UAE: Travelling abroad? Know when your credit card's travel insurance is good enough

Dubai: Many are informed of their credit card's perks and benefits, which includes travel insurance among others, when they sign up for a new card. But, many people still don't know how travel insurance actually works.

The complexities of travel insurance have made it so that few people understand whether they should buy it or when they actually need it. This tends to leave travellers with a lot of questions.

For example, what does travel insurance cover? And, is the free insurance offered by your travel credit card actually enough to protect you?

When should you rely on travel insurance offered through a credit card?

So, when is it okay to rely on your credit card's travel coverage? While it depends a lot on your specific card, its policies, and your trip details, there are some basic rules of thumb to follow.

According to travel experts and tourism consultants, some of the obvious instances when you may be able to rely solely on credit card insurance are for car rentals and checked luggage. That's because rental car insurance and lost luggage coverage are included for cardholders of certain travel credit cards.

Once you confirm the coverage you have by reading your credit card's terms and conditions, you should also check limits to make sure coverage is sufficient.

For example, you may find your credit card offers lost baggage insurance with a $500 (Dh1,500 to Dh2,000) limit, which may not even be enough to replace your suitcase, let alone your belongings.

If the limits your credit card sets leave you feeling prone to possible travel-related accidents, it may be worth looking into buying a travel insurance policy with a more comprehensive coverage.

When should you buy a dedicated travel insurance policy?

There are times when any traveller should consider buying a separate travel insurance policy, one of the most common being when they're traveling to a destination where their health insurance coverage is no longer valid.

It's not just getting sick that you need to worry about. You also have to think about motor vehicle accidents, especially if you don't have a personal car insurance policy. If you get hit while driving abroad, not having medical coverage or overseas auto coverage could leave you in a bind.

Be sure to check with your health insurance company to see if they cover overseas medical expenses before leaving. If not, getting a travel insurance policy that covers you in the event of medical issues or emergency is a good idea.

While most credit card companies will help arrange medical care, they will not pay for it, multiple experts confirm. They adding that while some credit cards offer some medical benefits, the coverage amount is usually so low that it is not a true safeguard.

Research shows that travel insurance in the UAE covers up to $25,000 to $45,000 (Dh91,830 to Dh165,294) in emergency medical coverage. Even pre-existing conditions are covered if insurance is purchased within 15 days of initial trip deposit.

For example, Allianz in the UAE, which has tailor-made travel insurance from Dh56, covers emergency medical and associated expenses (which provides cover if you are taken into hospital or you need to come home early or extend your journey due to illness or accident) of $45,000 (Dh165,294).

Here’s another example: AIG UAE offers three travel insurance plans, where emergency medical expenses can come up to $50,000 (Dh183,660), $100,000 (Dh367,320) or $500,000 (Dh1.8 million), depending on which plan you choose.

It's also worth noting that, if you are purchasing an expensive, once-in-a-lifetime trip, you may want trip cancellation or interruption insurance with higher limits than you could get with a credit card.

While some credit cards offer trip cancellation and interruption insurance that would work in this case, coverage caps can limit reimbursement to $10,000 (Dh36,732) or less, depending on the card.