Hidden Gaps of Credit Card Travel Insurance

Deciphering the real coverage in your credit card

Credit cards can provide a basic level of travel insurance - but it might not be as comprehensive as you think.
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One of the biggest misconceptions many travelers go down the road with is the idea that they have travel insurance, thanks to their credit cards. But the level of coverage that travelers think they have, versus the level of coverage they actually have may be two different things.

While coverage from a credit card can be great (especially in the case of rental cars), it may not be complete protection from everything that can go wrong. Here are three hidden gaps that your credit card travel insurance may not cover when you're on the road.

Payment Method Determines Travel Insurance Level

Many credit cards will offer you "complimentary" travel insurance coverage as part of your cardholder agreement, allowing you to focus on your travel planning. In the fine print, however, is one of the core stipulations of your credit card travel policy: you must pay for your travels with your credit card.

How much you pay with your card before travel will kick in depends on your travel provider. For some, simply paying for the majority of your travel on your card will qualify you for travel insurance benefits. For other cards, you will have to pay for the full amount of your travel on the credit card before travel insurance benefits are extended. Be sure you understand how much of your travel you have to pay for on your card in order to qualify for travel insurance benefits.

An additional note about payment methods and travel insurance: if you pay for your travel with points or miles earned from a credit card, any travel insurance may not extend to cover those points and miles. Be sure to consult your credit card policies to see how points and miles are treated when it comes to travel insurance.

Primary Vs. Secondary Travel Insurance

One of the biggest questions to ask of your credit card travel insurance is if your coverage is primary or secondary. Knowing this valuable piece of information can help you determine how to file a claim during or after your travels.

In many cases, your primary coverage will be the insurance policies that you already have on your persons and property - including your auto insurance, home insurance, or umbrella insurance policies. Secondary coverage (or supplemental coverage) is only applicable once your primary coverage has been exhausted. Once a claim is reviewed by the primary carrier and a determination is made, secondary coverage may cover what's left over. However, secondary coverage often times comes with a set of stipulations that need to be met in order to be valid.

Before you settle in with your credit card travel insurance policy, make sure you understand whether it is primary or secondary. If it is only a secondary policy, then you may want to consider adding a primary travel insurance option for your trip. 

Per Claim or Per Event Travel Insurance

One of the major assumptions travelers make with their credit card travel insurance is that it may cover many common situations, regardless of the number of claims you need to file. Depending on your coverage, you may be forced to pay out for every individual claim, and for all of your claims as a travel event.

Before you go on your trip, it's important to know if your credit card travel insurance is based per claim, or per event. If your travel policy is per claim, then you may be forced to pay any excess (like deductibles) for every claim that you make. But if your insurance is based per event, then your travel event would be looked at as one complete event, meaning you would only have one deductible or excess payment to make. So, if you were to have multiple claims (such as baggage loss and trip delay on the same trip) with a travel insurance plan that handles claims per event, you would pay only one total deductible for all of your claims.

However, if your insurance is based per claim, you could be responsible for excess payments on every claim.

While the travel insurance extended by your credit card provider is good, it may not be as fully encompassing as you think. By understanding how your travel insurance works, you can make sure you're getting the best coverage for your activities, no matter where you go.