Traveling is an exciting adventure, but it can often turn stressful due to unexpected events. Those unfortunate events include flight cancellations, medical emergencies, lost luggage, stolen credit cards and passports, and many more.

Travel insurance aims to protect you from these unfortunate events. You can always purchase travel insurance directly through an insurance carrier; however, many consumers can access travel insurance through their credit card company.

Many credit cards offer free travel insurance as a built-in benefit when using the credit card to book your trip and pay for related expenses.

How Does Credit Card Travel Insurance Work?

Many credit cards, particularly those in the premium and travel rewards categories, include complimentary travel insurance when you use the card to pay for eligible travel expenses like airfare, car rentals, hotels, and other related expenses. This insurance can cover various travel-related issues, often without you needing to sign up or pay extra for the coverage.

The insurance may also cover other expenses incurred while traveling, which are unrelated to airfare, hotels, rental cars, or lost luggage. For example, some travel insurance covers the cost of medical bills if you have a medical emergency while traveling away from home. Other plans may even cover a portion of your legal bills if you have to hire legal representation in the local jurisdiction where you are traveling.

Key Points to Access the Insurance Coverage

In order to leverage the free insurance, you must generally pay for the trip using the credit card that offers the insurance benefit. The insurance coverage is typically automatic, meaning you don’t need to notify your credit card company to opt in.

Each credit card issuer has different coverage amounts, policies, and conditions, so you must read the terms and conditions to know exactly what is and is not covered. The details are in the fine print.

Types of Credit Card Travel Insurance Coverage

Trip Cancellation or Interruption Insurance. This benefit reimburses you for non-refundable trip costs (such as airfare or hotels) if you have to cancel or cut your trip short for a covered reason under the policy. A covered reason usually includes illness, injury, a death in the family, severe weather, or other travel disruptions beyond your control.

For example, you book a four-day vacation in another country. The flight cost you $1,000 and your hotel room was $800. You prepaid for these expenses using your credit card, which grants you automatic travel insurance. One week before your flight, you suffer a medical emergency, and your physician advises that you not travel for several months.

You immediately notify the airline and hotel of the emergency to start the cancellation and refund process. If the airline and hotels do not reimburse your costs, the travel insurance will act as secondary coverage and generally cover you up to certain limits.

Lost or Delayed Baggage Insurance. If your luggage is lost, stolen, or delayed, you can report the event to your credit card company. The credit card company will launch an investigation into the issue and make efforts to recover your luggage. If your luggage cannot be recovered within a specific timeframe, the credit card company will reimburse you up to a specific dollar amount to cover the cost of replacing the suitcase and essential items like clothing, toiletries, and other personal belongings.

Trip Delay Insurance. If your flight is delayed for an extended period, trip delay insurance can reimburse you for expenses such as meals, lodging, and transportation. Coverage typically starts after a certain delay threshold, usually between 6 and 12 hours.

Rental Car Insurance. Many credit cards offer additional rental car insurance coverage, which includes Loss Damage Waiver (LDW) and Personal Accident Insurance (PAI). The LDW coverage protects you from theft or damage to the vehicle, while the PAI covers medical costs, emergency care, and accidental death during the car rental period. The PAI, however, does not cover damages to another person’s property or injuries to another person that you cause while operating the motor vehicle.  

Key Points to Remember

Keep Documentation of Your Expenses. To file a claim, you’ll need to provide proof of the covered event (such as a canceled flight or delayed baggage) and receipts for any expenses incurred. Keep copies of your booking confirmations, receipts, and any communication related to trip disruptions.

Make Claims Quickly. Credit card issuers typically require you to file a claim within a certain time frame; otherwise, you are barred from any recovery. In many cases, the insurance coverage offered by the card is only secondary coverage, meaning you’ll have to submit a claim to the initial carrier first.

For example, if an airline cancels your flight without cause, you should not first rely on your travel insurance through the credit card company. You must submit a claim to the airline before submitting a secondary claim to the credit card company. If you experience a travel disruption, injury, theft, or other loss, start the claim process immediately to ensure you meet all deadlines.

So What’s the Verdict on Travel Insurance?

Complimentary travel insurance is one of the most valuable hidden perks of many credit cards, but it’s often underutilized because many customers are unaware that the coverage exists. Furthermore, many customers may broadly know they are covered in some capacity but are unfamiliar with the details or limitations.

Educate yourself on the various options and read the fine print before picking a premium card with travel insurance coverage.