An Easy Guide to Travel Insurance for Your Next Vacation

What comes to your mind when you think about your next vacation? Beaches, warm weather, sunshine, or mountains? Or, has your vocabulary been replaced with COVID-19, Delta, Omicron, etc? In any event, one element you don't want to forget when you travel is travel insurance.


Understanding what travel insurance covers and doesn't cover is important to know
Understanding what travel insurance covers and doesn't cover is important to know. Image courtesy of Wix

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What Is Travel Insurance?


Travel insurance provides a guarantee of compensation for specified loss, damage, illness, or death—while away from home—in return for payment of a premium. Generally, a policy will define the number of miles away from home you need to be for the policy to be in force.


Travel insurance mitigates various risks a traveler is exposed to: Cancelled flights, delayed flights, lost luggage, illness, theft, accidents, emergency evacuation, etc. Travel insurance is a benefit with some premium credit cards; it can also be purchased separately as part of a comprehensive package.


It is important to understand that some travel insurance policies cover COVID-19 issues whereas others do not. It is important to do your homework!


Benefits of Using a Premium Credit Card


Some travel credit cards have built-in travel insurance. Not only do these types of credit cards have awesome sign-up bonuses, rewards multipliers, and other annual credits, but they also provide a measure of peace of mind while traveling—something that is priceless.


For example, my favorite premium travel credit card is the Chase Sapphire Reserve®. It has Trip Cancellation and Trip Interruption; Trip Delay Reimbursement; Emergency Medical and Dental Benefit; Emergency Evacuation and Transportation; Travel Accident Insurance; Travel and Emergency Assistance Services; Baggage Delay Insurance; Lost Luggage Reimbursement; and Auto Rental Collision Damage Waiver benefits. The following summary of benefits are found within Chase's website if you have the Chase Sapphire Reserve®:


Trip Cancellation and Trip Interruption. In the event your trip is cancelled or cut short by illness, severe weather, and other covered situations, you can be reimbursed up to $10,000 per person and $20,000 per trip for your pre-paid, non-refundable travel expenses, including airfare, tours, and hotels.


Trip Delay Reimbursement. In the event your common carrier travel (e.g. airplane, etc.) is delayed more than 6 hours or requires an overnight stay, you and your family are covered for unreimbursed expenses (e.g. meals, lodging, etc.) up to $500 per ticket.


Emergency Medical and Dental Benefit. If you are 100 miles or more from home on a trip, you can be reimbursed up to $2,500 for medical expenses if you or your immediate family member become sick or gets injured.


Emergency Evacuation and Transportation. If you or a member of your immediate family are injured or become sick during a trip far from home that results in an emergency evacuation, you can be covered for medical services and transportation—up to $100,000.


Travel Accident Insurance. When you pay for your air, bus, train, or cruise transportation with your card, you are eligible to receive accidental death or dismemberment coverage—up to $1,000,000.


Travel and Emergency Assistance Services. If you run into a problem away from home, call the Benefit Administrator for legal and medical referrals or other travel and emergency assistance. (You will be responsible for the cost of any goods or services obtained.)


Baggage Delay Insurance. Reimburses you for essential purchases like toiletries and clothing for baggage delays over 6 hours by passenger carrier up to $100 a day for 5 days.


Lost Luggage Reimbursement. If you or an immediate family member check or carry on luggage that is damaged or lost by the carrier, you're covered up to $3,000 per passenger.


Auto Rental Collision Damage Waiver. Decline the rental company's collision insurance and charge the entire rental cost to your card. Coverage is primary and provides reimbursement of up to $75,000 for theft and collision damage for rental cars in the U.S. and abroad. This does not include liability insurance.


"Using a premium travel credit card has many advantages the seasoned traveler will benefit from."

The aforementioned travel benefits are one reason why you want to use a premium credit card when you travel. We didn't even discuss the value of not having to pay a foreign transaction fee and rejecting the dynamic currency conversion if you are in a different country. Learn more about this in the following post: Avoid These Five Mistakes With a Credit Card!


There is a downside to the Chase Sapphire Reserve®—the $550 annual fee.


Ouch!


