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Credit card travel insurance: is yours enough or do you need extra cover?

Peter Terlato avatar
Peter Terlato
- 4 min read
Credit card travel insurance: is yours enough or do you need extra cover?

A significant proportion of Australians possess one or more credit cards. But is the travel insurance that’s often included with this popular payment method sufficient for your next overseas trip?

The latest payments data released by the Reserve Bank of Australia (RBA) found that more than 13 million Australians held credit card accounts, while there were 17.5 million credit cards on issue as of June 2022. That’s the equivalent of almost one credit card per adult.

Many credit cards offer an array of rewards and extra features, including travel insurance. Every Australian should consider travel insurance when venturing abroad. There’s a raft of incidents that could occur at any time to disrupt your travel plans so it’s sensible to be prepared for unforeseen circumstances such as travel delays and cancellations, accidents and injuries, extreme weather events, global pandemics, civil unrest and more.

While you might be satisfied using your credit card for holiday expenses, comparing your options for travel insurance may provide you with more comprehensive and specialised coverage.

How does credit card travel insurance stack up against standalone providers?

Travel is back on the cards for many Australians. In preparation for your next adventure, we’ve compiled a basic checklist to roughly compare the differences between credit card travel insurance policies and cover offered by standalone providers.

Component

Credit card travel insurance

Standalone travel insurance

Cost

Generally included as part of your card fees or may be complimentary

Prices vary depending on the policy you purchase and the level of cover provided

Underwriters

Generally the same as standalone insurers

Typically certified and accredited guarantors

Excess

Tends to be higher than standalone

Tends to be lower than credit card policies

Duration of cover

Typically up to six months

Typically up to 12 months

Scope of coverage

Generally only offer cover for international trips but policies vary

Generally offer both domestic and international cover

Personalised cover

Generally basic cover

Most allow for tailored cover

Cover for lost, stolen or damaged belongings

Typically excluded

Typically included

Cover for ancillary activities

May not be included

Can be included at a cost

Cover for pre-existing medical conditions

Typically excluded

Cover may be available

Rewards

Included in your spending

Generally no benefits

On the surface, it seems that standalone travel insurance policies offer a greater degree of flexibility and coverage for travellers. However, the information above should only serve as a guide to choosing the best policy to suit your needs.

What should you consider when taking out credit card travel insurance?

Activation

A number of credit card companies will require you to activate your travel insurance policy before you embark on your trip. You could also be required to have a return trip to Australia booked as one-way travel may not be covered. Check with your card issuer for details.

Excess

Credit card policies’ excess charges are typically higher than standalone insurance. Some card providers require an excess of up to $500 when you make a claim, while standalone policies generally limit excess amounts to $100.

Family cover

If you’re travelling as a family, it may be beneficial to compare standalone travel insurance packages. Some credit card policies only apply to the primary cardholder and may not cover children or other family members. Others might enforce a ‘minimum spend per person provision’ in order to unlock cover for additional travellers.

Ancillary activities

You may choose to participate in extracurricular activities such as hiring a motorbike, going skiing, canyoning, renting a boat, bungee jumping, attending music festivals and more. Often these pursuits won’t be covered by credit card travel insurance. Finding a tailored solution that encompasses these endeavours may be more advantageous.

Expensive items

When you travel it may be pertinent to bring along some high-value belongings such as  mobile phones, jewellery, laptops, cameras and hearing aids. Credit card travel insurance can be basic and typically won’t cover these items.

Cash

While we may not use it all that often at home, when travelling cash can still be king depending on your destination. For this reason credit card travel insurance may be useful as policies generally cover up to $500 for theft of cash from your person, while standalone providers typically provide cover up to $200.

For more details and to see what’s on offer compare a range of credit cards that include free travel insurance.

Every travel insurance policy is different and it’s advisable to read the product disclosure statement (PDS) to determine all the relevant details pertaining to your particular agreement. The PDS outlines the level of coverage provided in each scenario where you may be able to make a claim.

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Product database updated 21 Jul, 2024