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Credit card insurance
Save money on your purchases and when you travel with these 14 credit card insurance options.
Most credit cards come with a suite of insurance coverage that a lot of cardholders aren’t even aware they have access to. Credit card insurance can cover purchases you make with the card, travel expenses, health emergencies and more. Keep reading to learn about the 14 types of insurance available, and how you can get the most out of your coverage.
1. Balance protection
Balance protection insurance helps cover your credit card repayments if you unexpectedly can’t pay them yourself, like if you involuntarily lost your job or became unfit for work due to a critical illness or disability. It also helps pay the balance owing if you die. Since this insurance only kicks in under very specific circumstances, make sure to read the fine print carefully to decide if it’s worth paying the extra cost each month to add this coverage.
2. Purchase protection
Purchase protection covers the cost of theft, accidental damage or loss of items paid for with an eligible credit card. This protection typically lasts anywhere from 90 to 180 days after you purchase the product or service with your ard.
3. Extended warranty
Extended warranty coverage offers an extension on the manufacturer’s warranty for eligible items purchased in Canada. Usually, this insurance will double the warranty, usually up to a maximum period of 12 months. For example, if you bought an item with a 1-year manufacturer’s warranty, this credit card insurance would allow you to continue to get coverage on that item for up to 24 months.
4. Price protection
This credit card insurance will refund the difference in price if you buy an item and then find it at a lower cost at the same store or somewhere else. You typically have a window of around 60 to 90 days after you buy an item to make a claim. You’ll likely have an annual limit or a lifetime limit on the amount you can claim with this type of coverage. You should also note that many items are typically excluded from coverage, including food and other perishable items. So check with your credit card issuer to find out the details for your card.
|Example card with price protection:|
5. Trip delay
Trip delay insurance is paid to help cover any necessary expenses you incur if your carrier delays your trip. Expenses covered under this type of credit card insurance can include meals, lodging, medication, toiletries and ground transportation. Your trip must be delayed for a minimum amount of time, usually at least 4-6 hours, in order to qualify.
6. Trip cancellation and interruption
This type of credit card insurance covers expenses incurred when you have to cancel or return home from a trip unexpectedly due to an emergency. Eligible emergencies could include severe illness or death of the insured person or his/her travel companion, missed flight connections, business meeting cancellations or travel warnings issued by the Government of Canada.
|Example credit card with this type of insurance:|
7. Lost or damaged baggage
Lost or damaged baggage insurance compensates you if your baggage and its contents are permanently lost, stolen or damaged. This credit card insurance covers the personal items within both your checked and carry-on luggage, which could include jewelry, watches, cameras and cell phones.
8. Delayed baggage
Delayed baggage insurance reimburses you for essential items you purchase while waiting for your luggage to arrive if an airline temporarily loses or misdirects your baggage. Eligible expenses usually include clothing and toiletries. Coverage often runs from $500 to $1,000 per insured person and/or trip, and can only kick in after your luggage has been lost for a minimum amount of time, which usually runs between 4-12 hours.
|Example card with delayed baggage insurance:|
9. Car rental insurance
Car rental credit card insurance provides coverage for damage or theft to a rental car you payed for using your credit card. To be eligible, you usually have to decline signing on for the rental agency’s insurance plan. There are a few types of car rental insurance that can come with a credit card including collision damage waiver, personal accident insurance, personal effects coverage and supplemental liability insurance. Check with your credit card issuer to find out exactly what they offer.
11. Hotel/motel burglary
Hotel and motel burglary credit card insurance will cover your personal items if they are stolen from your hotel or motel room, as long as you’ve booked your hotel using your credit card. Like with any coverage, there are limits to what your credit card issuer will cover. For example, they may not reimburse you for the theft of cash or travel tickets. Eligible items will be covered up to a preset limit, such as $500 or $1,000 per trip.
12. Mobile device coverage
Although quite rare, this type of credit card insurance covers any loss or damage to your mobile device or tablet, as long as you bought your cell phone on your credit card. You’ll be covered for the cost of your phone, minus the value it’s depreciated since you purchased it. The maximum amount you could be reimbursed is usually $1,000. Keep in mind that the coverage may not last longer than a couple of years. Batteries and phone accessories are typically not covered either.
