One of the most common responses travel agents hear when recommending travel insurance is: "That's ok, I have free travel insurance with my credit card". Even though the cost of the travel insurance premium may be built into the annual card fee or interest rate, the true cost of credit card travel insurance can be much higher if it doesn't cover you when it comes to claim time. Here are three of the common traps we encounter with credit card travel insurance.
1. The Travel Insurance Policy Isn't "Activated"
Different credit card travel insurance policies have different requirements for the policy to be activated (i.e. for the policy to cover the holiday). One of the most common activation requirements is for a large proportion (if not all) of the holiday to be paid for on the credit card that provides the insurance.
So in the most straight forward example, a traveller books Business Class airfares and pays for the airfares on their credit card. But what happens if one traveller's airfare is paid for on the credit card and the other uses frequent flyer points? Or perhaps two different credit cards are used to pay for the holiday. Will the policy cover both travellers?
Confirming the activation requirements with the credit card company before you pay for your itinerary is critical.
2. The Policy Doesn't Cover You For All The Time You're Away
Some credit card travel insurance policies only provide for a limited number of days cover per trip. If your holiday extends beyond this limit you are unlikely to have cover. In a rather timely example I personally received notification from my credit card company that the number of days cover included in my "free" policy was reducing from 120 days to 35 days per trip.
It is important to check with your credit card company the length of the trip you are covered for. And if you are away for longer, does that mean you aren't covered from day 1 or only for the days the exceed the policy.
3. Pre-Existing Medical Conditions
Pre-existing medical conditions are one of the biggest hurdles to getting comprehensive travel insurance. The travel insurance companies we work with are becoming more flexible in providing policies that may either exclude the pre-existing condition rather than denying cover all together or allow the traveller to pay a higher premium so that they have cover. The process can be quite involved and require working with different travel insurance companies to find a policy that will offer cover at an acceptable premium.
For credit card travel insurance the same attention to pre-existing medical conditions must be applied. Although the policy may be "free" and it may have been correctly activated, ensuring that the credit card travel insurance company has signed off on pre-existing medical conditions is crucial.
Between more frequent disruptions to travel and the increasing cost of health care (especially for travel to the United States) having comprehensive travel insurance is now practically compulsory. If your credit card travel insurance policy covers your holiday then it can be a good way to reduce the cost of travel. But if you aren't covered when you think you are, it can be a terrible shock when you come to rely on the policy.