Just like any other type of standalone travel insurance, credit card travel insurance varies in the cover it offers. Depending on the card, credit card travel insurance may offer cover for:
- Emergency medical expenses while travelling overseas,
- Loss, theft and damage cover for luggage and other personal belongings,
- Compensation for missed connections or unavoidable trip cancellation,
- Compensation for travel delay, such as delayed flights,
- Accidental death, permanent disability or loss of income,
- Personal liability while travelling,
- Car rental insurance excess waiver (this usually only offers cover while overseas, but some policies cover this in Australia as well).
Credit card travel insurance may cover the primary cardholder only, or it may cover additional cardholders and family members as well. Cover is usually only provided when travel is paid for using the card. As these factors vary according to the provider, it’s important to read the PDS carefully before you travel.
Is credit card insurance really ‘complimentary’?
When it comes to credit card extras such as travel insurance, you will usually find the more sought-after features are offered on the more expensive cards. So, to enjoy those extras, you will generally pay a higher annual fee and higher interest.
For this reason, you may have trouble calling these features ‘complimentary’. After all, you are paying a higher annual fee to benefit from them. It’s also worth bearing in mind that some credit card insurance requires a specific spend in order to activate it, making it not exactly ‘free’.
However, it is true that complimentary travel insurance doesn’t have its own fee, which means it is technically available to you ‘at no extra cost’. So, as long as you meet the spend requirements – and it offers the cover you need – this feature can offer value as one of the extras offered on your card.
Should you choose a credit card simply for the insurance offered?
When comparing credit cards, it can be all too easy to get seduced by all the features on offer. From rewards to extras such as hotel stays, free flights and travel insurance, credit card features are designed to entice. But, they really only work for those who will get good use out of the features on offer, and for cardholders who can afford to pay more for them.
You see, credit cards with rewards and extras tend to have higher annual fees and interest. If you can afford to pay those higher annual fees – and you get value from the features offered – then this type of card can certainly be worthwhile. However, if you struggle to afford the annual fee, and you tend to carry a balance – paying interest on it as you go – then it may be better to look elsewhere.
Pros and Cons
- You may be able to save money, especially if you are a frequent traveller.
- The cover offered may be similar to standalone cover.
- You can save time comparing standalone cover for each trip you take.
- The policy may cover your family if they are travelling with you (as long as you activate the policy correctly).
- You may be able to enjoy continuing cover as you get older, whereas standalone cover can charge higher premiums for older travellers.
- Your policy may offer cover for a range of international destinations, whereas the cost for standalone cover may vary according to where you travel.
- As credit card travel insurance is considered a premium feature, you may pay higher annual fees and interest.
- Activation of travel insurance varies by card. You may have to spend a certain amount or pay for your entire trip using your card for the insurance to activate.
- Cover varies. Your policy may offer cover overseas only, or within Australia only.
- If you don’t travel that often, you may not get that much value from the insurance offered. You might find you're paying more in annual fees and interest and not getting the returns from perks like insurance.
- Certain exclusions and an excess may apply.
- The cover offered may not be as extensive as standalone travel insurance, in terms of the length on trip covered, the limits offered, or the activities covered.
Credit Cards with Free Travel Insurance - Frequently Asked Questions
There are certain factors to consider when you're comparing credit card travel insurance options. And yes, it’s always better to look at what your credit card travel insurance offers before you apply, rather than before you fly.
- Activation and eligibility: Find out how the cover is activated. Do you need to spend a certain amount on the card? Or perhaps book a return ticket on your card? You may need to log into your account to activate your cover manually before each trip. In terms of eligibility, check the PDS to make sure you and any family members are eligible.
- Length of travel: Check how much cover is offered over the year. You may be limited to trips of 30 days, or you may have an annual coverage allowance. If you travel a lot, make sure the cover provided allows for this.
- Level of coverage: Similar to standalone travel insurance, credit card travel insurance can also offer levels of cover. The level of cover offered usually depends on the level of the card, so lower level cards may offer less cover than more expensive premium cards. Ensure the card you are applying for offers the level of cover required.
