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Is there any credit card that really works for travel insurance? Every time I’ve tried to deal with travel insurance it’s been such a nightmare. I just want a credit card that will make life easy for me in case I lose my bag, or I need to cancel my trip because my cat got sick. I don’t think I can deal with filling out any more forms, though. —Jesse, Los Angeles
Your dream vacation is planned and paid for. Your kids are staying with the grandparents, your bosses and managers have been alerted, and you can almost taste the tiny, overpriced drink that’s just perfect for sharing on Instagram. But then you hear news reports of some 100-year storm—or you get a letter in the mail calling you for jury duty—and your best-laid plans come tumbling down.
Fortunately, credit cards can come to your aid in such times of disappointment and stress. Some travel rewards credit cards offer travel insurance that, under the right circumstances, can help mollify your misfortune.
If you travel in the US and get into a jam, your primary insurance (your existing health, renters, homeowners, or auto policy)—not the insurance that your credit card offers—is your most likely coverage option.
Your card’s travel insurance may be more helpful on foreign trips, but those policies have their limitations. Although your card can help you out of a tough spot, you should think of it as one tool at your disposal rather than a Swiss Army knife. Insurance terms and conditions get tricky fast, and you might not get the coverage you thought you had.
What’s actually covered by credit card travel insurance
Say you have the Chase Sapphire Reserve, a well-regarded travel card that offers a variety of insurance benefits.
Here’s what you get when something happens to your stuff on a covered trip:
- Baggage delay: up to $100 per day (for a maximum of five days) in reimbursement for purchases of essential expenses when your baggage is delayed for more than six hours
- Lost luggage: up to $3,000 to repair or replace your checked and carry-on baggage (and the personal items in them)
Here’s what you get when something happens to your covered trip:
- Trip delay reimbursement: up to $500 (per ticket) in reimbursement for reasonable expenses such as meals and lodging when your travel is delayed more than 12 hours or requires an overnight stay
- Trip cancellation and interruption insurance: up to $10,000 per trip when your travel is interrupted or cancelled because of a covered loss such as illness, injury, or severe weather
- Auto rental collision damage waiver: up to the cash value of the rental car when you decline the rental company’s insurance and your car is damaged due to collision or theft (coverage is secondary in your country of residence)
Here’s what you get when something happens to you on a covered trip:
- Emergency medical and dental: up to $2,500 (subject to a $50 deductible) in reimbursement for eligible medical expenses that aren’t covered by your primary insurance when you’re sick or injured during your travel (applies to trips between five and 60 days in duration, 100 miles or more from your home)
- Travel accident insurance: up to $500,000 in benefits when you experience certain grisly perils during your travel (such as accidental death or dismemberment)
- Emergency evacuation and transportation: up to $100,000 in benefits when you become ill and require an emergency evacuation during your travel
All of that sounds well and good, but each policy has exclusions and limitations that can make you go crazy.
Credit card travel insurance drawbacks
Say you have a heart condition and your doctor recommends at the last minute that you stay in bed for the next three weeks rather than lounge in Cabo. That’s disappointing, to be sure, but at least you paid with your Reserve. You just file some paperwork and get reimbursed for your nonrefundable flight and hotel stay, right? Not quite. Pre-existing conditions aren’t covered by your trip cancellation insurance, so you’re still on the hook.
Likewise, Chase won’t come to your rescue when your mom-and-pop deep-sea fishing guides never show, and you can’t get the guides to give you a refund.
And the claims process, with endless paperwork and tight time restrictions, can make an already confusing situation more unbearable. You may not even deal with Chase, since many of these benefits are actually underwritten and managed by third-party insurance companies.
This is the problem with recommending a credit card for its travel insurance coverage: One cardholder might experience smooth sailing while you get stuck in red-tape purgatory by some insurer you’ve never heard of because you didn’t supply a doctor’s note quickly enough.
No, probably not. If you booked a dream vacation that, because of current events, looks more like a nightmare, your credit card is unlikely to offer much help.
Let’s take the Chase Sapphire Reserve as an example. You see that it offers something called “trip cancellation/trip interruption” coverage of up to $10,000 per person and $20,000 per trip. The coronavirus is a global pandemic, so you should be insured for it, right?
Not so much. Turn to page 42 of the Reserve’s Guide to Benefits, and you find this terse gem under the “What’s not covered” list: Your disinclination to travel due to an epidemic or pandemic.
This can be confusing, since you are covered by Chase’s insurance if you’re quarantined by a physician or government due to health reasons. Basically, if you’re actually sick and a doctor tells you to stay in the hospital, you’re covered. But if you’re worried about getting that illness, you won’t be.
This is when buying a separate policy can come in handy. Travelex Travel Select, our pick for the best all-around travel insurance plan, offers “cancel for any reason” coverage as an optional upgrade. (The benefit covers 75% of the insured cost of the trip.) While that’s not everything, it’s better than losing everything.
What you should do
Don’t pick a credit card based solely on travel insurance. A credit card can be really good at some things (rewarding you for spending, for instance) but less adept at others. For domestic trips, your renters or homeowners insurance policies should cover your lost baggage, and your health insurance likely covers your medical issues.
If you travel far from home, get a quote from Travelex Travel Select, our pick for the best travel insurance. Although you pay more for your trip—generally an extra 5% or so—you get some added peace of mind thanks to more comprehensive coverage.
The Chase Sapphire Reserve can help you enjoy your dream vacation at the far edges of the globe, but don’t rely on it to protect you when something goes haywire.
Source: NY Times – Wirecutter
Keyword: Do Travel Rewards Credit Cards Actually Provide Good Travel Insurance?