The ultimate guide to credit card travel insurance

Businessman relaxing after using credit card travel insuranceImage: Businessman relaxing after using credit card travel insurance

In a Nutshell

Travel insurance may be one of the most underrated features of your credit card. Many frequent flyers obsess over sign-up bonuses but ignore a benefit that could potentially save them thousands of dollars.
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This past summer, I used the travel insurance with my Chase Sapphire Reserve® credit card to book a hotel in New York City and a ride to the airport. But these weren’t just any accommodations. The hotel was right next to Central Park, and the ride was in a limousine.

How did I manage this? Allow me to explain.

I was on my way to San Francisco when a thunderstorm came rolling in and my flight out of LaGuardia Airport was canceled. Instead of panicking, I saw it as an opportunity to test out the trip delay benefit from my Chase Sapphire Reserve®.

I called the benefits administrator to make sure I was eligible for the trip delay insurance and confirm the coverage limits. Then I spent a few minutes figuring out how much I could afford to spend on a hotel, food and Uber rides.

Everything went smoothly until the next morning, when it was time to return to the airport. Uber was surging north of $80 for a trip to the airport, so I did what any budget traveler would do: I searched for the cheapest ride I could find. That just happened to be a limousine from the hotel’s car service. I felt as if I was going to prom.

Travel insurance is easy to ignore, but I’m glad I had it when I needed it. The trip delay insurance on my Chase Sapphire Reserve® turned what would’ve been a miserable experience into a fun night in the City that Never Sleeps.

The best part? I didn’t pay a penny. Many travel credit cards include travel insurance for no additional cost on top of the annual fee, as long as you purchase the trip with your card.

Not all credit card travel insurance is created equal, though. Let’s look at what you need to know to find the card with the best travel insurance features for you.

What’s travel insurance?

Travel insurance is exactly what it sounds like: insurance for when something goes wrong on your vacation or business trip. It can take many forms, ranging from trip cancellation or interruption insurance to coverage of emergency dental work.

My favorite credit card for travel insurance is the Chase Sapphire Reserve®. It covers a wide variety of expenses that result from unexpected changes to your travel plans, such as canceled flights and lost baggage. Learn more about how to maximize the benefits of the Chase Sapphire Reserve®.

Let’s take a closer look at the travel insurance benefits offered by this card.

Chase Sapphire Reserve®
Travel accident insuranceUp to $1 million for loss of life, sight, hearing, speech or limb
Trip cancellation/interruptionUp to $10,000 per trip for yourself, with a max of $20,000 per trip if you’re traveling with family
Trip delay reimbursementUp to $500 for reasonable expenses, after a delay of a covered hazard of more than 6 hours or that requires an overnight stay
Rental carPrimary coverage, up to $75,000

Why do you need travel insurance?

At this point, you might be wondering whether travel insurance is actually worth it.

As with homeowner and auto insurance, you hope to never need it. But think about it this way: You’re protecting yourself from the worst-case scenario. What if your flight is canceled? What if your bags get lost? What if you get sick or sprain your ankle?

Just because you’ve never been in a car accident, that doesn’t mean you should cancel your auto insurance. So why would you skimp on travel insurance?

If you need further proof, let’s look at some of the most common travel insurance benefits and how they might apply in a real-life scenario.

5 travel insurance benefits that can save you serious money

1. Trip cancellation/interruption insurance

Let’s say you’re planning a family trip to Walt Disney World.

You spend $4,000 booking your flights, hotel, rental car and, of course, the Disney tickets. But a few days later, you’re called in for jury duty and are forced to cancel the trip — despite the nonrefundable reservations you made.

That’s where trip cancellation insurance comes in handy. Chase Sapphire Reserve® covers up to $10,000 in qualified nonrefundable travel arrangements per person that you made before your covered trip was canceled.

Here’s another scenario: You’re in the middle of your Walt Disney World adventure when you find out a relative back home has passed away. You know you’ll need to return home early to attend the funeral, but you’re not sure how to do it.

Changing your travel plans is probably the last thing you want to be dealing with in this kind of situation. To help the process go more smoothly, Chase Sapphire Reserve® also offers trip interruption insurance, which may reimburse you up to $10,000 for the unused and nonrefundable portion of your trip.

2. Trip delay insurance

On the other hand, maybe your trip to Walt Disney World was fantastic, but your flight home was canceled because of severe thunderstorms (like mine was!) and you need to stay in town one more night.

Trip delay insurance could have you covered in this case. I used the Chase Sapphire Reserve® trip delay insurance when my flight out of New York was canceled.

Just remember, a trip delay doesn’t necessarily have to ruin your vacation.

Scott Keyes, the founder of Scott’s Cheap Flights, an email newsletter that alerts subscribers to low airfares, has experienced his share of delayed flights and missing bags in his travels around the world. But he always finds a way to make the most out of a bad situation.

“I like to ride out my delay in style,” Keyes says.

“If it’s on my dime, I probably won’t order steak or oysters,” he says. “But if I know I’m getting reimbursed, why not treat myself?”

Won’t the airline pay for my hotel and food if it cancels my flight?

Not necessarily. Your airline is required, with a few exceptions, to give you money to cover these sort of expenses if you miss your flight because it’s overbooked. But airlines aren’t responsible for cancellations resulting from bad weather. That’s when the travel insurance on your credit card may help.

