When planning a holiday, oddly, travel insurance is often the first expense to bite the dust with budget-conscious travellers. Utilising complimentary travel insurance offered by your credit card could be the answer, but you’ll need to know the ins and outs. You’ve already paid the credit card annual fee – so why not use the free travel insurance?!
Like most insurances, the true value of the policy only becomes apparent when it is time to make a claim, and then…it could be too late. If you fall outside the fine print of a travel insurance policy and the insurer refuses to pay up, what seemed like a bargain at the time, could end up being a daft deal.
Cost aside, the most important thing to consider when taking out any travel insurance policy is that you understand what you are covered for and any restrictions that apply. The same applies for ‘free’ credit card travel insurance.
Not all credit cards offer travel insuranceUsually ‘free’ travel insurance is only offered with high end credit cards like gold or platinum cards and some rewards credit cards. Given most of these cards have hefty annual fees, some would argue that the word 'free' is used a little too loosely as a lure by the credit card companies. Often with credit card benefits, the higher the annual fee, the more inclusions or rewards you get.
Consumer confusion and complaints about card-based travel cover prompted an investigation in June 2015. The two most common problems reported by cardholders were:
- Firstly, uncertainty around what customers need to do to kickstart their travel cover; and
- Secondly, who is covered under the policy.
Activate your travel coverNearly all credit card travel insurance requires you to have paid a large portion of your travel expenses using your credit card in order to be covered. The percentage and activation process varies between card providers, so make sure you know the terms.
For Example: ASB’s Visa Platinum with Rewards offers cover for a maximum of 120 days when you pay for at least 50% of your holiday using the card. BNZ Gold or Platinum Visa cardholders get cover underwritten by Cigna for return (leisure only) international trips. You must pay at least $250-$500 on the card to activate.
In many cases you need to pay for all or part of your airfare using the credit card, which can be easily overlooked if you hand cash to a travel agent or if you pay for tickets using BPAY to avoid credit card surcharges.
- Auto-Activation on Purchase: In most cases, your travel insurance is automatically activated when making any travel-related purchases on the card, such as flights and accommodation.
- Notify Your Card Provider: On other cards, you may need to notify your card provider when you wish to activate your travel insurance.
Know who is coveredYou will need to consider who requires cover, and importantly, who is actually covered. Some credit card travel insurance policies will only cover the cardholder, with a few card issuers extending cover to family members when travelling with the cardholder and having their travel expenses paid on the card.
‘Complimentary’ card cover often has age restrictions so a senior traveller is likely to have to purchase a standalone travel insurance policy.
Consider your trip lengthThe third consideration is your trip length. Credit card travel insurance will often only provide cover for a trip length up to 3 months. A select few may provide cover up to 12 months, so be sure to check the limits. Unlike standalone policies, you will do not have the option to extend your trip beyond the limits specified. So, if you’re planning on a longer trip and want the flexibility to extend while overseas, it would pay to look into stand-alone travel insurance options.
Most independent insurance providers will allow you to extend your holiday, however credit card companies generally will not allow this. If you extend your trip beyond the pre-confirmed travel time, your cover may cease.
Other traps to look out forYou may be able to save a few dollars by taking advantage of free credit card travel insurance, but there are a number of other catches that consumers need to be aware of before deciding on whether this cover is enough.
Pre-existing Medical Conditions
All credit card travel insurance covers medical costs for overseas travel, however some have lesser limits than a standalone policy. There are also strict exclusions in relation to pre-existing medical conditions.
When purchasing standalone travel insurance, there is a list of conditions automatically covered and you often have the option to cover additional medical conditions by paying an additional premium. Whereas credit card travel insurance generally excludes cover for any pre-existing medical condition.
If you’re heading to the slopes for some ski action or planning on jumping out of a plane, you might want to check what activities are covered. You may require a specialist standalone policy for your planned activities.
It’s no fun if your stuff gets nicked or if you end up in a pickle during your travels, but you'll be even more upset when you find out that the excess attached to your credit card insurance makes claiming worthless.
