Can you rely upon credit card
travel insurance for overseas travel?
Many credit card issuers provide travel insurance cover
free of charge if the cardholder pays for overseas travel
using their credit card.
What is credit card travel
Credit card travel insurance covers
cancellations, lost luggage and personal effects and
medical, hospital and dental expenses. The extent of the
coverage varies depending on the credit card used. As with
all travel insurance, pre-existing medical conditions are
excluded and upper age limits apply.
The travel insurance covers the whole holiday if the
credit card is used to pre-pay airfares, accommodation or a
tour before leaving Australia.
The coverage is comparable with stand-alone travel
insurance cover because it is provided by the same Master
Policy issuers, notably Allianz, Zurich and QBE.
generally the ‘premium’ credit cards (Gold and Platinum),
where a sizable annual fee is payable, that provide travel
insurance cover. Some ‘premium’ debit cards also provide
ASIC says that cardholders find it hard to tell
what cover they are getting
ASIC sees cardholders as
suffering from poor disclosure of the travel
insurance policy terms.
ASIC’s Deputy Chairman Peter Kell has identified this
shortcoming in the ASIC (Australian Securities & Investments
Commission) media release of 2 June 2015:
insurance is essential ... on an overseas trip ... for when
things go wrong. Credit card issuers and insurers must
clearly set out what is and what is not covered by a policy,
so that consumers can work out if they are adequately
Based on consumer complaints received by ASIC
and the Financial Ombudsman Service about credit card travel
insurance, ASIC is working with 17 credit card brands to
improve disclosure, particularly to make it easier for
cardholders to locate insurance policy terms and conditions
on credit card issuer websites.
The key terms in a credit card travel insurance policy
Credit card travel insurance has key terms which are not
found in stand-alone travel insurance policies. ASIC has
identified these key terms as its focus for improved
Extra benefits with credit card travel
Credit card travel insurance has
extra benefits which are not found in stand-alone
travel insurance. These are: credit card travel
insurance applies to travel worldwide outside
Australia; it can provide substantial accidental
death benefits, and good rental car excess cover.
And if a travel supplier cannot provide the travel
(because of insolvency), a credit card chargeback is
If a cardholder has stand-alone as well
as credit card travel insurance, they cannot ‘double
dip’. The rule is that the claim is made against the
stand-alone insurance first, and if that does not
satisfy the claim, against the credit card insurance
for the remainder.
credit card to obtain ‘free’ travel insurance is
smart because it does provide all the cover needed
for a normal holiday for an individual or a family.
But if it is a holiday with recreational activities
such as skiing, or there are pre-existing medical
conditions, or the age is above the upper limit, or
a lower excess is desired, or the tour operator
requires a policy certificate, it is better to look
around for a stand-alone travel insurance policy.
While stand-alone travel insurance cover is
effective when payment is made and the certificate
of insurance issues, you can rely on credit card
travel insurance cover only if it is ‘activated’.
Careful attention needs to be paid to ‘activation’
because no certificate of insurance is issued when
the travel cost is paid by credit card. It is only
when making a claim that the traveller will find out
whether or not their travel insurance has been
activated, when it could be too late!