Your guide to travel insurance ahead of your next trip

How to check coverage on your credit cards and assess if you need to buy a policy

Travel insurance has your back when the unexpected happens.
Consider what you would do – and how much money you could lose – if any of these things happened to you:
– Your Caribbean cruise is canceled by an impending hurricane.
– An airline strike in Europe cancels flights leaving you stuck in Stuttgart.
– You break your arm on your honeymoon at an all-inclusive resort.
– You get to Punta Cana but discover your luggage is MIA.

One way to protect your investment in a grand getaway or storybook honeymoon is through travel insurance. Rewards credit cards often offer varying degrees of travel insurance – covering everything from canceled or interrupted travel to lost luggage and damage to a rental car.

Carol Mueller, vice president of Berkshire Hathaway Travel Protection, suggests that travelers check their credit cards to determine “what coverage you do and you don’t have, and match it up against the concerns you have.”

How to decide what kind of travel insurance you need? How you answer the following questions will help determine what kind of (and how much) travel insurance you should have before you hit the road or head to the airport include:
– Will you be traveling domestically or internationally?

– How long will you be traveling (short stay of seven days or less or long stay of seven days or more)?

– What kind of travel you’re planning: business trip, vacation or emergency trip (such as to get to the bedside of an ailing loved one)?

For example, if you are just going on a quick business trip, you likely will not need the same travel insurance coverage as when you are heading out on a weeklong (or longer) vacation in an exotic location outside the U.S.
Then you need to assess what cards to use to ensure the maximum coverage for all you are planning to do on your trip.

If your cards don’t meet your travel insurance needs – or you just want to be covered for any contingency – you may want to supplement your coverage by purchasing a travel insurance policy.

In 2016, more than 42.6 million Americans bought travel insurance, spending almost $2.8 billion, according to the U.S. Travel Insurance Association.

What is travel insurance?

Travel insurance flowchartTravel insurance (sometimes called trip insurance) will reimburse your prepaid travel expenses if things go awry or compensate you in the event of an emergency.
Depending on the type of coverage you have – either offered at no charge to you with your credit cards or with a travel insurance policy you paid for – you may get your money back if you have to cancel the trip before you depart, or if you have to cut your trip short for an unforeseen reason.

Credit cards may include some types of coverage that you won’t find with a travel insurance policy you purchase, such as auto rental insurance. And the travel insurance you purchase may offer coverage that your card doesn’t include, such as medical evacuation insurance.

Who needs travel insurance?

In some cases, the insurance benefits provided by your credit card may be enough. In other cases, you might want to boost your benefits by purchasing travel insurance.

The difference may depend on where you’re headed and how much the trip costs.
If you spend $200 on an airline ticket to visit your parents, you might not need additional travel insurance. But if you’re going on a cruise that costs thousands of dollars and need to make payments months in advance, you might want the extra protection that travel insurance offers.
“It’s really up to the individual and what type of risk tolerance they have for losing money,” Mueller says.

About 25 to 30 percent of leisure travelers in the United States purchase travel insurance, she says, and the number of people purchasing the insurance has increased “as people see how hurricanes and weather impact destinations.”

How much does travel insurance cost?

A travel insurance policy usually costs about 5 to 7 percent of the cost of the trip, Mueller says.

Price is determined by the cost of the trip, the length of the trip and the traveler’s age, says Steven Benna, spokesman for the travel insurance site

If your trip costs $12,000, and your credit card provides $10,000 in trip interruption and trip cancellation insurance, you can save money by buying just $2,000 more in coverage from a travel insurer, he says.

What are the types of travel insurance?

The types of coverage offered can vary greatly from credit card to credit card. There also can be big differences between credit card coverage and a travel insurance policy you pay for out of pocket.

Trip cancellation and/or trip interruption insurance

Trip cancellation insurance can reimburse your non-refundable travel costs if you need to cancel your trip for a covered reason, such as illness or injury, before you depart. Trip interruption insurance can reimburse your costs when you’re already on the road and your trip is interrupted for a covered reason, such as an illness or a natural disaster.

Many credit cards provide either trip cancellation or trip interruption insurance, or both.

There can be wide variations in coverage limits for trip cancellation/interruption insurance, and premium cards usually offer more generous policies. For example, the Chase Sapphire Reserve, which has a hefty $450 annual fee, offers both trip interruption and cancellation insurance that provides coverage of up to $10,000 per covered trip, with the maximum benefit limited to $40,000 per 12-month period.

Travel accident insurance

Travel accident insurance, often called flight accident insurance or accidental death and dismemberment insurance, is included with several credit cards.
This insurance can provide a payout if you are killed or lose a limb or one of your senses, such as sight or hearing, while traveling on a common carrier such as airplane, bus or train.

