage for an accident resulting in death or dismemberment while on your trip. Offered by most policies.
  • Emergency medical transportation: Emergency medical transportation arranges and pays for the cost to medically transport you to an appropriate medical facility to receive care and to get you home after you have received care. Coverage may also pay for the costs of a visitor’s economy-class, round-trip transportation to the covered person’s bedside. Offered by most policies and usually requires preapproval and arrangement by the provider.
  • Political evacuation: The political evacuation benefit can be used to transport you to the nearest safe place or your residence under specific conditions. Not offered by most policies, and policies that do offer this benefit often have many exclusions.
  • Baggage loss or damage: Covers loss, damage or theft of baggage and personal effects. Offered by most policies, 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. Offered by most policies, but some require up to a 24-hour delay before allowing any reimbursement.
  • 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. Offered by most policies after a six- to 12-hour delay.
  • Change fee coverage: Provides reimbursement for fees to change the dates on your airline ticket. Only offered by some providers on some policies.
  • Loyalty program redeposit fee coverage: Coverage for frequent flyer mile redeposit fees in the event of a covered trip cancellation. Only offered by some providers on some policies.
  • 24-hour hotline assistance: An assistance team that’s available to help you handle all kinds of travel emergencies. Offered by most policies.
  • Concierge: Provides personalized information about your destination and assists you with obtaining restaurant reservations, tee times and tickets to events. Offered by some policies.
  • Rental car damage protection: Provides primary collision and loss damage coverage for physical damage to a rental car. Offered by most policies 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 do have some exclusions. Offered by some policies, and can be added to some policies for an additional fee.
  • Cancel or interrupt for work: Provides trip cancellation and interruption coverage for covered work-related reasons. Offered by some policies, and can be added to some policies for an additional fee.
  • Lost ski, golf, hunting or fishing days: Reimburses you for lost ski days, golf rounds, hunting days or fishing days, as well as for equipment rental expenses if your equipment is delayed by a common carrier. Not offered by most policies.

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 certain requirements. These requirements usually include purchasing the policy shortly after the first nonrefundable trip payment or deposit as well as being medically able to travel when you purchase 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.

Related: 7 times your credit card’s travel insurance might not cover you

What travel protections are provided by credit cards?

Couple near Machu Picchu. (Photo by dislentev/Getty Images)
If you injure yourself while exploring Machu Picchu, the Chase Sapphire Reserve might cover your medical costs. (Photo by dislentev/Getty Images)

Some credit cards don’t provide any notable 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 ($550 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, nonrefundable travel expenses Up to $10,000 per person and $20,000 per trip for prepaid, nonrefundable 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 (100-mile requirement waived for New York residents) n/a At no cost 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 (100-mile requirement waived for New York residents) 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 so you understand the benefits and the associated exclusions.

Related: Comparing built-in travel insurance with the Chase Sapphire Reserve and Amex Platinum

Some travelers may also want to consider the protections provided by the U.S. Bank Altitude Reserve Visa Infinite® Card, though the Chase Sapphire Reserve will generally be a better option for cardholders willing to pay a high annual fee.

If you’re looking for a small business credit card that offers travel protections, you may want to consider the Ink Business Preferred Credit Card or The Business Platinum Card® from American Express.

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.

Related: Battle of the premium travel rewards cards: Which is the best?

When should I purchase travel insurance?

Palm Springs, California. (Photo by Ron and Patty Thomas/Getty Images)
If you’re planning a golf trip, you may want to purchase a travel insurance policy that provides protection against lost golf rounds. (Photo by Ron and Patty Thomas/Getty Images)

There are many different travel insurance providers and policies, so it’s difficult to compare independent travel insurance and credit card travel protections head-to-head. Instead of comparing travel insurance with credit card travel protections, in this section I consider when you should purchase travel insurance before considering 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 your 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.

Related: The best credit cards for airfare purchases

You may want to cancel for epidemic-related reasons

Credit card travel protections and most independent travel insurance exclude cancellation due to pandemics or epidemics unless you have personally been diagnosed. So, if you’re booking travel that you aren’t sure you’ll want to take — or even be able to take — due to a global health crisis, you may want to purchase cancel for any reason insurance.

