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This article was last updated Apr 11, 2018, but some terms and conditions may have changed or are no longer available. For the most accurate and up to date information please consult the terms and conditions found on the issuer website.
The travel insurance industry is growing by leaps and bounds. Yet, travel insurance policies can be confusing for travelers and could add unnecessary expenses to travel spending.
Americans spent almost $2.8 billion on travel insurance in 2016, a 19% jump from 2014 according to the U.S. Travel Insurance Association.
- Travelers typically pay 4%-10% of their trip costs for a trip insurance policy. For example, insuring a $5,000 trip could cost $250-$500, according to Insuremytrip, a website that compares travel insurance options.
- Rental car insurance coverage from car rental companies could add up to $30 per day to the cost of your rental car bill.
- In many cases, these costs are unnecessary. Travelers may already be insured for some of these travel issues through a credit card they carry in their wallet.
Yet, nearly half of Americans (47%) fail to take advantage of valuable benefits that come with their credit cards, a new CompareCards.com survey found. CompareCards surveyed 1,050 Americans who have a credit card and traveled last year or plan to this year, and asked them about their experience with credit card protections and insurance.
No doubt, credit card protection and insurance terms can be confusing. Yet, those who wade through the details and file a claim are richly rewarded.
- The average size of claims totaled just over $1,500 and 76% of those who filed a claim were fully compensated, the survey found.
“Many people simply aren’t aware of the deep level of benefits that are attached to credit cards. These are, in essence, free insurance policies that are often neglected,” said Thomas Donaldson, senior credit card specialist at CompareCards.com.
Only 53% of credit card holders report taking advantage of valuable credit card protection benefits that include:
- Purchase protection
- Rental car collision coverage
- Price Protection
- Trip cancellation insurance
- Extended warranty
- Cell phone damage
- Lost/delayed baggage
Purchase protection is the most commonly tapped benefit
Americans who do rely on credit cards to insure purchases against damage or theft utilize purchase protection most often at 46%, followed by car rental collision coverage at 37%. Another 35% use cards to get reimbursed if they find a lower price elsewhere on a purchase they recently made.
Credit card claims yield a big return
The average size of the credit card benefits claim totaled an impressive $1,530, the survey found. A majority, or 76%, of customers who filed claims reported being fully compensated for their claim.
“These benefits are easy to use and our survey found that most credit card benefits were paid in full,” Donaldson said.
Most of those who filed a claim were satisfied with the process. The majority, or 85%, who filed a credit card benefit claim didn’t experience a problem.
A new-found friend
More than two-thirds (68%) of cardholders are confident about relying on credit card coverage in the future. In fact, among those who did file a claim, 79% said they would rely on coverage in the future.
A quick guide to valuable credit card benefits
Wondering what you may be missing out on? “If you aren’t aware of the protections that your current credit card offers, go online and search for the official guide to benefits from your issuer,” Donaldson said.
Here’s a brief overview on some of the benefits you may find.
1. Cellphone protection. While some credit cards offer various levels of purchase protection, extended warranty, rental car collision insurance and trip cancellation insurance, Wells Fargo offers a unique benefit with its under the radar cellphone protection plan. For cardholders, the Ink Business Preferred℠ Credit Card offers up to $600 per claim in cellphone protection (subject to a $25 deductible) against covered theft or damage when cardholders pay their monthly cellphone bill with the card.
“The cellphone protection plan offered with the Wells Fargo Cash Wise Visa® Card is one of the most underrated credit card benefits available, in my opinion. I have used it multiple times over the past few years and it has saved me hundreds of dollars,” Donaldson said.
