We explain how travel insurance on credit card works and look at the pros and cons of using it.
Some rewards credit cards offer travel insurance. However, your credit card is unlikely to give you all the cover you need as full medical insurance is not included.
This article will cover:
- How does travel insurance on credit card work?
- Which credit cards offer free travel insurance?
- Should I pay for my holiday with a credit card?
- Travel insurance or credit card?
- How do you claim money back on travel insurance?
Related content: What are my flight refund rights?
How does travel insurance on credit card work?
First, it’s important to establish what is meant by travel insurance. If you mean getting a refund if the trip is cancelled or goes wrong, then yes, you may be.
Credit card providers are bound by strict consumer laws set out in Section 75 of the Consumer Credit Act, which covers purchases of £100 to £30,000 should the merchant be liable to you.
But credit card providers do not offer full travel insurance, as they do not pay out for medical issues that may arise during a trip overseas.
They will also not necessarily pay out in the event of lost luggage and do not necessarily include other features that are common in standard travel insurance policies, such as personal liability.
Some providers offer “travel accident insurance” – sometimes for free – but this is not necessarily as comprehensive as full medical cover offered through standalone travel insurance policies.
Accident insurance covers accidental death or an accident resulting in permanent injury such as loss of limb or sight. But hospital treatment for less “serious” conditions is not covered.
There is a card that offers comprehensive travel insurance, including medical cover. This the Platinum card from American Express, which comes with a fee of £575 a year. However, be mindful that each travel insurance policy comes with its own specific policy terms.
But this is a charge card, not a credit card. The difference is that, unlike with a credit card, the customer has to pay the entire balance each month and does not come with any protection under Section 75 of the Consumer Credit Act.
Credit cards that offer free travel accident insurance
American Express is the only credit card provider in the UK that offers freetravelinsurance.
The best credit card for travel insurance will depend on how much you are willing to pay, and what you want covered.
- American Express Platinum Cashback Everyday – Annual fee: £0
What’s covered? Travel accident insurance worth up to £150,000. Travel delay: no - American Express Preferred Rewards Gold – Annual Fee: £140 (£0 in first year)
Travel accident Insurance: £250,000, Travel delay: Yes, up to £600. - American Express Rewards – Annual Fee: £0
Travel accident insurance: £150,000, Travel delay: no. - British Airways credit card (American Express) – Annual fee: £0
Travel accident insurance: £75,000. Travel delay: no. - Vitality (American Express) – Annual fee: £0
Travel accident insurance: £150,000, Travel delay: no.
There is also the Chase Sapphire Reserve card. This offers generous travel rewards, but this card is not available in the UK.
There may also be other credit card providers that provide Travel Insurance as an add on or at a discount. For example, the Santander World Elite card offers a 40% discount ontravelinsurance.
Should I pay for my holiday with a credit card?
The main benefit of using a credit card is the payment protection.
Under Section 75, UK consumers are protected if something goes wrong with a purchase, for which the merchant would be liable for, costing between £100 and £30,000.
So if your holiday does not go ahead for some reason of which the merchant is liable for, you should get your money back if you have paid through a credit card (depending on the reason for the cancellation).
Some merchants used to charge extra for payments made through a credit card.
But the surcharges have been banned since January 2018. So paying for holiday expenses using a credit card should not cost you any more than paying through a debit card.
Before using a credit card, ask yourself if it is likely to take you a long time to pay the money back. If you fail to pay the full balance of your card by the due date, you may be charged interest that will bump up the cost even higher.
Find out more: Nine things that you need to know before booking your next holiday
Paying for holidays on a credit card
Section 75 of the Consumer Credit Act gives you a good chance of getting your money back should your trip not go ahead as planned.
If you have booked a holiday or flights costing between £100 and £30,000, and paid either a deposit or the full price on your credit card, you should be able to make a claim if:
- The airline goes bust
- The holiday company goes bust
- Or the holiday isn’t as described.
The good news is that you don’t have to pay for the cost of the entire holiday on a credit card to be covered by Section 75.