Not everyone will want to swallow that fee—even though the sign-up bonus, multipliers, $300 annual travel credit, and other benefits easily surpass the $550 annual fee. Nevertheless, there is another card with only a $95 annual fee that provides just about the same benefits referenced in bold type above.


Tell me more!


It is the Chase Sapphire Preferred® Card. In my opinion, the best beginner's credit card for Award Travel is the Chase Sapphire Preferred® Card. With a welcome bonus of 60,000 Ultimate Rewards® Points and enhanced rewards, this is an awesome card! You can read more about this credit card in the following post: Chase Sapphire Preferred—The Best Credit Card Just Got Better! You can also apply for this card here!


Some of the differences of the travel benefits are as follows: Trip Delay Reimbursement uses a time frame of 12 hours as opposed to 6; there is no Emergency Medical and Dental Benefit; the Travel Accident Insurance benefit is up to $500,000 as opposed to $1,000,000; the Auto Rental Collision Damage Waiver doesn't cover "expensive" automobile defined by the Benefit Administrator.


It is easy to see the benefits of using a premium travel credit card when you travel. The peace of mind will help you to relax more—whether you are on the beach or hiking the Grand Canyon!


However, it is important to understand the Trip Cancellation and Trip Interruption terms. For example, the Guide to Benefits of the Chase Sapphire Reserve®, updated on August 15, 2021, pages 43-44 states:


"The Trip Cancellation and Trip Interruption benefit does not apply to any loss caused by or resulting from, directly or indirectly...Your disinclination to travel, a country closing its borders, or a Travel supplier cancelling or changing travel arrangements due to an epidemic or pandemic."


It is crystal clear that COVID-19 issues could eliminate your Trip Cancellation and Trip Interruption benefit. Hence, if you want coverage to include the current COVID-19 pandemic, read on!


Benefits of Using a Travel Insurance Provider


If you are thinking of traveling to another country, you may want to take out a separate travel insurance policy—even if you have a premium travel credit card. This allows you to "customize" your coverage and select additional elements of coverage that may be lacking with your premium travel credit card.


For example, a number of travel insurance providers offer COVID-19 insurance and expensive "cancel for any reason" policies. Be careful to use a reputable company and understand the coverage options available.


SquareMouth is a comparison engine that allows you to quickly search for quotes, compare, and buy coverage from every major provider in the United States. They have great reviews and I have found them to be very helpful and user-friendly. If you decide to go this route, it is recommended to purchase your policy early—perhaps no more than 7 days after your initial payment on your trip—in order to have better coverage options. It is possible to find coverage for less than 3% of the total trip!


Before purchasing a special travel medical insurance policy you will want to contact your existing health insurance company to understand your coverage—especially when traveling internationally. While many U.S. health insurance companies provide international coverage, Medicare does not.


Even if your health insurance company does provide international coverage you may still want to purchase a special travel medical insurance policy. Although this would typically be secondary, it should cover any expenses your health insurance company does not—such as deductibles. Just keep in mind that you'll probably have to pay out-of-pocket for any medical expenses and wait for reimbursement.


Travel Resources


COVID-19 has changed the dynamics of travel. Vaccinations have made it easier for many to travel once again. To learn more about how to create a COVID-19 vaccination digital record, see the following post: COVID-19 Vaccination—How to Create a Digital Record.


Be sure to research your destination to learn about any COVID-19 restrictions or travel entry requirements. Our COVID-19 Resources will help you in this regard; simply enter the state or the country you plan on visiting and dynamic links that contain COVID-19 guidance and other travel advisories will automatically populate.


It is important to remember that conditions and requirements can change rapidly. By doing your homework and having your documentation in order, you may mitigate COVID-19 related problems that could arise on your journey—and that will make your trip less stressful.


Would you like to learn more about a creative way to save a substantial amount of money toward your travel expenses? This can be done in the arena of Award Travel! The key ingredients to being successful at Award Travel involve (1) strategically earning miles & points and (2) redeeming those miles & points for outsized value. You can learn more about this topic and receive assistance to get started by contacting a Credit Card Miles & Points Consultant. You can also learn more at the following post: Why Should I Consider Using a Credit Card Miles & Points Consultant?


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