Credit card travel insurance often has a much higher excess in comparison to stand alone insurance providers. Standalone travel insurance policies have variable excesses (generally $100 - $250), however the excess for credit card travel insurance can be as much as $500.
High Value Items
If you’re travelling with high value items, you should check the per item limits that apply. For example even though luggage cover may stipulate $10,000 if your high end DSLR camera is worth $2,000 and the per item limit is $750 you’ll probably want additional cover. Credit card travel insurance doesn’t allow you to add high value items whereas standalone travel insurance does.
There may also be some exclusion of coverage for valuables put into checked luggage. For example breakable items like cameras and laptops are often not covered if they are damaged during travel.
A large proportion of ‘complimentary’ credit card travel insurance excludes coverage for lost items. You need to read the terms and conditions carefully.
The term 'free' does not necessarily mean 'free'. Credit cards that provide ‘complimentary’ travel insurance typically have annual fees ranging from $87 to over $500.
If you're a healthy, savvy traveller who takes more than two standard short trips a year, credit card travel insurance could be the winning ticket. When you compare the card annual fee cost to the cost of standalone travel insurance, it may save you some cash. It’s good to weigh up the options but make sure you read the terms of cover paying particular attention to exclusions.
Be it business or leisure, there are many affordable options out there for covering your travels. Your focus should be ensuring you have enough cover for your planned trip. Use our comparison to instantly compare travel insurance quotes and levels of cover from 20+ reputable travel insurance companies.
Activate your 'free' travel insurance
|Credit Card Company||Eligible Cards||Insurance Activation Requirement||Insurance
|American Express Credit Cards: Platinum, Platinum Edge and Airpoints Platinum||1. Ensure that you have one of the eligible AMEX cards.
2. Cover is effective when you pay the full fare for a Trip on the American Express Platinum Credit Card Account
|ANZ Credit Cards: Cashback Visa Platinum and Airpoints Visa Platinum||1. Ensure that you have one of the eligible ANZ cards.
2. You must hold a return travel ticket for your travel before you depart New Zealand.
3. If you are using points from a loyalty scheme, you will be eligible for cover provided you pay for at least half of your prepaid travel expenses using your ANZ Premium Card. Where an ANZ Premium Card is not an accepted means of payment, you will be covered if you pay using funds from any of your other ANZ accounts.
Your spouse and/or dependent children accompanying you on the journey are also covered by this policy.
|ASB Credit Cards: ASB Visa Platinum Reward
and ASB Visa Gold card.
A spouse or dependents are not covered unless they are travelling with the card holder and at least 50% of everyone’s return travel tickets have been purchase using the card.
|BNZ Credit Cards: Advantage Visa Platinum Cash Rewards, Advantage Visa Platinum Fly Buys||
|Kiwi Bank Credit Cards: MasterCard Gold
and Air New Zealand Airports Platinum
|Westpac Credit Cards: Westpac hotpoints Visa Gold, Platinum, BusinessPLUS Mastercard.
Westpac Airpoints Platinum, Business or Airpoints World Mastercard, if you are travelling for business purposes, or simply hold an Airpoints World Mastercard as provided in the policy for travel.
Your spouse and dependants are covered provided that they meet the same criteria as having $500 of their prepaid travel costs paid on the card.
We hope this guide has helped answer some of the common questions posed by many credit card holders in terms of whether complimentary travel insurance is enough and how to activate the insurance cover. The information provided is factual at the time of writing and general in nature. We have not considered your personal circumstances. Eligibility requirements and terms and conditions on cover are subject to change from time to time. Please refer to your credit card provider and the latest policy wording prior to your travels.
Eugene is the king of insurance! Having spent more than ten years raising awareness on the importance of holiday protection, he is a self-confessed insurance geek extraordinaire when it comes to the world of travel cover. Eugene loves helping people save time, worry and loads of money with the right policy at the right price. His ideal holiday is any one where he has a pina colada in his hand. Salut!