The 10 things you need to know about credit card travel insurance

Why buy travel insurance when you can get it for nothing?

If you use a gold, platinum or diamond credit card to pay for your air tickets and other travels you might be eligible for travel insurance from your card provider at no cost. What's not to like? But does it really stack up against the travel insurance you buy on the internet, or through a travel agent? Not according to most travel agents.

"They'll do anything they can to stall a claim", "Their cover is substandard", "It's free so what do you expect?" are some of the criticisms you might hear from a travel agent should you express satisfaction with the level of coverage provided by your credit card. The percentage commission an agent receives from a travel insurance policy is far more handsome than that which they pocket from an airline ticket or a hotel booking and this goes some way to explaining their enthusiasm for the travel insurance policy they sell.

See also: Travel insurance: Common mistakes and pitfalls to look out for

Evidence suggests they're wrong. According to claimants' reports, cardholder travel insurance policies are every bit as solid as the policies you pay for, and with good reason. Card providers are extending the privilege of free travel insurance to their biggest-spending cardholders. Getting them offside with a shonky travel insurance policy is not going to foster an enduring relationship.

Here are 10 things you need to know about credit card travel insurance. 

Eligibility and cost

To take advantage of the free travel insurance that comes with many platinum, gold and other upper-echelon credit cards, a traveller must use their card to pay for either all or a portion of their travels above a specified amount. There might also be a minimum spend. In most cases the travel insurance policy is activated automatically but some, such as CommBank's Gold, Platinum and Diamond credit card customers, need to activate their coverage online. While this free travel insurance applies only to cards with an annual fee, in most cases you only have to use it for one overseas trip per year to put yourself in the winner's circle compared with the cost of even the cheapest travel insurance that you pay for.

Who's covered?

If it's a family trip, only you and your partner might be eligible for the full cover provided under the policy. Cover may be reduced for other family members. For example under the Citibank policy, claims for loss of personal belongings is limited to $16,000 per person up to a maximum $32,000 for a family.

Medical cover

This is the big ticket item and most credit card travel insurance policies provide unlimited cover for accidents, injuries and medical repatriations. Standalone policies are usually more generous with incidental expenses incurred during a hospital stay but this is not likely to cause major pocket pain. There's a "gotcha" in the travel insurance provided to American Express Platinum Edge cardholders. Under the terms and conditions, the policy document states "We will not pay medical costs over $1500 without prior authorisation by ACE Assistance." If you're semi-conscious in a hospital bed this might be difficult.

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Excess

The excess for any claim is generally higher for a credit card policy, usually in the range $200-500. For a retail policy the lower figure is often around $100 for most claim items.

Age limits

This is one area where credit card travel insurance shines. Coverage will often apply to anyone aged under 80. This is a big advantage for senior travellers since retail travel insurance premiums head skywards once the candles on the birthday cake get to 70.

Loss of personal effects

Cover for theft or damage to your goods and chattels is often more generous with a free credit card policy than with the policy you buy. Same goes for theft of cash, you're usually better off with a credit card policy. 

Rental vehicle expenses

In all but the USA where the renter may be liable for the full replacement cost of a vehicle they damage, a credit card insurance policy gives you adequate cover. For example with ANZ Premium Cards you're covered for rental vehicle insurance excess to the tune of $5000, in the case of Citibank Rewards cards the figure is $2750. 

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Geographic coverage

The premium you pay for a standard travel insurance policy will usually vary depending on where you're going. Not so with a credit card policy. Provided you're not heading for Syria, Libya or anywhere else that carries a "Do not travel" advisory from Australia's Department of Foreign Affairs and Trade, you're covered. On the other side of the coin you might not be covered for travel within Australia.

Time limits

A credit card policy will usually end at the time you return home. If you subsequently fall ill with malaria contracted overseas or if a wound sustained when you fell into an open drain in Myanmar becomes infected, chances are you're not covered. A retail travel insurance policy will usually cover you for such medical expenses for 12 months after you return home. Note too that if you purchase travel insurance for a trip to Indonesia in two months time and a week before you're due to travel an erupting volcano grounds your airline, you'll probably receive compensation if you've paid for your travel insurance policy, but that's less likely if you're relying on the insurance that comes with your credit card. 

Terms and conditions

Read the fine print. Credit card travel insurance policies come with the usual ifs, buts and where-to-fors, available as a PDF on your card's website, and they matter. Insurance T&C's are possibly one of the most boring documents ever written but you shouldn't set foot outside without a thorough read. "I didn't know…" is a threadbare position if you fail to read the terms and conditions and your insurer won't pay your claim.

See also: 11 mistakes every first-time traveller makes
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