13. Roadside assistance
Roadside assistance credit card insurance typically covers the costs associated with emergency services for your vehicle like towing, battery boosts, door unlocks, tire changes, gas delivery and more. Depending on the credit card you chose, you could be limited to the number of service calls you make in a year. For example, you may only be covered for 4 calls per year. This type of credit card insurance is often offered 24/7 across both Canada and the US.
14. Emergency medical
Emergency medical coverage provides coverage for the cost of evacuation or transport to a care provider should you or an immediate family member become injured while traveling. If you’re a frequent traveler, this is definitely one type of credit card insurance coverage you’ll want to consider getting. Coverage is usually offered for trips lasting no longer than 31 to 60 days. Also keep in mind that some credit card issuers will reduce or even drop this type of coverage if you’re over 65 years old.
Which credit cards offer insurance?
Many standard credit cards offer some kind of complimentary insurance. However, you can usually find the best insurance on premium gold and platinum credit cards, which often include a range of extra perks that standard cards don’t. Because of those extra perks, these premium cards often come with higher annual fees. However, you should keep in mind that the savings you’ll receive from your credit card insurance could potentially outweigh the cost of the card, especially if you travel frequently.
Is a credit card with travel insurance all you need?
It depends on your coverage needs. Your credit card might only cover a few areas, such as car rental and luggage delays. What’s more, most credit card insurance policies only cover up to a certain dollar amount per year or only a certain number of days abroad. Plus, there are plenty of stipulations in a credit card travel insurance contract that you’ll need to meet such as paying for all or most of your trip on your credit card.
If you’re a frequent traveller for business or for pleasure – whether alone or with your family – a credit card might not offer enough insurance to effectively cover you throughout the year. In this case, you’ll want to supplement with other options like separate insurance or upgrade your credit card plan to a premium option if possible.
Are you eligible for credit card insurance?
The eligibility requirements for credit card insurance vary depending on the specific policy, the provider and the insurance company that’s involved in underwriting it. You can find specific details in your credit card’s travel insurance contract. In general, the most common conditions include:
- Spending requirements. Whether it’s travel insurance or purchase coverage, you usually have to pay with your credit card to be eligible. For example, if you want overseas travel insurance, you will likely have to pay for some or all of your return ticket with your credit card before you leave. Similarly, if it’s purchase coverage, you’ll have to buy the relevant item with your card.
- Policy activation. In some cases, you may also have to “activate” the included insurance to be eligible for coverage.
- Age requirements. This typically relates to travel insurance, where people over a certain age (typically 76 and older) may not be eligible for coverage.
- Pre-existing medical conditions. Similar to most standalone travel insurance policies, pre-existing medical conditions usually aren’t covered by credit card insurance. However, depending on the insurer, you may be able to get approval for coverage with a pre-existing medical condition by lodging an extra application. Fees usually apply for these requests, and not all credit card insurance allows it, so check the insurance policy booklet to see if this is possible for any card you’re considering.
- Partners and/or dependent children. Usually credit card travel insurance will also cover your spouse and/or dependent children travelling with you as long as they meet the eligibility requirements.
Who counts as an eligible family member?
Generally, immediate family members are eligible family members. This includes your spouse and eligible children. Some policies will extend protection to more than just your immediate family, but it ultimately depends on the provider’s specific insurance agreement.
While definitions of “spouse” and “dependent children” will likely vary between insurance policies, here are a couple of popular examples:
- “Spouse”. This means a person you’re legally married to or cohabiting with and has been publicly represented as your spouse for at least 12 consecutive months.
- “Dependent child/children”. This means children, including adopted children and those children placed up for adoption, who are primarily dependent upon you for maintenance and support. Dependent children will need to be: 1) under the age of 19 and residing with you; 2) over the age of 19 and permanently mentally or physically challenged and incapable of self-support; or 3) under the age of 25 and classified as full-time students at a post-secondary institution.
