As the summer travel season gets underway, airline system outages, overbooked flights and new electronics bans on some planes seem to be joining flight delays and lost luggage as travel norms.
Can credit card travel protections help if your flight is overbooked or canceled? What if your luggage never arrives, or you wind up on a fight that requires you to stow your valuable laptop, camera, and tablet in your checked baggage?
The answers often are yes, and generally, the more elite the credit card, the more sweeping the travel insurance coverage.
Credit card travel insurance benefits typically fall into three categories: Trip cancellation or interruption insurance, delayed or lost luggage reimbursement, and travel accident/emergency evacuation insurance. The details of insurance benefits vary widely from card to card, so read the fine print of your credit card terms and conditions before you next head to the airport.
Here’s a quick overview of the different types of credit card travel insurance and how to use these benefits:
Trip cancellation or trip interruption insurance
Trip cancellation and trip interruption insurance protect you when your trip is canceled before it starts or cut short due to any of a long list of causes such as illness, severe weather, transportation strikes, a death in the family, or even jury duty.
This insurance typically will reimburse you for the cost of prepaid, nonrefundable expenses such as airfares, tours and hotel reservations up to a designated per-trip limit. Unfortunately, if your trip interruption is caused by your own negligence – such as if you missed your train to the airport – you’re on your own.
Reimbursement for ordinary flight delays, overbooking and cancellations from airlines is normally covered only under trip inconvenience or trip delay insurance. This insurance doesn’t reimburse you for the cost of the flight, though.
Card tip: If you have a credit card such as the Citi Prestige and your travel is delayed for more than three hours, Citi will reimburse you for expenses such as lodging and meals up to $500 per covered traveler, per trip. Different cards have different coverage levels and rules, though, so check your card’s coverage.
Delayed or lost luggage reimbursement
If you’ve traveled more than a handful of times in your life you’ve inevitably waited at the baggage carousel only to find your luggage is MIA when the last bag appears. Sometimes your bag arrives on the next flight, but other times, even after weeks of calling the airline, your stuff never makes it home.
When your baggage is lost, or if it is damaged beyond repair due to the fault of the airline, lost luggage insurance pays you back for the cost of your luggage and its contents up to a certain limit.
When my friend Kevin traveled around Morocco last summer, his flight home on Royal Air Maroc took him from Agadir to Casablanca and onward to Paris. His backpack, full of clothes and gifts for friends back home, unfortunately, did not successfully make the same transit.
After weeks of calling the airline hoping to see his stuff again, the baggage was officially declared lost. Lucky for him he’d purchased the tickets with his Chase Sapphire Reserve card, and his lost baggage was insured up to $3,000 – an amount that far exceeded what the international airline was able to offer as compensation.
As with any insurance, it took some effort to make the claim. “Be prepared to spend multiple hours on the phone and doing paperwork,” he says. “And always keep your baggage claim ticket until you have your baggage in hand; you’ll need the original to process your claims.”
If your baggage isn’t totally lost in the Bermuda Triangle like Kevin’s was, baggage delay insurance helps cover your costs in the interim for incidental expenses such as buying underwear and toothpaste so your trip isn’t ruined.
Baggage delay benefits typically cover reimbursement for essentials while you’re waiting for your lost luggage, and the benefit only becomes available once your bag is delayed more than three-to-12 hours (as defined by the card issuer). You may receive a lump-sum payment or a certain amount per day up to a cap.
Card tip: Most credit card baggage insurance has limits on what’s covered. While the new UBS Visa Infinite credit will reimburse you for up to $5,000 per trip if your luggage is lost, coverage does not include hearing aids, artificial teeth, prosthetic limbs and business items such as cellphones and computers and their accessories.
If you are flying to the U.S. or U.K. from a destination that has been included in the current aviation electronics ban on flights from some African and Middle Eastern countries, you’ll want to pay special attention to your baggage insurance benefits.
If you travel often on these routes you may want to look beyond your credit card insurance and consider a travel rider on your renter’s or home insurance, or look for a supplemental travel insurance policy that covers checking valuables.
Travel accident and emergency evacuation insurance
Travel accident insurance covers you in the event or death or dismemberment during the course of common carrier travel. If you’re hurt in an accident on a plane, cruise, train or boat that runs on a schedule and you’ve purchased a ticket, you or your next of kin could be eligible for compensation.
If you have a medical issue while traveling away from home, emergency evacuation insurance will help get you to the nearest health care facility where you’ll be able to receive proper care. Coverage is typically valid if you are more than 100 miles from home and your trip is fewer than 90 days.
Emergency evacuation insurance benefits do not include medical care – just the transportation to get you to good care. If you have an accident while traveling in a remote location this type of coverage can come in handy.
Card tip: There are a lot of exclusions to what is covered under your card’s travel accident or evacuation policy, and there are rules on how long you have to file a claim. As with all other insurance benefits, these will vary significantly from card to card. For example, the USAA World Mastercard offers $500,000 in travel accident insurance.
If you do need to use emergency evacuation insurance, you’ll also want to be sure to go through the claim process to coordinate an evacuation as most policies won’t reimburse you for what you pay upfront.
Things to be aware of when using credit card travel insurance
Just carrying travel rewards cards in your wallet isn’t enough to guarantee that you’ll receive the benefits when something goes wrong. You need to be in the know before you go. Always research the benefits of the card that you’re using and take special note of these four things:
1. Pay with the card that has the most coverage: Many cards only provide coverage for flights and trips paid for with that card. For example, you won’t be able to use your Citi baggage delay benefit if you pay for your plane ticket with your American Express card.
2. Take note of who is covered. Card insurance benefits may only cover the cardholder or cardholder plus immediate family. If you’re using a business card, the benefit may only cover employees, and you may also need to prove it’s an actual business trip.
3. Purchase your airfare with your rewards card. If you’re using points to pay for the ticket or paying in a foreign currency, this may change the travel benefits available to you.
4. Keep good records. If you have to use any of these travel insurance benefits you’ll most likely have to prove that you’ve lost belongings or spent money. Take a quick picture of what’s in your bag – especially if you’re checking electronics – and keep all your travel documents, tickets, receipts and boarding passes.
Hopefully, these different types of insurance coverage are all benefits that you will never have to use, but it’s nice to know that they’re often included with the cards in your wallet just in case!
See related: 5 money-saving credit card tips for savvy family travelers, Do credit cards cover checked electronic devices? 5 favorite apps to save money while traveling, Can you count on your credit card’s travel insurance?