Credit Card Insurance vs. Travel Insurance: Which is Better?

June 18, 2024 - Meagan Palmer

You might think your credit card has you covered, but the truth is, it doesn’t always deliver the reliable insurance benefits you need for your trip. In this blog post, we’ll uncover the real differences between credit card insurance vs. travel insurance, reveal the crucial benefits credit card coverage is missing, and help you decide when it’s time to consider a separate travel insurance plan. So, fasten your seatbelts and get ready to explore the world of travel protection like never before!

Jumping Ahead

• Differences Between Credit Card Insurance vs. Travel Insurance
• Shortcomings of Credit Card Insurance
• When Credit Card Insurance Isn’t Enough
• When Credit Card Insurance Might Be Enough

General Differences Between Credit Card Insurance vs. Travel Insurance

Understanding the key differences between credit card insurance and travel insurance helps ensure you have the coverage you need. Both options provide some level of protection. However, they have distinct features that can impact the extent of coverage for your trip.

Coverage Fundamentals

Credit card insurance often provides limited coverage compared to standalone travel insurance policies. For instance, credit card coverage may have lower coverage limits for medical treatment, which could be quickly exceeded in case of a serious emergency. 

On the other hand, travel insurance typically offers more comprehensive coverage. For example, it often includes higher limits for medical expenses, trip cancellation/interruption, and baggage loss protection. 

“Rather than settling for the standard insurance your credit card offers, opting for general retail travel insurance allows you more freedom to select the right coverage for the type of trip you’re taking,” says Terry Boynton, co-founder and president of Yonder Travel Insurance.

Exclusions and Restrictions

In general, both credit card insurance and standard travel insurance will have varying exclusions and restrictions. For example, certain activities might not be covered, some destinations are excluded, and some have limits on age or trip length. We’ll get into reasons why you might want to opt for a comprehensive travel insurance policy later.

Additionally, if you want to get insurance through a credit card that offers it, you usually have to book all your travel plans using that specific card.

Unveiling Shortcomings of Credit Card Insurance

With an increasing number of credit cards offering travel insurance, Yonder compared the coverage to what’s offered by our trusted travel insurance providers. Yonder analyzed the coverage from top credit cards that offer travel insurance benefits including:

• Chase Sapphire Reserve

• Chase Sapphire Preferred

• Delta Skymiles Gold American Express

• Platinum American Express

• Capital One Venture Rewards

In a nutshell, credit card travel insurance doesn’t offer as much coverage as you might think. Let’s break it down.

Limitations of Credit Card Insurance vs. Travel Insurance

Yonder’s analysis revealed that credit card insurance frequently lacks important benefits when comparing coverage categories. Compared to regular travel insurance, many credit cards don’t include any sort of medical expense or medical emergency evacuation benefits. This is highly troublesome if you face an unexpected emergency during your trip.

Furthermore, not all credit cards include trip cancellation, travel delay, or baggage coverage –benefits typically included with comprehensive travel insurance.

“Even credit cards with high annual fees don’t offer the pillars of travel insurance needed to feel your trip is being adequately protected,” says Boynton.

Here are the shocking discrepancies Yonder found between credit card insurance vs. travel insurance:

Benefits You Can’t Get with Credit Card Insurance

There are just some benefits you can’t often find included with credit card travel insurance. Here are some of the benefits often included with general retail travel insurance that typically aren’t found in credit card coverage:

Cancel for Any Reason: Allows travelers to cancel their trip for any reason at all and be reimbursed for a majority of their trip costs. Yonder couldn’t find any credit cards that include this trip cancellation upgrade.

Interruption for Any Reason: Should you have to cut your trip short for any reason at all, you could receive a majority of your unused trip costs back.

Vacation Rental Damage: If you accidentally damage your vacation rental’s personal property, reimbursement for replacing those items wouldn’t have to come from your pocket. Luckily, Yonder offers a policy that includes this upgrade. Ask our friendly humans about it!

Pre-Existing Conditions: Credit cards don’t typically provide coverage for any ongoing medical conditions that cause you to cancel/interrupt your trip or cause you to seek medical treatment during your trip. 

Missed Connection: If you miss your cruise or tour departure, don’t count on your credit card picking up the fees to catch you back up with your trip. Instead, you can opt for a travel insurance policy that includes this specific benefit.

Pro Tip: For answers to other frequently asked travel insurance questions, check out our Travel Insurance FAQ page.

When Credit Card Insurance Isn’t Enough

Credit card coverage alone might not be enough to protect you and your trip. Below are some practical scenarios in which you might want to consider alternative travel insurance coverage. 

When You Should Consider Comprehensive Travel Insurance

Your Trip Is Expensive: Some credit cards have a dollar limit on how much of your trip they’ll insure. If your trip costs are quite high, contemplate purchasing a separate travel insurance policy to protect the remaining uninsured amounts.

Your Health Insurance or Credit Card Doesn’t Provide International Medical Coverage: Similar to credit card insurance, it turns out that not many health insurance policies provide international medical insurance. Without additional travel insurance, you’d be responsible for any medical bills you incur during your trip. Not ideal when trying to stick to a reasonable travel budget.

Pro Tip: Yonder recommends purchasing a travel insurance policy with at least $100,000 of emergency medical coverage. 

You Need Pre-Existing Condition Coverage: Speaking of medical coverage, if you have an ongoing medical condition you’re worried about ruining your trip, it’s best to purchase a general retail travel insurance policy with a Pre-Existing Condition Waiver.

You’re Traveling Somewhere Remote: When you’re visiting a remote destination where medical care isn’t close by or adequate, you’ll want higher limits on medical expense and medical evacuation benefits. Since credit cards don’t often have enough, opt for a comprehensive travel insurance policy that offers higher benefits limits.

You’ll be Participating in Adventure or Extreme Activities: If you’re often participating in adrenaline-rushing activities during your travels, you’ll likely need to opt for a specific “hazardous activities” rider with a general retail travel insurance policy since the sports aren’t usually covered under credit card travel insurance.

Political Unrest or Natural Disasters: Should a natural disaster or political unrest cause you to need to vacate your destination, credit card coverage usually won’t be able to assist. Instead, opt for a regular travel insurance plan that includes “non-medical evacuation” benefits.

When Credit Card Insurance Might Be Enough

There are times when the insurance offered with your credit card might not be of concern. Some folks might find that credit card coverage is enough because it’s affordable (included in your annual credit card fee) and covers the basics, especially for shorter or simpler trips. Here are some other areas to think through when comparing credit card insurance vs. travel insurance needs:

Personal Risk Tolerance: Some travelers are more comfortable with taking on a higher level of expense should something go wrong before or during their trip and not feel the need to purchase additional travel insurance.

Enough Medical Coverage: For those travelers lucky enough to have credit cards that offer higher medical coverage limits, that might meet your needs and not require you to purchase supplemental coverage.

Includes Sufficient Benefits: If you learn your credit card offers full coverage similar to that of general retail travel insurance, then it might seem redundant to purchase an additional policy.

Next Steps

As you plan your next adventure, it’s essential to be equipped with the best protection. While credit card insurance offers some coverage, it’s clear that there are significant gaps compared to traditional travel insurance. Understanding these differences and recognizing the benefits you might miss out on is essential for making informed travel-safeguarding decisions. Yonder recommends checking out a third-party travel comparison site (like ours!) to get better and more affordable travel insurance.

Whether you’re embarking on a quick weekend getaway or a once-in-a-lifetime journey, having the right coverage can provide peace of mind and ensure you’re prepared for the unexpected. Our team of friendly humans would be happy to help you navigate what kind of insurance you need for your trip.