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What you need to know
Debit card travel insurance usually covers things like delayed flights, lost luggage and other unexpected events.
You must satisfy certain conditions to activate your cover. For example, a minimum spend on transport or accommodation costs.
Read the fine print as many policies will cap cover at a lower limit than with standalone travel insurance.
Travel insurance provides financial protection from risks such as medical emergencies, cancellation fees and lost deposits and lost or stolen luggage. However, before you run out and get comprehensive travel insurance, it's worth checking to see if cover is provided through your debit card.
Compare domestic and international travel insurance
One of the features offered by many high-end debit cards is complimentary insurance policies. In addition to features like purchase protection and extended warranty insurance, many cards also offer comprehensive travel insurance.
If you want to use your debit card’s travel insurance for your next trip, keep in mind that you need to satisfy certain conditions to activate your cover. Rather than automatically covering you whenever you hop on a plane, these policies typically require you to spend a certain amount of your trip expenses on your card. For example, you may need to use your debit card to book and pay for your flights.
Once in place, these policies provide protection against a range of risks. Cover differs between cards, but complementary debit card travel insurance typically covers things like delayed flights, delayed luggage, lost luggage and other travel interruptions. Some also offer financial protection when you require overseas emergency medical assistance or a stay in a hospital.
Limits and sub-limits on debit card travel insurance differ from those offered by standalone policies, so make sure to compare this feature when deciding on the right insurance for your needs.
Although complimentary travel insurance has long been offered with premium credit cards, it is now becoming a more regular feature with premium debit cards. For example, the NAB Gold Visa Debit Card comes with overseas travel insurance as standard.
You need to spend $500 on pre-paid overseas transport or accommodation costs to activate your cover, which then protects you against everything from overseas medical emergencies to cancellation fees, lost luggage and personal liability.
The main advantage of this cover is that you can save money by not buying a standalone travel insurance policy. If you have a platinum credit card, on which you are already paying an annual fee, there’s no need to fork out extra cash for more cover.
Although the exact type and level of cover offered differs between credit cards, most policies will provide cover for the same risks that a normal travel insurance policy would. This includes overseas emergency medical expenses, cancellation fees and lost deposits, lost or stolen luggage, lost passports, travel and luggage delays, rental vehicle excess and personal liability.
However, it’s important to read the fine print associated with your credit card travel insurance policy before deciding whether or not it offers an adequate level of cover.
Many debit card or credit card policies cap cover at a lower limit than standalone policies. For example, a credit card might only cover up to $500,000 of overseas emergency medical expenses while a standalone policy could offer unlimited cover.
Find out how to protect your finances during the global coronavirus pandemic with insurance.
Drawbacks of 'free' cover
There are some important factors you should be aware of when you are considering using your debit card’s travel insurance policy to provide cover for your next trip. These include:
Your cover is not actually free. Remember that this cover is only offered on premium cards, so the cost of this policy will be included as part of your annual card fee.
Cover needs to be activated. To be eligible for cover, you’ll need to satisfy certain criteria to activate your policy before you begin your journey. This may include paying for all or part of your holiday with your card.
Limits apply. As mentioned above, some credit and debit card policies will not offer cover to the same high level as standalone policies. You’ll need to examine the limits and sub-limits of your policy to ensure you end up with the right level of cover.
Trip duration. While you can take out standalone travel insurance for trips 12 months in duration or even longer, a the majority of debit card policies won’t cover trips that are longer than 3 months.
Lack of flexibility. Many debit card policies do not allow you to take out cover for adventure sports.
Debit card travel insurance undoubtedly has a number of benefits for cardholders. However, there are many cases where it does not offer sufficient coverage for some people. This could include those people who want a high level of cover, those who are planning extended journeys, or those who want the flexibility to add extra options to their cover.
In such situations, it often makes sense to consider taking out standalone travel insurance cover. Standalone policies typically offer a higher level of coverage than debit card policies, while you can often opt to add in extra cover for things like adventure sports.
You can take out a standalone policy through your travel agent, but this approach is not always recommended. Travel agents may add a hefty commission on top of the price of the policies they offer, so you can end up paying much more than you need to. Instead, it's usually cheaper to take out a policy online from a direct travel insurer.
However, some travel agents do sometimes have cheaper policies so it's important to consider all policies. It’s quick and easy to get a quote online, plus you can use finder.com.au’s comparison tools to weigh up the pros and cons of competing policies.
Whether you opt for insurance from your debit card or from a standalone policy, it’s important to take a close look at the fine print. While complimentary insurance on premium-level debit cards can provide adequate financial protection for many travellers, you’ll need to closely examine the cover your card offers to determine whether it is right for you, or whether you’d be better off seeking out a standalone travel insurance policy.
Richard Laycock is Finder’s insights editor after spending the last five years writing and editing articles about insurance. His musings can be found across the web including on MoneyMag, Yahoo Finance and Travel Weekly. When he’s not doing deep dives on data, he is testing the quality of cocktails in his newfound home of New York. Richard studied Media at Macquarie University and The Missouri School of Journalism and has a Tier 1 Certification in General Advice for Life Insurance.
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