Alternatively, you could consider purchasing a travel insurance policy that explicitly includes cancellation due to epidemics. Although these policies are currently rare, Wendy Perrin’s website found that Atrio Travel Assist includes epidemics as a valid reason for trip cancellation.

Travelers should also be mindful that travel insurance policies are always changing and adapting to traveler demands. That’s why many experts agree that future independent travel insurance policies could very well cover cancellations or interruptions due to epidemics or pandemics.

Related: Will future pandemics be covered by travel insurance?

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.

Related: Who is covered by your credit card travel insurance?

Adventure activities

Photo by nudiblue / Getty Images.
Some types of diving may be excluded by your travel insurance. (Photo by nudiblue/Getty Images)

If you’re planning to partake in an activity that is generally excluded by most insurance policies, you may want to purchase a travel insurance policy that explicitly includes your activity of choice.

For example, adventure sports such as base jumping, sky diving, free soloing, diving, mountaineering and paragliding are often excluded. 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.

Related: When finding the next adrenaline rush is the ultimate reason to travel

You’re concerned about preexisting conditions

Most credit card trip interruption and cancellation insurance excludes 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 want trip cancellation and interruption insurance that covers preexisting conditions.

Related: What older travelers need to know about getting travel health insurance

Nonmedical evacuation insurance

If you want evacuation insurance for nonmedical reasons, you’ll want to purchase travel insurance that covers 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 an area that’s suddenly inaccessible due to a landslide or other environmental incident.

Related: How much does a seat on a repatriation flight cost?

Ski, golf, hunting or fishing trip coverage

We were lucky to get our 2020 spring break trip in (Photo by Summer Hull/The Points Guy)
You can purchase travel insurance that may refund some of your trip cost if you can’t ski for select reasons. (Photo by Summer Hull/The Points Guy)

Some travel insurance policies cover missed ski, golf, hunting or fishing days if travel delays or other select reasons cause their cancellation. Some of the policies also cover sporting equipment rentals if your equipment is delayed or lost by a common carrier. And, some policies may provide compensation for trips on which you’re unable to hunt or fish due to regulations implemented after you booked your trip.

Related: The ultimate guide to flying with sports equipment

Cancel for any reason

If you are uncertain whether you’ll be able to take your trip, but the reason for which you’d need to cancel or interrupt your trip isn’t normally covered by credit card trip interruption or cancellation protections, then 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 for which he needed a visa but wasn’t sure his visa application would be successful. Ironically, some policies have exclusions for this benefit, so be sure that the reason for which you may need to cancel isn’t excluded.

Related: Everything you need to know about cancel for any reason trip insurance

Extra assurance

If you simply 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 price of the policy. However, you may find that each insurance wants you to file with the other insurance first if you have multiple coverage options.

Related: Why one TPG contributor buys travel insurance

When are credit card travel protections enough?

(Photo by Josh Gribben for The Points Guy)
(Photo by Josh Gribben/The Points Guy)

If you don’t fall into any of the categories above and you use a credit card that provides extensive travel protections — such as the Chase Sapphire Reserve — when making travel purchases, you may determine that credit card protections are enough for some (or all) of your trips.

I’d only recommend relying on credit card protections if you also have medical insurance that provides adequate coverage at your destination even if the medical providers you end up using are out of network.

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 choose to rely on credit card protections:

Related: Why you might want to get a premium credit card instead of purchasing travel insurance

Is credit card travel insurance good enough?

(Photo by Wyatt Smith/The Points Guy)
(Photo by Wyatt Smith/The Points Guy)

After researching the best travel insurance policies and providers, I did purchase travel insurance for one specific trip because I wanted political evacuation coverage. But, for the majority of my trips, credit card protections provide enough protection for me. This is because my travel usually looks like the following:

So, as you can see, the benefits of purchasing travel insurance would be minimal for most of my trips. And, although I live on the road as a digital nomad, I visit my legal residence frequently enough to be covered by credit card protections that have 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.

Related: Is credit card travel insurance sufficient on its own?

Bottom line

Should you purchase travel insurance for an upcoming trip? 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, you should consider 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 by Samuli Vainionpää/Getty Images.

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