Recently, three new travel rewards credit cards – two from Bank of America and one from JPMorgan Chase – were introduced, reportedly in response to consumer frustrations over air miles.
Many travelers make the mistake of thinking they have the same protection as travel insurance with their credit card, but they are wrong.
Credit card travel protection is not comprehensive travel insurance – a fact that has caught many travelers off guard.
Here are 4 reasons your credit card travel protection is essentially junk:
1. Maximum trip costs are much lower with your credit card
Trip cancellation coverage allows a traveler to cancel their trip (for a covered reason) and be reimbursed for their trip costs. Some credit cards offer trip cancellation, but the maximum coverage for their trip can be as low as $1,500. When is the last time a family vacation cost you just $1,500?
Maximum trip costs with travel insurance plan are much more likely to cover the cost of a real-life vacation or business trip ($5,000, $10,000 and higher).
2. Reasons to cancel are very limited with your credit card
Trip cancellations are only covered if the reason you are cancelling your trip is specifically stated as a covered reason. This is true of travel insurance and it’s true of your credit card benefits as well.
Unfortunately, the list of covered reasons with your credit card is very limited. Typically, covered reasons for trip cancellation with your credit card includes death, accidental incapacitating injury, and serious diseases. Sometimes the illness or death of an immediate family member is covered (but not always). Sometimes the bankruptcy or default of a travel supplier is covered (but not always).
Most travel insurance plans let you cancel your trip for a wide range of reasons including hurricanes, job loss, terrorism, and more (depending on the plan). Plus, with some travel insurance plans, you also have ‘Cancel for any reason’ which (as the name implies) lets you cancel your trip for any reason at all. You can’t do that with your credit card protection.
3. No medical or evacuation costs are covered
If you are injured or have a medical emergency outside your home insurance network, you could be facing huge costs like this couple stranded in Costa Rica or these travelers who were refused medical treatment in the Bahamas. In some cases, a travel medical emergency can bankrupt a traveler with huge medical bills.
Credit card travel protection simply doesn’t have the same level of emergency medical or coverage for evacuations as travel insurance does.
4. Exclusions can’t be overcome with your credit card
Just like travel insurance, credit card travel protections come with exclusions. Some of the common exclusions with credit card protection and travel insurance plans include:
- Pre-existing medical conditions
- Accidental injuries due to participation in sports activities
- Wars, invasions, and acts of foreign enemies
- Being under the influence of drugs or intoxicants
- Injuries or illnesses due to cosmetic surgery
- Travel against the recommendation of a physician
- Traveling for the purpose of obtaining medical treatment
- Travel during the third trimester of pregnancy
- Sporting equipment losses
- Losses due to emotional trauma or mental illness
- Piloting or learning to fly an aircraft
The interesting bit is that travel insurance plans have options to override some of these exclusions, including coverage for pre-existing medical conditions, hazardous sports, sports equipment, and lots more.
Where Travel Insurance and Credit Card benefits are similar
There are credit card travel protections that are very similar to those offered by travel insurance plans:
- Lost or delayed baggage
- Rental car protection
- Travel accident coverage
- Global travel assistance services
So, depending on your credit card agreement you may rely on these benefits rather than getting travel insurance for them. For everything else, only travel insurance will keep you safe and only if you read the policy.