When I offer my clients to
purchase trip insurance as an added benefit to their vacation, they state that
their “Credit Card” has them covered.
Does it? Let’s take a closer look
at what your credit card really covers and how you can be covered in an
emergency when traveling.
As
a free perk, some credit cards offer supplemental insurance, such
as car rental collision insurance, travel cancellation insurance
and even cell phone replacement coverage. So when disaster strikes, you
may already be covered. However, don't
be too quick to turn up your nose at buying your own trip insurance. Your
credit card's offerings are secondary
insurance, meant as a supplement to -- not a replacement for -- more comprehensive coverage. Most, if not all credit cards' coverage is
riddled with exclusions. Read the fine
print and make sure you're absolutely clear about the coverage that's available
through your credit card.
Here
are some facts to keep in mind:
TRAVEL ACCIDENT INSURANCE - Think of it as a miniature life insurance policy, free for
buying your vacation with your credit card. If the unimaginable happens while you're on vacation,
your credit card provides a payout to you or your survivors.
What's
usually covered:
Death or dismemberment resulting from an accident on a plane, train, bus, boat
or other official carrier generally qualifies for some cash. You're also
usually covered when you're being shuttled to and from the terminal. Most credit
card agreements spell
out the terms of agreement in grisly detail.
If you die, your survivors get the full benefit. Lose just a thumb and an index finger on the
same hand and you'll only get a quarter of the money.
What's usually excluded: If
the accident happened while you were traveling to or from your regular
workplace or just a leisurely vacation, even if you paid for the vacation with
your credit card, you probably won't be covered. Plus, anything other than dying or losing a
limb is generally out of bounds, so you won't get any help with health issues
along the way, such as a heart attack. A separate travel
insurance plan,
which usually costs between 6 percent and 8 percent of the total price of your
total trip, will likely protect you in the event of all kinds of away-from-home
health issues, including medical evacuation. "Credit cards, in general, cover far less than
traditional travel insurance," says Linda Kundell, spokeswoman for
the U.S. Travel Insurance Association.
TRIP CANCELLATION INSURANCE - If an emergency or an illness
keeps you from going away on your vacation you paid for with your credit card,
your card company may reimburse you for them.
What's
usually covered:
While only 15% of cards offer it, travel cancellation insurance reimburses you the cost of a
nonrefundable vacation if an emergency or illness derails your travel plans in rare
cases.
What's usually excluded: If
you have to cancel a trip because your fibromyalgia acts up, you'll probably be
on your own, since cancellations due to pre-existing conditions aren't covered.
Only a tiny handful of high-end cards cover weather-related trip delays, so if
a snowstorm strands you in Buffalo, you'll have to eat the cost of the vacation
yourself. Plus, most credit cards exclude war zones, so if you booked a
sightseeing tour to Afghanistan, you're on your own.
LOST LUGGAGE INSURANCE - In
2009, almost four bags were lost or otherwise mishandled for every 1,000
passengers. Some credit cards will reimburse you for the items in your suitcase
the next time your checked luggage goes permanently astray.
What's
usually covered:
If you paid for your tickets with your credit card and your checked baggage is
stolen or lost by the carrier, you'll usually be eligible for coverage for the
replacement value of your lost stuff.
What's usually excluded: Read the fine print carefully because some credit cards that
offer this perk also maintain a bizarre laundry list of items they won't
insure, including glasses, travelers checks, skis, tennis rackets, hearing aids
and cameras. And if your luggage is just
horribly delayed, forcing you to buy a whole new wardrobe for your stay on your
cruise or vacation, you're on your own for the bill. Like many other forms of credit card
insurance, this won't
kick in until after you've filed a claim with the travel carrier and sometimes
your homeowners insurance.
CELL PHONE REPLACEMENT INSURANCE - Pay your cell phone bill with
your credit card every month, and the next time your cell phone is rendered inoperable, your
card issuer will pay for your new one.
What's usually covered: If your phone gets damaged or stolen, you can file a claim
and be reimbursed up to $250 for your new phone, minus a $50 deductible. (Just
be sure to pay off your credit card bill in full each month; otherwise, the
interest that you pay on your card could total more than
the amount that you'd get reimbursed.)
