Many of us lean on the free travel insurance credit cards provide, which can sometimes make sense. After all, premier travel credit cards offer most of the coverage you get with a travel insurance policy for free. Image Credit: Shutterstock

Dubai: Travel never comes cheap, especially if you're flying far from home. This is why travellers tend to pay for travel insurance before they even depart to the airport. But did you know that several credit cards offer this service for free? Also, can it save you from all travel-related troubles?

“Many of us lean on the free travel insurance credit cards provide, which can sometimes make sense,” explained Abbud Sharif, a banking industry analyst based in Dubai. “After all, premier travel credit cards offer most of the coverage you get with a travel insurance policy for free.

"And if you can get insurance for free, why pay for it? The reality is, there are a ton of reasons to buy travel insurance even if you get some coverage and perks to using the travel credit card. But there are important details to consider, as you plan your next trip.”

With a travel insurance plan, you can generally buy coverage that will reimburse if your trip is cancelled or delayed for a covered reason. You can even buy "cancel for any reason" policies that let you back out of your trip any time you want. Other inclusions are medical coverage, baggage delay coverage, lost luggage insurance, travel accident insurance, and more.

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

“An obvious instance when you may be able to rely solely on credit card insurance is for checked-in luggage. That's because rental car insurance and lost luggage coverage are included for cardholders of certain travel credit cards,” said Essam Kabeelali, an Abu Dhabi-based credit advisor.

“However, once you confirm the coverage you have by reading your credit card's terms and conditions, and 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.

“This 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.”

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 factors to weigh when planning your trip.

Tourist woman at beach holding a credit card

Check if your credit card’s travel insurance pays for enough medical coverage

Even though travel credit cards are pretty good about offering perks like trip cancellation or interruption insurance and baggage delay coverage, Sharif opined that they're often times ‘notoriously bad’ when it comes to offering medical coverage.

“That's a real problem if you're traveling to a destination where your own health insurance coverage won't work, such as any trip abroad. With travel insurance, however, you can buy a policy that offers a much higher limit for medical expenses,” added Sharif.

“It wouldn't take long to rack up huge medical bills if you wind up in the hospital due to illness or broken bones during your trip, but you can protect yourself with adequate travel insurance coverage that includes coverage for medical bills.”

Injured abroad? Only travel insurance with medical evacuation coverage will help

In addition to medical coverage, you'll want to make sure you have adequate coverage for medical evacuation. “Medical evacuation coverage will kick in if you become injured or ill and require emergency transportation to get back home,” added Kabeelali.

“This could mean emergency evacuation with a full medical team, so it's easy to imagine just how much you'd be stuck paying if you didn't have this type of coverage. However, most credit cards don't offer emergency evacuation coverage. This is when a separate travel insurance will help.”

Additionally, credit that do may not offer high enough limits. Sharif agreed with Kabeelali that if you're worried about the high cost of medical evacuation of turning sick or injured overseas, you'll want to buy travel insurance that includes this benefit.

So when does credit card travel insurance coverage not apply?
Some credit card insurance coverage may not even be applicable to you. For example, auto rental coverage, which is a popular credit card benefit, is a great example of coverage that doesn't always work as many credit card auto insurance policies only cover certain types of cars for certain times.

Some cards only offer insurance for rental periods of 31 days or less, noted Sharif, while adding that some credit card auto insurance policies also limit the number of countries you can use your coverage in, meaning it may not work at all depending on where you travel to.

“Additionally, if you have a pre-existing medical condition, you may need to purchase separate travel insurance that covers your specific condition, as credit cards typically won't cover you for trip cancellation due to a pre-existing issue,” he added.

Why you may want higher coverage limits when buying travel insurance

You take travel insurance to select your coverage limits, but this is unlike credit card coverage since it gives you whatever limits your credit card issuer decides. For example, some cards offer free baggage insurance that can cover you if your baggage is lost by a common carrier, added Kabeelali.

“However, this benefit sometimes includes limits on the cost per person, per trip for carry-on baggage and checked bags, which may not be enough if you have brand-name luggage that would cost a lot more than that to replace.

“This is true with trip cancellation or interruption insurance, which is a key valuable travel benefit you can buy. Travel credit cards that offer this perk tend to limit it to $10,000 (Dh36,730) per person and $20,000 (Dh73,460) per trip, which may not be enough if you splurged for a luxurious trip.”

Bottom line?

While there are times when it makes a lot of sense to rely on your credit card's insurance coverage, you have to make sure you have the coverage you need with high enough limits to count. In many cases, credit card travel insurance just isn't enough.

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.

So if you're on the fence about whether you have the coverage you need to protect yourself, you may want to buy a travel insurance policy just in case. Sharif and Kabeelali agree.