How to file a claim with the credit card provider
Most credit card companies ask customers to follow these steps to file an insurance claim:
- Contact the claims administrator at the company’s phone number or claims website within a specified time period.
- You’ll be sent a claims form and informed of any additional documentation needed for filing. Make the necessary copies and fill out the form.
- Send your completed form and documentation to the designated address. Some credit card companies let you upload and send these documents online.
- You usually don’t need to do anything afterward, though you can call or check online to monitor the status of your claim.
How to compare credit cards with travel insurance
Compare by reviewing your insurance coverage needs along with your spending habits and financial needs. Here are some factors to consider:
- Policy details. Does the insurance policy cover all the people you need covered while travelling? Does the offered coverage make the policy worth it? Or are there certain exceptions in the fine print that make the policy a bad fit for your travel needs?
- Rewards. If a card offers good travel insurance coverage but bad reward earnings on your travel, the card might not be worth it. Ideally, a card should provide great value even if you don’t use the travel insurance coverage.
- Annual fees. Does the card have a high annual fee? If so, the overall value of the included travel insurance might feel less impactful — particularly if you make good use of the insurance and other features.
- Interest rates. Finding a card with a reasonable interest rate is helpful if you need to carry a balance over a certain period of time – like when you’re travelling. There are a few low rate credit cards on the market, however you likely won’t get the most comprehensive insurance coverage or the strongest rewards.
- Additional travel perks. If you travel frequently, consider a credit card that offers great travel perks to make travel easier and more fun. This might include airport lounge access, concierge services, flight upgrades and more.
- Foreign transaction fees. If you’re spending money overseas on your credit card, you’ll likely be charged a foreign transaction fee of 2.5% – which can quickly add up and cost you a hefty sum of money over the course of your trip. Instead, consider a card that waives foreign transaction fees.
Compare a range of credit cards offering insurance
Policy details to check before applying for credit card insurance
If you’re interested in taking advantage of complimentary credit card insurance, make sure you consider the following policy details:
- Eligibility requirements. Review the details of what you need to do to get coverage and consider whether or not you will be eligible based on your circumstances. For example, if you’ve already paid for a trip overseas and then get a credit card that offers complimentary insurance, you may not be eligible for that particular trip since you didn’t use that specific card to pay for the trip.
- Coverage limits. All complimentary insurance policies limit the amount of money available for specific claims. For example, lost baggage may limit coverage to $500 per claim. Consider the type of coverage you want and your travel plans to decide if these limits will suit your needs.
- Excess costs. If you make a claim against a complimentary credit card insurance policy, you may have to pay a specified amount before you get any money back. For example, if you submit a claim for emergency overseas medical costs, you may have to pay $500 (once approved) for the claim to be processed. This is known as the excess and is most common with travel insurance (both overseas and domestic).
- Coverage period. Complimentary credit card insurance policies offer coverage for a limited amount of time. For travel insurance, this could be anywhere from one week to 12 months, and for purchase coverage, it could be 2 weeks to 3 months or more. It’s important to consider this coverage period before you choose a credit card (or use the insurance) so that you know the coverage will work for you.
- Exclusions. As well as looking at what coverage is provided, make sure you’re aware of what won’t be covered by a complimentary credit card insurance policy. For example, food and perishable items are generally not covered in best price guarantee coverage.
- Claim period. There is a limited timeframe for you to submit a claim for complimentary insurance coverage. For example, with a “best price guarantee”, you may only be able to make a claim within 21 days of the original purchase, and with overseas travel insurance you may only have 30 days from the time of the incident to submit a claim. Ideally, you should always aim to submit a claim as soon as possible, or at least contact the insurer to advise them of your situation.
Credit card insurance offers a host often overlooked perks cardholders can be taking advantage of. Remember to read through your policy for any coverage limitations, and to make sure you’re getting the most out of your card when you cash in on your credit card insurance. Start by comparing a range of options so that you can choose a credit card that offers value based on your financial circumstances and lifestyle needs.
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