I get this question all the time: “Do I need to buy travel insurance?” It’s not easy to answer, but one thing I always say: You may already have it and don’t know it. Your credit card might already provide it.
If your son breaks his leg in a soccer match days before a family cruise vacation, if you forgot your phone on the plane, if your flight was delayed or canceled, or your bag lost or delayed, you may be covered.
Depending on the card you used to pay for your trip, your issuer’s built-in, free travel insurance might have compensated you for at least part of your loss.
I recently left a valuable item in the overhead bin, and it was never found. Bingo, my credit card covered me because I bought the airfare with it.
And not long after, my checked bag was delayed for five days. My card offered $100 per day up to five days for “essentials” (yes, that includes whatever you decide is essential). Interestingly, I booked that flight with frequent-flier miles, but because I paid the airline’s frequent-flier fee and taxes with the card, I was covered.
There are three main categories of air travel insurance included with credit cards, although not all cards offer all of them:
Trip interruption or delay
Your flight is interrupted or delayed after departure due to a “covered reason” — typically one or more (but not always all) of the following: illness, injury, labor strikes, equipment failure or weather. Of course, no card covers all possible causes of a delay. If it’s not in the “covered reasons” (for example, a crew showing up late for your flight or congestion-related air traffic control delays), you’re on your own.
Trip cancellation (before departure)
You or a traveling companion or immediate family member (definitions of “immediate” vary ) becomes ill or injured before departure and you need to cancel your plans. For example, your son breaks his leg a week before your trip and you have $4,000 in nonrefundable trip arrangements: Many credit cards cover that. But in all cases, pre-existing conditions are not covered.
Lost or delayed baggage
The airline loses your checked bag; someone steals something from your carry-on bag in flight or you leave something on the plane or train; or your bag is not lost, but merely delayed upon arrival. Different cards define a delay differently: For some it’s just four hours; for another it might be 12 hours. And in almost all cases, lost bag coverage is in “excess” of whatever you collect from your airline or any other insurance you might have, such as homeowner’s insurance (although if your policy deductible is $1,500 and the loss is $1,000, you might not have to make a claim if you present your policy’s declaration page to the credit card company’s representative).
Even computers, cellphones and jewelry are covered by some credit cards, although for no more than $500 per incident. But at least it’s something, and airlines don’t cover these things at all.
Cards vary in their deadline for making a claim, so if you’ve had a recent loss but didn’t know you had coverage, you may still have time to file a claim retroactively to your credit card issuer (some claims can be made a full year after the loss). However, some cards require that you pay the entire cost of your trip on the card to qualify for coverage, while others settle for just a portion of the trip.
This free coverage will never be as extensive as a policy purchased separately from a company such as Travel Guard or Allianz, but it’s not something to ignore, especially if you’ve suffered a recent loss.
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