Even if you just put a small deposit on a credit card and want to pay the rest in cash or using a debit card, you are still entitled to a full refund if something goes wrong.
The key is to fund part of the holiday using a credit card. This could be just a £50 holding deposit.
There is no minimum amount that needs to be paid on a card, as long as the cash price of the product (for example, a flight, hotel or travel package) is between £100 and £30,000.
But not all situations are covered by Section 75, as discussed below.
What is typically covered?
- A cancellation by the travel provider.
- The travel company, airline or accommodation provider going bust before or during the trip.
- The holiday not being as described.
- Additional expenses as a result of an issue that is not your fault. For example, if the airline collapses while you are away and you have to pay for more expensive flights to get home.
What isn’t covered
- If you paid for your holiday through a third party – for example, PayPal or Amazon marketplace. However, these often have their own payment-protection schemes, which do not necessarily afford the same level of protection as that of Section 75.
- The purchase was made by a family member using an additional card – unless the main cardholder is also on the trip.
- You choose not to take the holiday because you have changed your mind.
- The credit card is used to make a cash withdrawal, and you then pay for the holiday using that cash.
Will my credit card cover a holiday cancelled due to the coronavirus?
Travel rules and restrictions have changed frequently over the past 18 months.
As discussed above, the protections provided by Section 75 mean you should get your money back if you have paid money in advance for a holiday that can no longer be provided because of the Covid-19 pandemic.
If you have paid for your trip using a debit card, you can make a claim using chargeback. This is when the bank tries to reclaim the money you paid to the holiday company on your behalf.
Credit cards also have their own version of chargeback. This could be another route if your claim doesn’t meet the criteria of Section 75.
Travel insurance or credit card?
Many will wonder whether their credit card offers enough protection or whether to buy travel insurance on top to ensure they are “fully” covered.
The answer is that you need to review or seek independent advice on the terms of the policy provided via your credit card provider, to establish whether you would benefit from taking out a separate travel insurance policy to ensure that you are covered for additional eventualities.
This is because comprehensive medical cover, essential for trips abroad, is primarily offered by insurance companies and not by credit card providers.
If you need hospital treatment abroad and do not have health insurance, medical expenses could run into thousands of pounds. According to an example from the Foreign Office, a fall in Spain that results in a broken hip, hospital treatment and an unplanned flight back to the UK would cost you about £15,000.
When taking out health travel insurance, you must state whether you have a pre-existing medical condition.
Full travel insurance will typically include contingencies for common travel problems such as transport delays, lost luggage or stolen items.
However, paying by credit card offers a good chance of financial compensation if your trip doesn’t go ahead as planned.
In some cases it may be better to make a refund claim through your card provider, rather than through your insurer. This is because some travel policies charge an excess fee for claims.
For more information: What are your travel rights?
When should I purchase travel insurance?
- You should consider travel insurance for any trips abroad. Most importantly, to ensure you are covered for any medical emergencies. If you have pre-existing conditions, these can also be covered as long as you have declared them, but you will likely need to seek out a speciality policy that covers pre-existing conditions
- For peace of mind, to get help and redress for common problems such as lost luggage, baggage delay or a stolen passport.
The strengths of credit card travel protection
- Gives protection if the travel company goes bust
- Should deliver a refund if the holiday provider doesn’t deliver as promised
- Will likely not charge an excess fee for making a claim
How do you claim money back on credit cards?
When making a claim, your card provider will expect you to have tried to negotiate with the holiday company first.
If this fails, keep copies of all correspondence and then approach your credit card provider. There might be a phone number on the back of the card. Alternatively, contact details will be given on their website.
Travel insurance providers also expect travellers to chase a refund with the holiday company before making a claim.
It is worth bearing in mind that not all travel insurance policies cover coronavirus-related disruption.
Important information
Some of the products promoted are from our affiliate partners from whom we receive compensation. While we aim to feature some of the best products available, we cannot review every product on the market.