3. Lost baggage protection

Now let’s say you’re traveling from Chicago to New York for a job interview, but the airline accidentally loads your checked bags onto a flight headed to Los Angeles.

Instead of wearing a suit and tie to your interview, you’re staring down the prospect of showing up in blue jeans and a T-shirt. That’s not exactly the best way to impress a potential employer and win the job.

And if you find out a few days later that your bags have disappeared completely? A credit card that offers lost baggage protection can come in handy.

4. Rental car insurance

Most travel cards offer some form of rental car insurance.

What’s nice about Chase Sapphire Reserve®‘s coverage is that it’s primary rental car insurance, so you don’t have to file a claim with your auto insurance company, which could raise your insurance rates.

Keep in mind, the rental car insurance provided by your credit card might cover damage to the vehicle you’re driving, but it may not include liability coverage. So, you could still be on the hook for damages you cause to another driver’s car and any injuries sustained as a result of the accident.

How do I file a travel insurance claim?

The rules for filing a travel insurance claim may vary depending on the credit card issuer, but here are a few tips to keep you on track.

Call ahead for preapproval

This is the sort of situation in which it may be better to ask permission than forgiveness.

Sure, your credit card issuer may not always require preapproval (though sometimes it does). But if you misunderstand the fine print of your travel insurance policy and make an expensive purchase that’s not covered, you could be stuck footing the bill.

There’s usually a phone number on the back of your credit card you can call to reach a benefits administrator, who can confirm whether you’re covered, what type of purchases you can make and how much you can spend. Ask for a call reference number so you have a record of what they told you over the phone.

Don’t go crazy

Unfortunately, your insurance policy is not an all-expenses-paid extension of your vacation.

If your flight is canceled and you need to stay another night, you might be tempted to book a fancy hotel, but don’t go overboard. Your insurance provider may frown upon (i.e. deny the claim for) extravagant purchases. So while it’s fine to treat yourself to a nice dinner, you should probably think twice before buying a diamond ring.

Remember, you’re still on a budget. Save room for unexpected costs.

Save your receipts

I recommend taking pictures of your receipts from restaurants and other stores you shop at, just in case you misplace them.

It’s also a good idea to ask your hotel for an email copy of your receipt. If you stay with Airbnb, your receipt will be emailed to you. Uber and Lyft also email your receipts, but taxis may not.

When it comes time to file your travel insurance claim, it will save you a lot of hassle if you keep all your receipts in one place. Just make sure you hang onto the original receipts and submit copies. That way, you’ll have a backup.

Don’t delay

It’s easy to procrastinate, but if you don’t file your claim promptly, you may run out of time. Many credit card issuers have deadlines for filing insurance claims, so pay attention to the terms and conditions associated with your card.

Besides, who doesn’t want that money sooner rather than later?

6 common questions about travel insurance, answered

What types of travel are covered?

Typically, most travel rewards credit cards offer some form of rental car insurance.

Some of the best travel cards may also offer various forms of coverage if you’re traveling by plane, train, bus or ship.

How do I know if my trip is covered?

It helps to read the fine print of your credit card agreement if you’re not sure whether your trip is covered. If you’re still confused, reach out to the benefits administrator for assistance.

What if I paid for my trip with rewards?

Certain credit cards may cover your vacation as long as you pay for any portion of your trip with the card. Coverage also can kick in when you redeem rewards. Many other credit cards require you to pay for the trip in full with your card, so always double check first.

Is my family covered?

With Chase Sapphire Reserve®, you can rest assured that you’re not the only one who’s covered. If you purchase a family member’s ticket with your card, that person may also be covered. Conditions apply, so be sure to read the fine print. The coverage also extends to authorized users.

What exclusions should I know about?

Even the best travel insurance cards have their limitations.

Whether you qualify for trip cancellation insurance, for example, depends on the reason for the cancellation. If it’s raining in Cancun and you decide not to go even though it’s perfectly safe to fly, don’t count on being reimbursed. The same goes for a businessman who cancels his trip because of a meeting he has to attend.

Also, people with preexisting medical conditions and those participating in certain sports may not qualify for coverage.

Where can you get travel insurance?

If you want to protect yourself from vacation mishaps but can’t afford to pay an arm and a leg, you may want to consider applying for a credit card that offers travel insurance.

Many of the best travel cards offer various forms of travel insurance for no additional cost. But when you’re shopping for the best travel card, keep in mind you may be charged an annual fee.

Travel booking websites like Expedia may also offer travel insurance for a modest fee when you purchase airfare, book a hotel or rent a car. You can also find companies that specialize in travel insurance, but be prepared to pay for the peace of mind.

“Most of the time, it’s not worth paying more money for travel insurance,” Keyes said. “I’m a cheapskate. I don’t like spending money on things I don’t need to, so I always rely on my credit card as my fail-safe.”

Bottom line

When you’re heading out on vacation, signing up for travel insurance is just as important as remembering to bring your camera and map.

Travel insurance may sound boring, but you’ll be glad you have it if your plans fall apart.

If you’re wondering whether you can afford travel insurance, check to see if your credit card offers it. You may be surprised at the benefits already hiding in your wallet.

About the author: Tim Devaney is a personal finance writer and credit card expert at Credit Karma. He’s a longtime journalist who prides himself on being a good storyteller who can explain complex information in an easily digestible wa… Read more.