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Standalone vs Credit Card Travel Insurance — Pros & Cons

Will My Credit Card Travel Insurance Give Me Enough Cover?

Credit Card Travel Insurance

Everyone loves to get something for nothing, especially if it means those extra dollars can go towards an upcoming trip. While complimentary credit card travel insurance can provide sufficient cover for some travellers, it's crucial to be clear on the terms and conditions of credit card cover before falling back on this option.

Key factors to look at when considering credit card travel insurance:

  • When is cover on your card actually activated? (what portion of trip needs to be purchased on card)
  • What excess will I pay in a claim?
  • How is your luggage/valuables actually covered?
  • What is the maximum period I can travel for?

This article will looking into these and other important considerations around credit card travel insurance to help you decide if it's the right option for you.

Credit Card Travel Insurance vs Standalone Travel Insurance

Standalone Travel Insurance vs Credit Card Travel Insurance

If you have discovered that your credit card provides a complimentary travel insurance policy, you’re probably wondering what the difference is between that policy and the cover you can take out through insurance providers. The main difference between the two types of insurance is in the limits to coverage and in the flexibility of each type of policy.

What is Covered?Standalone Travel InsuranceCredit Card Travel Insurance
Capped cover
  • Standalone policies will allow you to choose a level of cover ranging from basic to unlimited coverage.
  • Some credit card travel insurance policies will cap the amount of overseas emergency medical expenses they will cover at $500,000.
Trip Duration
  • If you buy a standalone policy you can purchase cover for trips usually up to 12 months in length.
  • Another possible drawback to travel insurance through your credit card provider is that they may only provide cover for a limited amount of time, such as a holiday lasting no longer than three months.
Covered if not paid for on card?n/a
  • You will only be covered if you pay for all or some of the bookings (flights, hotels, tours) with the credit card. Each card will have different conditions on when the cover is actually activated.
Additional cover
  • Flexibility is another area where standalone travel insurance policies can sometimes be more practical than complimentary credit card policies. For example, standalone policies will allow you to purchase cover for participating in a range of sports for an extra fee.
  • Credit card travel insurance regularly excludes skiing and other adventure sports.
Annual fee
  • n/a
  • Yes
Valuables
  • Standalone policies allow policyholders larger limits and sub limits on valuable items. They also allow policyholders the option of purchasing additional cover for valuable items.
  • Most credit card travel insurance policies will not cover you if valuable items that are stored in your luggage are broken or damaged.
Loss of Valuables
  • Standalone policies generally provide cover for items that are lost, stolen or damaged.
  • Most credit card travel insurance policies specifically exclude items that have been lost, only covering damaged or stolen items.
Free cover
  • Have to pay for cover each time you travel.
  • Credit card travel insurance is offered free with your card. Of course, remember that this is paid for by your card’s annual fee, so you do still have to fork out for cover.
Excess
  • Lower excess.
  • While the cover provided by your credit card may seem like good value because it is free, the excess you’ll be required to pay is a lot higher than that of standalone policies. Some excess charges can be as high as $500
You can take out cover for domestic travel.
  • Cover available for many destinations.
  • Many credit cards only cover international trips, though some do offer domestic inconvenience cover to cardholders.
Many policies do not have age limits
  • Policy costs increase as the policyholders gets older.
  • This means that it’s entirely possible for elderly travellers to have some level of travel insurance cover in place.
Cover for pre-existing conditions available.
  • Some insurers will consider providing coverage for certain pre-existing medical conditions.
  • Most credit card policies will exclude all such conditions from cover.
Good basic cover
  • You can find good basic cover from a standalone policy but you will have to pay for it.
  • If you’re planning a simple and uncomplicated trip to a safe part of the world, many cards offer an adequate level of cover. This can take some of the hassle out of booking your trip.
Comprehensive cover
  • Buying standalone travel insurance allows you to purchase a more comprehensive level of cover.
  • On the whole, credit card travel insurance does not offer the same comprehensive level of cover with few features and reduced benefit amounts.
Cover for family travelling with you
  • Some policies may cover travel companions but you will need to check with your provider.
  • Some cards will allow you to take out cover for yourself and other family members travelling with you (check your card’s fine print).
Flexible cover
  • Most travel insurance brands allow you to add a range of options to your cover to help you tailor a policy to suit your specific needs.
  • Credit card travel insurance policies tend to take more of a ‘one size fits all’ approach.
High level of coverage for cash
  • Lower level of cover.
  • If someone steals your wallet while you’re on holidays, you’ll be pleased to find out that credit card travel insurance policies usually offer a higher level of cover for cash than standalone policies.
Anyone can purchase a policy
  • You don’t need to be a gold or platinum credit card holder in order to be covered.
  • Need to own a credit card to get cover.
This type of insurance is not based on your location
  • Your destination will influence the amount you pay for cover.
  • This means you can travel to a range of international destinations and still be covered. Under a standalone policy, however, you’ll have to select a policy that matches your planned areas of travel.

Credit card insurance comes free with your credit card, though you should remember that this coverage is paid for in part by your card’s annual fee. Standalone travel insurance, meanwhile, will require you to pay a premium based on a whole range of factors, including everything from your age to where you are travelling.

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Benefits of Travel Insurance Through Your Credit Card

Paying your credit card’s annual fee entitles you to a host of rewards, so access to a complimentary travel insurance policy can seem like a bonus. The obvious benefit of having credit card travel insurance is that it saves you the hassle of having to go out and find and compare standalone travel insurance policies.

