Most travel rewards credit cards offer at least one or two forms of travel insurance as complimentary no-cost extras—they're included as basic features. Some insurance benefits are pretty minor, but a few are robust enough to substitute for separate travel insurance. This summary applies to consumer travel rewards cards; many business travel rewards cards provide similar benefits.
Secondary Rental Car Collision Coverage
All of the credit cards issued by American Express and Visa, most MasterCards, and a few Discover cards include coverage for collision damage to a rented car. By relying on your card, you can avoid the rental company's gouge-priced collision/loss damage waiver (CDW) that can easily add up to $30 a day to your rental bill. Typically, MasterCard and Visa coverage in the U.S. is for 15 consecutive days, American Express coverage is for 30 days; foreign coverages vary. There's lots of fine print, and most cards exclude some countries.
Most credit card CDW coverage is secondary. That means the credit card pays off only what you can't first recover from other insurance, including your regular auto policy. You have to pay for the damage up front, then later claim from your auto policy. And any claim might affect your future rates.
Primary Rental Car Collision Coverage
Secondary coverage isn't a problem outside the U.S., where your regular auto policy probably doesn't cover you. But only a few credit cards provide primary CDW coverage everywhere, including in the U.S meaning the card pays up front and you don't have to make any other claims. Among the cards that provide primary CDW coverage: Chase Sapphire Preferred Credit Card and the United Mileage Plus credit cards, including the United Mileage Plus Explorer Card.
Accident Insurance
Almost all travel-oriented cards include travel accident insurance, usually in the range of $500,000 to $1 million. But this is a trivial benefit. It's officially "Accidental Death and Dismemberment," or ADD coverage, and it pays off only if you're killed or severely maimed in a disastrous crash of some sort.
Back in the day, airport vending machines sold million-dollar ADD policies for about $5, a complete ripoff that exploited widespread fear of flying. At the time, Consumer Reports estimated that the actual actuarial risk was something like 25 cents; the other $4.75 was marketing expense and profit. ADD is a way a credit card can boast a huge dollar benefit that costs very little and will hardly ever be paid.
Lost/Damaged and Delayed Baggage
Somewhere around one-third of U.S. consumer credit cards include insurance coverage for lost or damaged baggage on common carriers. The limit is usually $3,000, the same limit as the airlines' mandatory liability. Thus, the coverage on most cards is de-facto secondary, meaning it covers only what you can't first recover from the airline.
But some credit card policies cover items such as electronics that airline liability excludes. Among the cards offering this benefit: many Visa Signature and MasterCard World Elite credit cards.
When your checked bag doesn't show up on the baggage carousel, it usually isn't completely "lost." It's just delayed, and most of the time you are reunited in a day or two. A much smaller percentage of cards cover delayed baggage, paying something like $100 a day up to a $500 maximum for you to buy stuff you need until the airline finds your bag.
Because airlines don't promise this benefit, the credit card coverage is primary—which is why comparatively few cards offer it. You can find this benefit on some premium airline credit cards.
Flight Delay
When your flight is substantially delayed, many airline contracts offer specific assistance, including meals and overnight accommodations, but only when the delay is due to a problem the airline caused. Some credit cards augment this problematic benefit with delay insurance, typically paying up to $500 for delays. Among them: United MileagePlus Explorer Card.
Trip Cancellation/Interruption
Once you've made prepayments and deposits, canceling or interrupting a trip can be very expensive. That's why typical third-party travel insurance policies emphasize trip-cancellation/interruption (TCI) insurance, and why it's often expensive. A few credit cards offer TCI, typically between $5,000 and $10,000. As with most TCI, it covers only what you can't first recover from your suppliers.
The fine print on credit card TCI follows most third-party TCI: It pays off only for "covered" reasons specified in the contract. But credit-card TCI has one big disadvantage: Unlike most third-party TCI, you have no way to get the standard exclusion for pre-existing conditions waived.
Still, credit-card TCI is robust enough for many travelers thant it can substitute for a third-party policy that could easily cost $100 to $200. Among the cards offering TCI: Capital One Venture Card, Chase Sapphire Preferred Card, Hyatt Credit Card, Citi ThankYou Preferred Card, the Platinum Card from American Express, and some premium-level co-branded airline credit cards. (Disclosure: Citi is an Airfarewatchdog advertiser.)
Medical Insurance
A few credit cards offer medical and emergency-evacuation coverage along with TCI. Maximum benefits can be more than $1 million, subject to a lot of red tape. As with TCI, credit-card medical/medevac insurance excludes coverage for any pre-existing condition and it cannot be waived.
Still, it's good enough for many travelers. Among the cards that offer it: Citi / AAdvantage Executive World Elite Mastercard, the Platinum Card from American Express, and the Chase Sapphire Reserve Card.
