Does My Client’s Credit Card Insurance Cover Them?

For years, travelers looked to their credit cards as a key component of their emergency travel plans, covering everything from trip cancellations to emergency medical evacuations.

But what many consumers find is that card insurance leaves substantial gaps and often reimburses travelers at inadequate levels that are best filled by conventional travel insurance policy.

Credit card insurance “is icing on the cake. It’s nice to have, but you want to be strategic about booking vacations,” said Bob Chambers, vice president of operations at CSA Insurance, San Diego. “Travelers shouldn’t rely on plastic for 100% of their insurance needs in every situation.”

Credit card insurance plans typically have limitations and caps, he noted. For example, flight cancellation reimbursement or lost baggage may allow for only a one-time payout, regardless of the value of your baggage.

Lynne Peters, product director at InsureMyTrip, noted how trip cancellation insurance may be capped at $1,500 for a year. So a scuba diver traveling with his or her own equipment could cap out after one incident and not have any more coverage.

“There’s a real misconception out there with consumers that ‘I don’t need it. My credit card covers me. Or my home insurance covers my baggage, and my health insurance covers medical,’ ” Chambers said. And credit insurance only kicks in if the traveler uses that specific card to book the trip.

Sifting through the offers
Travelers may come to an agent with multiple cards in their wallet. Each card is different, with basic insurance services on basic cards, and more elaborate coverage on elite cards, making it difficult for an agent to help determine if a client is sufficiently covered.

Typically, elite cards offer fairly good coverage. American Express offers its Premium Global Assist plan on Platinum cards ($450 annual fee), for example. The program covers trips of more than 100 miles from home, with 24/7 medical, legal, financial and other select emergency assistance services, including passport replacement, cash wires and more.

Emergency medical evacuation is covered up to $100,000, medical services up to $20,000, and prescription expenses up to $1,000. The Citi Prestige MasterCard ($450 annual fee) offers reimbursement for emergency medical evacuations up to $100,000 for a traveler, spouse or dependents, as well.

A basic plan with Allianz Global Assistance would cover up to $50,000 for emergency evacuation, at a cost of about $115 per trip. For about $35 more, emergency medical evacuation would be covered up to $500,000.

IMG’s standard travel insurance policy, Travel SE, provides up to $100,000 in emergency medical evacuation coverage. Its luxury travel insurance policy, Travel LX, provides up to $1 million in emergency medical evacuation coverage.

Additionally, said Amanda Winkle, vice president of international sales at International Medical Group (IMG,) “One of the most important distinctions is that travel insurance and travel medical insurance policies do not provide reimbursement for medical evacuations. Instead, third-party insurance companies like IMG arrange and pay for evacuation services up front, in an effort to minimize large out-of-pocket expenses for the client.”

For trip cancellation insurance, the Chase Sapphire Preferred Visa card (first year free, $95/year after) offers up to $10,000 per covered trip if the trip “is canceled or cut short by sickness, severe weather or other covered situations” and will reimburse for “prepaid, nonrefundable travel expenses, including passenger fares, tours and hotels.”

For lost or damaged, checked or carry-on baggage and personal property, Chase covers up to $3,000 for each Insured Person for each “Common Carrier Covered Trip” and $500 for each Insured Person per trip for jewelry, watches, cameras, video recorders, and other electronic equipment. The $500 is not in addition to the maximum benefit amount for lost luggage, Chase said. For lost or stolen baggage, American Express Platinum Assistance will reimburse the traveler up to a maximum of $1,200 per trip.

All in the fine print
It’s these kinds of details travel agents will have a hard time tracking. “It’s up to the consumer to find what is included in that credit card coverage,” said Peters. “A lot of times things are in the fine print that you wouldn’t think of.”

For example, the American Express Delta Skymiles Platinum Card and their Corporate Gold card offer replacement cost up to $1,250 for carry-on baggage and $500 for checked baggage, for each covered person on a covered trip. For “high-risk items” like jewelry, sporting equipment and cameras and video cameras, the maximum benefit is $250, and that could come out of the baggage replacement reimbursement.

The company’s Platinum Corporate Card offers replacement cost of up to $3,000 for carry-on baggage and $2,000 for checked baggage.

Even if you have medical coverage from an elite credit card, the fine print might include other exclusions, said Winkle. “Overall, travel insurance offered by credit card companies includes fewer covered perils and more restrictions,” she said.

IMG’s travel insurance policies cover trip cancellation or interruption due to illness or injury, theft of a passport or visa, jury duty, inclement weather or natural disaster, mechanical breakdown of a common carrier, terrorist incident and more.

Agents also should be aware of any pre-existing medical conditions a client may have, as those conditions may exclude them from coverage.

Unconventional travel may not be covered
For agents booking clients on adventure trips to exotic locations, things get even more complicated. InsuranceQuotes.com Senior Analyst, Laura Adams said that such trips might necessitate taking out travel insurance specifically designed for adventure travelers.

“It’s interesting how niche travel insurance policies have gotten, for scuba diving, bungee jumping” said Adams. “A co-worker of mine does an annual mountain climbing trip. He is a big advocate of getting travel insurance. Not only have you paid a lot to go, you’re also dependent on the weather. And not only could you get injured, you’ve got a lot of gear to bring. If it is stolen or lost, you wouldn’t be able to complete your trip.