What's usually excluded: If
your phone mysteriously disappears or gets lost, you can't make a claim. Plus,
cards that offer cell phone protection tend to provide a host of exclusions. And
if you miss a cell phone payment, your protection plan is suspended until the
next calendar month after you pay again depending on the carrier you have. Make sure you check with your carrier and the
exclusions they have.
FACT: Travel protections offered in your credit card simply
don’t stack up to the level of protection offered by a travel insurance plan
from your travel agent.
Not
all credit cards offer all of the travel benefits such as Trip Cancellation,
Trip Interruption, Travel Delays, Rental Cards, Lost or Destroyed Baggage, Accidental
Death and Dismemberment (AD&D) or Flight Accident Insurance, Emergency
assistance and concierge services, and a higher annual credit card fee may be
required to get these travel benefits. Often,
the annual fees charged by credit cards are higher than you’d expect to pay for
a basic travel insurance plan. In addition, you must charge all travel expenses
to the card offering the travel benefits for the coverage to be in effect, and
your trip must be less than 30 days long.
Four Ways Credit Card
Travel ‘Protection’ Is Not As Good
As Real Travel Insurance
Clients
depend on credit card ‘protection’ to cover their trips like travel insurance, but
it simply does not compare to when you purchase trip insurance through your
travel agent.
No Medical Or Evacuation Coverage - For travelers going abroad,
this is a very important difference. Credit
card protection does not have the same emergency medical or evacuation coverage
as a travel insurance policy. If you are
injured or have an accident overseas and need medical care, the credit card
protection might have assistance services to help arrange care but they will
not automatically reimburse for medical expenses.
Trip
Cancellation Coverage Is Very Limited - Trip cancellation insurance through your credit card is typically
limited to canceling for these reasons: illness, injury, or death of you, a
close family member, or your traveling companion. Maximum trip costs are very limited
when you make a claim for trip cancellation on your credit card. If you take
multiple trips in a year, or even one big trip, you could use up those benefit
limits pretty quickly. The maximum trip costs with travel insurance are often
much higher.
Trip Interruption Coverage Is Very Limited - Trip interruption coverage is for those emergencies
where you have to abandon your trip to return home immediately, like when your
daughter is sent to the hospital, or an earthquake strikes your destination (or
residence), or a family member unexpectedly dies.
The covered reasons for trip interruption with your credit card are limited
to sickness, injury, or death of you, a close family member, or traveling
companion resulting in medically imposed restrictions. By contrast, the
covered reasons for trip interruption with travel insurance include bankruptcy,
natural disasters at your home or destination, jury duty, terrorism, and more
(depending on the plan).
These are desperate situations
that result in unexpected (and often high) airline, lodging, and transportation
fees, not to mention the loss of your nonrefundable trip costs.
We found that the benefit limits for trip interruption with
your credit card are very limited. If you are on a week-long cruise with
your family, and face an emergency that requires you to return home, you’ll be
paying far higher costs than this credit card coverage provides. See the maximum
provided by travel insurance for trip interruptions.
Travel Delay Coverage Is Limited – Even though minimum travel delays might be covered
with your credit card protection, the benefits are limited to the following
covered reasons: delays due to inclement weather, common carrier equipment
failure, and lost or stolen passports. In contrast, see the reasons for trip delays
commonly covered by travel insurance.
·
Applies
to outbound travel only (not return travel)
·
No
more than 2 claims per 12-month period
·
No
coverage for common carrier cancellations
Credit Card Exclusions Are The Same
But Travel
Insurance Gives You Options
All
credit card travel protection automatically exclude many of the things travel
insurance plans exclude, such as terrorist acts, pre-existing medical
conditions, underwater sports, etc.
However, the key is that travel insurance plans often offer optional riders to overcome these exclusions and credit cards do not.
For
example, with some travel insurance plans, you can have coverage for:
·
Pre-existing medical conditions
·
Adventure/hazardous activities
·
Sports activities and equipment
·
Security or political evacuations
·
Missed connections
·
‘Cancel for any reason’ coverage
·
‘Cancel for work reason’ coverage
Check
out Damian’s site at http://www.travelinsurancereview.net/ who is a licensed travel
insurance expert in the field of travel insurance for more in-depth facts.
So
the next time your travel agent offers you trip insurance to cover you for your
vacation, take a second look at how much it would really cost you in the end if
you don’t.
Keep
updated with the latest in travel information and special vacations at www.facebook.com/maralohatvl &
http://www.maralohatravel.blogspot.com
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