- Excess: While some credit card travel insurance requires an excess to be paid in the event of a claim, other policies do not. Typically, insurance provided on lower level cards will have an excess, while high-end cards do not, but this will vary according to the card. Think about how much you are willing to pay in excess, and whether the policy still offers value if you have to make a claim.
- Terms and conditions: It's tedious, but important that you read the terms and conditions in full. Do this before you rely on the cover – not after you want to make a claim.
There's a wide range of credit cards that offer travel insurance, however, you'll usually find this feature offered on premium cards. Premium cards are usually labelled frequent flyer cards, rewards cards and platinum, black and diamond cards.
While you may find credit card insurance on low-cost cards, most cards offering credit card insurance tend to have a higher annual fee and/or higher interest. To make the most of these cards, it’s important to make sure you get good value from the extras offered, while avoiding interest by clearing your balance by the due date each month.
Check out the range of credit cards offering credit card travel insurance above.
The way in which you make a claim will depend on the insurance underwriter of the policy, as you will be making the claim with them, not with your card provider. Before you travel, it can be a good idea to find out how to make a claim. You can usually find this information online from your card provider, or alternatively, call them to find out more.
We spend a lot of time talking about how to find the right credit card – and all the same rules apply here. Firstly, think about what you need from the card, and how you will use it. Weigh up how much you will pay in annual fees against what features are on offer. When it comes to travel insurance, think about whether it offers everything you need, and if you will get use out of it.
If you tend to carry a balance on your card, a card with a high purchase rate – as is often the case with cards with travel insurance – may not be the best option. You may also want to consider whether the card offers other features you’re interested in, such as rewards. Be sure to take into account currency conversion fees if you plan to use the card while overseas.
If you’ve ever spent time comparing travel insurance options, you’ll understand the benefit of having credit card travel insurance that you know you can rely on, whenever you need it. One of the greatest benefits of credit card travel insurance is the time it can save you comparing, choosing and buying standalone travel insurance.
Of course, it can also allow you to save money. Instead of paying for standalone travel cover, you can utilise the travel insurance offered on your credit card. And, there’s that old ‘peace of mind’ factor spruiked by all insurance providers. With your credit card travel insurance sorted, you can enjoy peace of mind that you’re covered.
This can include the standard cover that you know you need, plus additional cover you may not have thought of investing in. For example, when you hire a car, the rental company will invariably ask you if you want to reduce your excess by paying for extra cover. If you say no and are involved in an accident, your credit card insurance may provide cover regardless.
It's also worth bearing in mind that your credit card insurance may cover more than just you. You may also enjoy cover for you and your family if they are travelling with you. It may also offer cover for any additional cardholders you have on your account. And, if you happen to be getting on in years, you may find it easier to get cover on your card’s insurance than elsewhere.
Lastly, unlike standalone travel insurance which can charge more in premiums depending on your destination, your credit card travel insurance could offer you cover at no extra cost, no matter where in the world you are heading.
But – and this is a big but – you have to make sure your credit card travel insurance offers you all of these things should you need them. Cover can vary extensively depending on the credit card you choose. So, before you choose a card – and especially before you travel – you need to check the cover on offer.
Before you apply for a credit card with travel insurance, it’s a good idea to find out more about what’s on offer.
- Read the product disclosure statement (PDS). This is usually available in PDF or paper format. Yes, it is mind-numbingly boring, but it does provide all the need-to-know on what the travel insurance covers – and what it doesn’t.
- Find out what it covers. Look at what the cover offers, such as medical expenses and personal belongings.
- Check whether there are any limits on the cover. This may include the number of days you can travel at one time, or within the year.
- Check whether there are any exclusions on the cover. This could include pre-existing medical conditions, or travellers above a certain age.
- Find out who the policy covers. You may need the cover only for yourself, or you may need it to cover family members travelling with you, or any additional cardholders on the account. If the policy covers them, check what is needed to activate their cover, and what conditions apply.
- Ensure you know what you need to do to activate your cover. This may include paying for your travel with your card. You may need to spend a certain amount, or you may need to purchase return tickets for the cover to be valid.
- Consider whether there is an excess to pay. Some credit card travel insurance will require you to pay an excess if you make a claim. Think about whether the cover still offers good value if you have to pay this excess.