When to Buy Travel Insurance Versus When to Rely on Credit Card Protections
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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 in action. Emergency room visits in foreign countries.
You can self-insure against these sorts of things by simply paying for expenses when they arise — but if things go downhill, you may be stuck with a massive bill. So, many travelers chose to protect themselves financially by either purchasing individual travel insurance or putting trip expenses on a credit card that provides protection when you use it 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?” This answers are personal, differing from one traveler to another and from trip to trip. Let’s dive in so you can make an informed decision for yourself.
What Is Travel Insurance?
With travel insurance, you pay a modest amount and are protected for a larger amount when your trip doesn’t go as planned. There are many different types of travel insurance that you can purchase, but most policies that are publicly available provide two types of protection: medical protection and travel protection. However, it is possible to purchase travel insurance that only provides medical protection (such as GeoBlue) and travel insurance that allows you to only purchase the protections you need (such as American Express Travel Insurance’s build-your-own option).
I recently compared nine of the best travel insurance policies in The Best Travel Insurance Policies and Providers. 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.
- Trip Interruption: Reimburses you for the unused, nonrefundable portion of your trip and 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.
- 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/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 Protector: Provides primary collision/loss damage coverage for physical damage to a rental car. Offered by most policies for a per-day, add-on fee.
- Cancel/Interrupt for Any Reason: Provides trip cancellation and interruption coverage for any reason. Offered by some policies, and can be added to some policies for an additional fee.
- Cancel/Interrupt for Work: Provides trip cancellation and interruption coverage for covered work-related emergencies. Offered by some policies, and can be added to some policies for an additional fee.
- Lost Ski Days/Lost Golf Rounds: Reimburses you for lost ski days or lost golf rounds, 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 time 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 — and 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 notable travel protections, while others offer ample travel protections. Since Citi recently announced the removal of travel protections from most of its cards as of Sept. 22, 2019, my favorite personal cards for travel protections going forward are as follows:
|Benefit||Chase Sapphire Reserve ($450 annual fee)||Chase Sapphire Preferred Card ($95 annual fee)||The Platinum Card® from American Express ($550 annual fee, See Rates & Fees)|
|Baggage delay protection||Delays over six hours by passenger carrier, up to $100 a day for five days||Delays over six hours by passenger carrier, up to $100 a day for five days||n/a|
|Lost/damaged baggage protection||Up to $3,000 per passenger||Up to $3,000 per passenger||Up to $3,000 per passenger|
|Trip-delay reimbursement||Delays of more than six hours or requiring an overnight stay, up to $500 per ticket||Delays of more than 12 hours or requiring an overnight stay, up to $500 per ticket||n/a|
|Trip cancellation and interruption protection||Up to $10,000 per person and $20,000 per trip; doesn’t cover preexisting conditions||Up to $10,000 per person and $20,000 per trip; doesn’t cover preexisting conditions||n/a|
|Medical-evacuation benefit||Up to $100,000 on trip of five to 60 days more than 100 miles from home||n/a||Covers all costs on a trip of no more than 90 days that’s more than 100 miles from home; excluded preexisting conditions; trip doesn’t need to be paid with card|
|Travel accident insurance||Accidental death or dismemberment coverage of up to $1,000,000||Accidental death or dismemberment coverage of up to $500,000||Accidental death or dismemberment coverage of up to $500,000|
|Emergency medical and dental benefit||Up to $2,500 if 100 miles or more from home on a trip||n/a||n/a|
|Auto rental collision damage waiver||Primary coverage of up to $75,000||Primary coverage of up to the actual cash value of the vehicle||Secondary coverage of up to $75,000|
|Roadside assistance||Covers up to $50 per incident four times a year while traveling in the US and Canada||Will dispatch, but you’re responsible for the roadside service fees||Covers at no cost to you, up to four times a year in the United States, the District of Columbia, Canada, Puerto
Rico and the U.S. Virgin Islands
|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.
Additionally, some travelers may want to consider the protections provided by the U.S. Bank Altitude Reserve Visa Infinite Card. However, I excluded this card because the benefits aren’t clearly defined to non-cardmembers and the Chase Sapphire Reserve will generally be a better option for cardholders willing to pay a high annual fee.
When Should I Purchase Travel Insurance?
There are many different travel insurance providers and policies, so it’s difficult to compare 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 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.
Some travelers aren’t covered: Just because a card offers travel protections, doesn’t mean you will be covered. In particular, travel protections usually only extend to select relatives of the cardholder. So, friends (including boyfriends and girlfriends), employees and other relatives may not be covered.
Preexisting conditions: Chase’s 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.
Nonmedical evacuation insurance: If you want evacuation insurance for nonmedical reasons, you’ll want to purchase travel insurance that covers nonmedical evacuations. However, 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.
Ski/golf/hunting/fishing trip coverage: Some travel insurance policies cover missed ski or golf days, sporting equipment rental if your equipment is delayed or lost by a common carrier or trips where you’re unable to hunt or fish due to regulations implemented after you booked your trip.
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/cancellation protections, then you may want to purchase travel insurance that offers a cancel-for-any-reason benefit. For example, 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.
Extra assurance: If you simply want extra assurance that you’ll be covered, 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.
When Are Credit Card Protections Enough?
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) trips. However, I’d only recommend relying on credit card protections if you also have medical insurance that will cover you while on your trip.
Below are 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:
- You have personal health insurance that will cover you on your trip
- You have a premium credit card that provides travel protections, including medical evacuation protection (and you use this to book your travels)
- 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
I have decided multiple times that credit card protections provide enough protection. When researching The Best Travel Insurance Policies and Providers, I once again considered whether I wanted to purchase any of the policies for an upcoming trip. However, none of the policies made sense for this trip because:
- My outbound flight was booked about a month ago, which is too long ago to be covered if I purchased a policy now
- My return flight is an award flight that I can cancel and redeposit free of charge due to my American Airlines Executive Platinum status
- My lodging is booked with Choice Hotels points and the reservation allows free cancellation and redeposit until 6pm on the day of arrival
- I haven’t booked any tours and if I end up booking an activity, it will likely be within 24 hours of the activity
- My personal health insurance covers me, so travel insurance would only cover my deductible. And since I booked my outbound flight about a month ago, I’m not eligible for the preexisting-condition exclusion waiver on most policies.
- I booked my outbound flight and put the taxes and fees on my return flight on the Chase Sapphire Reserve card. So, I already have access to the card’s travel protections, including emergency medical evacuation (which I also have as a cardholder of The Platinum Card from American Express), trip delay, baggage delay and lost baggage protection.
So, as you can see, the benefits for me of purchasing travel insurance for this trip would be minimal. As this tends to be the case for most of my trips — and 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 — I continue to rely on the travel insurance provided by premium credit cards instead of purchasing travel insurance.
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’ll 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 purchase the initial expenses for your trip.
For rates and fees of the Platinum Card, please click here.
Featured photo by Darren Murph / The Points Guy.
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