Coverage varies from one credit card to the next, but credit card travel insurance typically includes cover for:

  • Overseas emergency medical and hospital expenses. This benefit ensures you (and your wallet) will be looked after should the worst happen. However, pre-existing conditions are typically not covered.
  • Luggage and personal belongings. If your luggage and/or personal items are lost, stolen or damaged while you’re travelling, credit card travel insurance will cover the cost of replacement or repair.
  • Cancellation fees and lost deposits. Sometimes unexpected events can force you to change or cancel your travel plans such as a relative falling ill or you losing your job. In these cases, your insurance will reimburse you for cancellation fees and any non-refundable deposits for pre-paid travel arrangements.
  • Resumption of journey. Cover is provided for travel and accommodation costs so that you can resume your journey after an unexpected event, for example the death of a relative.
  • Special event. If an unexpected travel delay means that you are unable to make it to a pre-arranged special event, for example a wedding, cover is available for the cost of alternative transport expenses to get you there on time.
  • Rental vehicle excess. This feature covers the rental vehicle insurance excess if your rental car is crashed, damaged or stolen.
  • Travel delay. If you’re unexpectedly delayed for more than six hours, such as if a computer system meltdown results in massive flight delays, cover is provided for meals and accommodation.
  • Accidental death and funeral expenses. Your family will receive a benefit if you die as a result of an injury you suffer while travelling.
  • Loss of income. This feature provides a regular benefit if you are injured during your trip and unable to return to work.
  • Legal liability. Credit card travel insurance policies will also cover you when you are deemed legally liable for causing injury or property damage to a third party.

Find out which credit card providers offer complimentary travel insurance

Things You Should Know About Credit Cards and Travel Insurance

Credit card travel insurance does have a few disadvantages, exclusions and limitations that you should be wary of. Many pre-existing medical conditions are excluded from cover, so make sure you familiarise yourself with exactly what is and isn’t covered by your card’s policy.

Need to activate cover

One thing you must be aware of is that you have to activate your insurance for it to take effect. The exact requirements you will have to satisfy to activate your insurance may differ from one card to the next, but typically you will have to pay for your airline tickets with your credit card. If you forget to use your card and instead use another payment option, don’t be fooled into thinking you have cover in place.

Duration restrictions

Some cards will offer limitations on the length of trips they will cover, while others will require you to spend a certain amount of your holiday booking expenditure on your credit card in order to activate cover.

It’s also a good idea to read the fine print of your policy. Many travellers have ended up with a nasty shock when they’ve discovered their credit card travel insurance does not provide cover for luggage or personal items left unattended in a public place.

A host of other typical travel insurance exclusions also apply, such as no cover if you visit a country where the Australian government has a travel advisory in pace warning against travel there.

Who Is Covered by Complimentary Travel Insurance?

With many cards, the travel insurance policy offered will only apply to the cardholder, which is something many people are not fully aware of. However, some credit cards will include cover for your spouse or dependent children travelling with you, though you may have to satisfy a minimum spend per person requirement on your credit card before cover will be activated. These types of policies typically specify an age limit of 19 years for dependent children, though some cards extend cover to children who are studying at university up until 25 years of age.

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Tips to Choosing Credit Cards That Offer Travel Insurance

If you’re looking for a credit card that provides travel insurance cover, the best thing you can do is shop around. The benefits, features, limits and exclusions of the cover offered can differ greatly from one card to the next, so it pays to examine each competing policy closely. Does it provide coverage for the events and incidents you want coverage for? Are the coverage limits adequate for your needs? What do you need to do to activate cover? Is there a minimum spend required?

Asking yourself all of these questions will help you settle on the right card for you. It’s also a must to read product disclosure statements closely. While it may seem like a monotonous task, familiarising yourself with what is and isn’t covered is an absolute must. When you’re doing this, remember to examine the excess attached to each policy and whether you would have to pay this every time you make a claim.

Of course, you’ll also need to factor in the other benefits each credit card offers. What is the rewards program like? What is the points earn rate? What other features can you take advantage of as a cardholder? How much is the annual fee? Take all these factors into consideration to help you make the right choice.

Compare Quotes for Standalone Travel Insurance

Complimentary travel insurance is one of the most useful features of a high-end credit card. It offers much-needed coverage when you’re travelling overseas, so make sure you find a credit card that offers the right level of travel insurance cover for your needs.

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Richard Laycock

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Richard is the senior insurance writer at finder.com.au and is on a mission to make insurance easier to understand.

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4 Responses to Standalone vs Credit Card Travel Insurance — Pros & Cons

  1. Default Gravatar
    clarrie | June 19, 2015

    I am with anz and have a visa platinum which I get free travel insurance is that a good way to go

    Reply
    • Staff
      Richard | June 19, 2015

      Hi Claire,

      Thanks for your question. It depends on what you’re looking for out of your travel insurance policy and how comprehensive the policy is the ANZ are offering. finder.com.au is a comparison site and we’re not permitted to provide our users with personalised advice. The checklist under, Credit Card vs Standalone Travel Insurance should help you weigh up the pros and cons.

      I hope this was helpful,
      Richard

      Reply
  2. Default Gravatar
    Jan | June 18, 2015

    You don’t list Westpac Earth Black American Express Cards.

    Reply
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