The Capital One Venture Rewards credit card, and other Capital One Visa Signature cards, for example, provides up to $250,000 of such insurance.

Emergency medical and evacuation insurance

A handful of premium credit cards, such as Citi Prestige and Chase Sapphire Reserve, offer emergency evacuation insurance if you or your spouse, domestic partner or dependent children become seriously injured or ill while you’re traveling. Both cards cover emergency services and transportation for up to $100,000.
Once you are evacuated to a hospital, though, you may have to foot your own medical bills if you become ill or injured while traveling.

In general, Medicare does not pay if you have a medical emergency outside of the United States, and many private health insurance plans may not cover you if you’re traveling abroad, Benna says.

Travel insurance policies you purchase on your own can include both emergency evacuation insurance and emergency medical insurance.

Trip delay insurance

Both comprehensive travel insurance policies and some credit cards will cover your unreimbursed expenses if your trip is delayed for a certain amount of time.
The United Explorer Card, for example, will cover your expenses such as meals or lodging if your trip s delayed more than 12 hours or if an overnight stay is required. Reimbursement is up to $500 per ticket.

Lost or delayed baggage

Comprehensive travel insurance will typically cover the purchase of clothing and other essentials if your baggage is delayed.
Some credit cards will also cover lost or delayed luggage. The Capital One Venture card, for example, reimburses you for up to $3,000 if your luggage is lost.

Auto insurance

Credit cards also may offer travel protections that extend beyond flights, hotels and cruises.
A number of credit cards, including the Premier Rewards Gold card from American Express, will cover you if you decline the collision damage waiver when renting a car, and your rental vehicle is damaged or stolen.

Comprehensive insurance

Comprehensive insurance is by far the most popular type of coverage sold by travel insurance companies, Mueller says.
It bundles different coverages for one flat fee, and can include trip interruption and cancellation insurance, accidental death and dismemberment insurance, travel delay insurance, emergency medical, dental and evacuation insurance, and baggage delay insurance.

Who is covered?

Benefits provided by your credit card may cover you, your spouse or domestic partner, and your dependent children.
If you purchase travel insurance, you can buy a policy just for yourself or for your whole family if you are traveling together.

Watch for benefits changes

Even if your current card has travel benefits, be sure to check your coverage before you depart.
Discover, for example, eliminated five card benefits, including flight accident and auto rental insurance, in February.

Citi, meanwhile, is changing its benefit limits on some cards as of July 29. Trip cancellation and interruption protection for the Citi Simplicity card will fall from $3,000 per person per trip, with no annual limit, to $1,500 per trip and $5,000 per year, says spokeswoman Jennifer Bombardier.

Citi is making the changes, she says, “so that we can continue providing key benefits that our customers use and value most at no additional cost.”
As of Aug. 26, Chase is eliminating its lost luggage reimbursement and travel accident insurance on its Chase Freedom card and lowering its trip cancellation and interruption coverage, according to The Points Guy.

Where can you get travel insurance

If you’ve got a trip coming up, first check your credit cards to see what kind of coverages they provide.
If you’re in the market for a new card and you’ve got a big trip on the horizon, you might want to check the travel benefits offered before applying for a new card. You might even land a sweet sign-up bonus that will help cover some off your travel costs.
If you want to supplement your card benefits with other coverage, you can check sites such as Berkshire Hathaway or travel insurance aggregators such as Squaremouth or TravelMedEvac.

Watch for exclusions

Doctor in scrubsBoth travel insurance that comes with your credit card and coverage you purchase will have exclusions, so read the fine print.
For example, travel insurance typically won’t cover pre-existing medical conditions or if you’re planning to take part in a high-risk sport, such as skydiving or scuba diving.
You also may not be covered if you’re traveling against the advice of a physician, if you’re participating in a competitive sport, or you’re in the third trimester of pregnancy.
For high-risk sports, you might be able to purchase a special policy that covers those activities, Benna says.

When should you buy travel insurance?

Mueller recommends buying travel insurance within 15 days of making a deposit or paying for your trip.
Because many policies have exclusions for pre-existing conditions, you don’t want to be diagnosed with a disease, and then be unable to buy travel insurance.

Another reason to buy well ahead of your trip: If a terrorist attack happens at your destination a week before your trip, or a volcano erupts, you won’t be able to purchase travel insurance.

Planning your next trip involves checking your credit card travel insurance benefits and purchasing additional travel insurance, if you feel that is needed.
Whatever you do and wherever you go on your next trip, you want to be prepared – and to know you won’t lose your shirt if your luggage goes missing.

By Susan Ladika