Credit Card Insurance vs. Third-Party Travel Insurance

Last Updated: March 31, 2017July 17, 2024 — 2 min read

ST. PETERSBURG FL March 31, 2017 — Credit cards often attract travelers with perks like built-in travel insurance, but depending on a traveler’s needs, using this insurance may or may not be the best option. Leading travel insurance comparison site, Squaremouth, breaks down the key differences between credit card travel insurance and third-party travel insurance.

Cancellation Benefits

Similarities:

• Credit cards and third-party travel insurance can both include Trip Cancellation coverage
• Common covered reasons include illness, injury, death, inclement weather, or terrorism

Differences:

• Most credit cards only cover trips purchased on that card and limit their coverage to a specific dollar amount, typically between $1,500 and $10,000 per trip
• Third-party travel insurance can cover 100% of trip costs with a much higher maximum dollar amount
• Some third-party policies offer the Cancel For Any Reason upgrade

Expert Recommendation: If you’re taking an expensive trip and want to be covered for your entire trip cost, look for a third-party policy with the Trip Cancellation benefit. You can insure any prepaid and non-refundable trip expenses, including airfare, hotels, cruises, and tours.

Luggage Benefits

Similarities:

• Travel insurance, whether from a credit card or third-party provider, will typically include coverage for lost and damaged luggage

Differences:

• Credit cards usually cover a higher amount for lost or damaged luggage, often reimbursing up to $3,000
• Many credit cards also include purchase protection for items that were purchased on that card within the past 90-120 days
• Third-party policies typically have a lower benefit amount, between $250 and $1,000 in coverage for lost luggage
• Third-party policies can cover items that are lost at any point during a trip, while many credit cards only cover items lost or damaged by a common carrier

Expert Recommendation: If lost or damaged baggage is your primary concern, credit card insurance will likely have more coverage. Check for specific items that are excluded or partially covered. These items may include jewelry, cameras, computers, and other electronics.

Medical Benefits

Similarities:

• While medical benefits can be available on some credit cards, more comprehensive coverage can be found with a third-party travel insurance policy

Differences:

• Most credit cards don’t include coverage for medical or evacuation expenses
• The medical benefits included on third-party policies usually start at $10,000 for Emergency Medical and $100,000 for Medical Evacuation
• Third-party policies can also offer coverage for pre-existing conditions, including chronic conditions and recent diagnoses, illnesses, or injuries

Expert Recommendation: Squaremouth recommends at least $50,000 in Emergency Medical coverage and $100,000 in Medical Evacuation coverage for international travel, and higher amounts for cruises or travel to remote locations.