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When booking a trip, you're probably thinking about relaxing by the beach, exploring architectural wonders, or dining on delicious local dishes.
But before you get too caught up in all the fun you can have, it's important to plan ahead for what could go wrong. Namely, if you have to cancel your trip or cut it short midway through, will you be able to recoup what you spent?
Some travelers rely on coverage through their credit cards — but do cards provide enough protection, or are you better off buying separate travel insurance? Well, it depends.
In general, credit cards provide basic coverage. So even if you have a high-end credit card, it could pay to buy a travel insurance policy with higher limits and/or additional coverage.
How Credit Card Travel Coverage Works
While coverage depends on the specific credit card, many cards offer at least some protection for purchases made with that card.
That said, premium travel credit cards like the Chase Sapphire Preferred® Card or The Platinum Card® from American Express* tend to offer more extensive coverage than, say, cards for beginners who are still building credit.
For example, both offer up to $10,000 in coverage if your trip is canceled or interrupted due to sickness or severe weather.
To access credit card travel coverage, you must buy the trip with that card. If you do, some key benefits could include:
- Trip cancellation/interruption coverage: Receive reimbursement if you have to cancel your trip or end it early.
- Luggage coverage: Get compensation for baggage delays, loss, or damage, beyond what an airline might provide.
- Emergency assistance: Get help with issues such as locating a hospital in a medical emergency. Note that this does not include financial coverage.
Pros of credit card coverage
- No additional cost beyond credit card annual fees (if applicable)
- Coverage is automatically applied for eligible purposes
- The claims process is often straightforward, especially for premium cards
Cons of credit card coverage
- Exclusions, such for pre-existing conditions or adventurous activities
- Lower reimbursement limits and less comprehensive coverage than some travel insurance plans
- Potential to not have coverage if you mistakenly bought the trip with a different card
Chase Sapphire Preferred® Card
Rewards Rate
- 5x on travel purchased through Chase Travel℠
- 3x on dining, select streaming services and online groceries
- 2x on all other travel purchases
- 1x on all other purchases
Welcome Offer
Earn 60,000 bonus points after $4,000 in purchases in your first 3 months from account opening.
Annual Fee
$95
. . .
The Platinum Card® from American Express
Rewards Rate
- 5x points on directly booked flights and hotels booked through American Express Travel (up to $500,000)
- 1x on all other spending
Welcome Offer
Earn 80,000 Membership Rewards® Points after spending $8,000 in the first 6 months
Annual Fee
$695 (rates and fees)
. . .
How Separate Travel Insurance Works
While credit card coverage automatically comes with your purchases on that card, travel insurance is purchased separately.
Policies vary based on the provider and the plan you choose, but some common features are that they typically:
- Offer comprehensive protection for different situations such as trip cancellations, medical emergencies, trip delays, and more
- Charge an upfront fee (known as a premium) to activate coverage
- Provide higher coverage limits and broader protections than what many credit cards offer, without requiring all purchases to be on a single card
You can use an online marketplace like VisitorsCoverage to compare comprehensive travel insurance quotes and easily buy a policy that works for you.
Pros of travel insurance
- Customizable coverage — select a plan with protections and reimbursement limits that match what you're looking for
- Optional add-ons, such as cancel for any reason (CFAR) and adventure sports/activities
- Coverage that works across different payment methods
Cons of travel insurance
- Additional costs versus included coverage on credit cards
- Additional time required to shop for and apply for the right policy for your needs
- Potential for more complicated claims process than through your credit card
Erika Recommends
- Chase Sapphire Preferred® Card
Includes trip cancellation/interruption benefits. - The Platinum Card® from American Express
Premium travel protections.* - VisitorsCoverage
Comprehensive standalone insurance for all trip types.
. . .
When To Use Credit Card Coverage
Before you rely solely on your credit card coverage, review the terms and conditions and compare that against what a separate policy can provide.
For short or low-cost trips
Credit card coverage often makes sense if you're taking short or low-cost trips — ideally both.
For example, if you're just going away for two nights over the weekend, there's much less risk of your trip being interrupted than if you were traveling for a month.
If your card has strong travel benefits
The stronger your card's travel benefits, the less likely you are to need separate travel insurance.
Cards with annual fees like the Chase Sapphire Preferred® Card and The Platinum Card® from American Express often provide extensive travel coverage, so it can make sense to put everything for that trip on the card.
COMPARE: Best Credit Cards With Travel Insurance
When To Use Separate Insurance
While credit card coverage often gets the job done, sometimes travelers need separate insurance.
For expensive or long trips
The more your trip costs, the higher insurance limits you'd likely want, and credit cards might not provide enough coverage.
Also, the longer your trip is, the more time there is for something to go wrong, like baggage issues or accidents that could cause you to need medical assistance or return home.
For high-risk or adventure travel
Some activities or locations could be excluded from credit card travel coverage, such as if you're taking a ski trip or diving trip in a remote area.
Because these activities involve higher risks, credit cards (and some insurers) might deny coverage. But you can find some standalone travel insurance policies that protect you in these more extreme situations.
READ MORE: How To Choose the Right Trip Cancellation Policy
Tips for Deciding Which to Use
When it comes to deciding between credit card coverage and separate insurance, the choice is subjective. Weigh the costs and risks to see what you're comfortable with.
- Compare coverage limits and exclusions: You might find that certain activities you're planning aren’t covered, which could prompt you to buy separate insurance.
- Combine both for full protection: You might rely on your credit card for smaller issues like baggage insurance, while also buying travel insurance for medical evacuation when traveling to a remote area.
FAQs About Credit Card Coverage vs. Separate Insurance
What are the typical coverage limits for credit card travel benefits?
The typical coverage limits vary by card and type of coverage. But even with premium cards, the maximum is often around $10,000 to $20,000 for trip cancellation/interruption.
Can I use both credit card coverage and separate insurance for the same trip?
Yes, combining both coverages can be a cost-effective way to optimize protection.
Are medical emergencies covered by credit card travel benefits?
It depends on the credit card. Some offer some financial assistance for medical emergencies or at least can connect you with emergency support, while others don’t cover medical issues at all.
TL;DR: Is Travel Insurance or Your Credit Card Better?
The travel insurance that automatically applies to some credit card purchases can be a cost-effective way to protect yourself, especially on a short, low-cost trip.
For higher-cost, lengthier, and/or riskier travel, consider buying separate insurance that provides more comprehensive support.
Or you can combine coverages if you have gaps in your coverage and want additional protection.
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* Eligibility and Benefit level varies by Card. Terms, Conditions, and Limitations Apply. Please visit americanexpress.com/benefitsguide for more details. Underwritten by Amex Assurance Company.
Disclosure: Opinions expressed here are the author's alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.