Unlimited 1.5% Cash Back*
Earn $150 cash rewards bonus*
Enjoy 1.8% cash rewards with Apple Pay® or Google Pay™, during the first 12 months*
- Earn a $150 cash rewards bonus after spending $500 in the first 3 months
- Earn unlimited 1.5% cash rewards on purchases
- Enjoy 1.8% cash rewards on qualified digital wallet purchases, like Apple Pay® or Google PayTM, during the first 12 months from account opening
- No category restrictions or sign ups and cash rewards don’t expire as long as your account remains open
- Get up to $600 protection on your cell phone (subject to $25 deductible) against covered damage or theft when you pay your monthly cellular telephone bill with your Wells Fargo Cash Wise Visa® Card
- $0 Annual Fee
- See Rates & Fees
See additional details for Wells Fargo Cash Wise Visa® Card
2. Auto rental insurance. Accidents happen. From a door ding to a collision, rental car incidents can be costly. When you book your rental car reservation with a credit card, you may have access to rental car insurance typically called auto rental collision damage waiver (CDW).
- Credit card auto rental insurance typically comes in two flavors: primary and secondary.
“Primary rental car insurance is big for anyone who travels regularly,” Donaldson said.
Premium travel cards including Chase Sapphire Preferred® Card and Chase Sapphire Reserve® offer primary coverage, which means you do not have to file a claim with your own auto insurance provider before you can receive coverage from your credit card. That could mean the difference between a hike in your auto insurance rates after filing an accident claim and not having to notify your company at all.
Secondary collision damage waiver insurance is a more common credit card benefit. Secondary insurance typically kicks in after you have filed a claim with your own insurance company.
If you have a credit card that offers primary collision damage waiver, consider using that to make your rental car reservation for maximum benefit and coverage.
“It’s important to note the difference between primary and secondary rental car insurance. I always use my Chase Sapphire Reserve® to pay for car rentals because of the excellent primary rental car insurance,” Donaldson said.
3. Trip cancellation protection. Your bags are packed. Then, you get sick. Or, a blizzard shuts down your airport and prevents you from flying to Miami to catch your cruise. A premium travel credit card could come to the rescue with trip cancellation insurance.
- This is a premium benefit. Expect to find trip cancellation insurance only on travel rewards cards with an annual fee like Chase Sapphire Preferred® Card and Citi® / AAdvantage® Platinum Select® World Elite™ Mastercard®.
There are limits, exclusions and time frames in which you must file your claim. Cardholders should read their benefits guide for complete details. Trip cancellation insurance offered by credit card companies generally only pays if you cancel for specific reasons. Here’s the basics.
The Citi AAdvantage® cards offer trip cancellation and interruption protection. Maximum coverage is $5,000 per trip. Citi may cover the cost of nonrefundable trip expenses if certain events like sickness, injury and weather issues get in the way.
The Chase Sapphire Preferred® Card is a little more generous as cardholders and immediate family members are covered up to $10,000 per covered trip.
For the Chase Sapphire Preferred® Card trip cancellation may be covered in the case of:
- Injury or sickness
- Severe weather that prevents the start of a trip
- Jury duty or court subpoena
4. Lost/delayed baggage coverage. Protections vary by card. On covered Citi cards, for example, if your checked baggage is delayed by six hours or more, you may be eligible for up to $100 in replacement items. For a lost bag, you are covered for up to $3,000 per covered traveler ($2,000 per bag for New York residents).
5. Price protection. When you are on the hunt for a bargain, it can be frustrating when you see a lower price after you buy an item. Price protection, a benefit offered on some credit cards, can fill that gap.
The Citi® Double Cash Card – 18 month BT offer boasts one of the easiest to use price protection features. It’s called Citi® Price Rewind. Once you register your purchase, Citi® Price Rewind does a 60-day search for a lower price. You can get up to $200 back per item and up to $1,000 a year with this feature.
The bottom line
The types of benefits that are offered on credit cards vary by issuer, card and also by which version of the card you own. Some cards are issued in a “Visa Signature” version, which are designed for people with high credit limits and come with a wider range of features and benefits.
Looking at issuers, for example, American Express cards don’t offer trip cancellation or delay coverage. And, earlier this year, Discover discontinued most of its travel and purchase protection benefits, including auto rental insurance, purchase protection and extended warranty.
It’s worth taking a deep dive into your credit card’s guide of benefits. You might be happily surprised to find real benefits you can use.
CompareCards.com by LendingTree commissioned Qualtrics to poll 1,050 credit card users who traveled for vacation last year or plan to travel this year. The survey was conducted March 13-14, 2018.