Credit card travel insurance could protect you from holiday nightmares

By Marianne Curphey

You already know that your credit card can come to your rescue if you need emergency funds. But did you know it could come to your rescue if your airline strands you or if you get injured abroad?

Some credit cards come with built-in protections for travellers. If you used the card to pay for the trip, it could cover you if you get hurt, lose your luggage or have to cancel your holiday. Here's what to know about these perks before you leave home.

Which cards have travel protections?
The level of cover depends on the card. Robust travel insurance protections are generally associated with more exclusive cards. You'll need good credit to qualify, and the card will likely come with an annual fee. Some examples include the NatWest Black MasterCard (£250 annual fee) and the British Airways Premium Plus American Express Card (£150 annual fee). travel-insurance

If you don't want a credit card, you may be able to get travel coverage by getting a packaged bank account -- a bank account that comes with a variety of perks, like film rentals, music downloads, discounts and, in some cases, travel insurance. Grant McDonald, spokesman for RBS, says that RBS and its subsidiary NatWest offer travel insurance as part of their packaged current accounts. Such packaged accounts don't come for free, though. The NatWest/RBS Select Silver packaged account costs £10 per month.

Common types of coverage
Cards with travel cover vary widely in their protections, but here are the main areas that may be covered:

Lost luggage: Lost luggage cover comes into play during one of the most annoying travel hassles -- when an airline loses your luggage. It generally will also cover stolen or damaged luggage up to a certain limit, says a spokesman from consumer advocacy group Which?

The spokesman also points out that lost luggage cover will often have limits when it comes to particularly valuable items. In addition to the overall coverage limit, expect limits of between £200 and £500 for items such as digital cameras and laptops, Which?'s spokesman says. There is also usually a limit on the amount of cash a travel insurance policy will reimburse if you're robbed.

Travel accident cover: This common type of coverage may sound all-inclusive, but it won't cover holiday-ruiners like a sprained ankle. Although cover varies, travel accident cover is not usually the same as comprehensive travel insurance. It tends to cover only fatalities and extremely serious, permanent bodily injuries incurred under very limited circumstances defined by your policy.

Trip delay/cancellation (also called "travel inconvenience"): This type of travel insurance will generally pay you compensation if you have to cut short your trip or cancel it before you leave -- because of an illness or death of a close relative, for example, Which?'s spokesman says.

Travel medical coverage: This covers emergency medical costs you incur while travelling and may include the cost of an air ambulance to get you home. Check whether your travel insurance covers pre-existing medical conditions and whether there is an age limit. Some insurers exclude travellers over age 70.

How much cover do I need?
Whether you are covered through your credit card, a stand-alone travel insurance policy or a combination of the two, Which? recommends meeting these minimum criteria:

  • At least £2 million of medical cover (this should include the cost of an air ambulance to get you home, if necessary)
  • At least £1,500 in baggage and belongings cover
  • At least £3,000 in cancellation or curtailment cover, including prepaid excursions and the costs of getting you home
  • Personal liability cover of at least £1 million (to cover any costs that result from you injuring someone or damaging their property)

Common exclusions
If you're travelling with family members, make sure they are covered by your policy, too. Some, but not all, credit card travel insurance cover extends to certain family members.

Make sure that your insurance won't be affected by any pre-existing medical conditions -- or by your age. Also check if it covers acts of terrorism or acts of war (which can cause flights to be cancelled).

Other common exclusions involve mistakes you make. According to the Foreign and Commonwealth Office, (FCO), which assists Britons in trouble abroad, most policies won't cover alcohol- or drug-related accidents. Also, if you fail to exercise proper care over your belongings (by leaving your luggage unwatched in a public place, for example), it's likely your card won't reimburse you for your loss.

See related: Don't want a credit card? Here's why you might need one, How to milk your travel rewards card

Updated: 1 April 2015