Published in: Credit Cards | Nov. 26, 2019

This Is the Most Underrated Perk of Travel Credit Cards

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Hint: It's not the points or the freebies.

When you think of the best travel credit cards, you probably think of racking up points and miles that can be redeemed for a free vacation. Maybe you think of VIP perks like complimentary airport lounge access or travel credits.

While rewards are certainly important when it comes to choosing a travel credit card, there's another benefit that's seriously overlooked: travel insurance. From rental car insurance to baggage protection, having good coverage through your credit card can save you money and keep you safe.

Three people kayaking in a tropical canyon.

Image source: Getty Images

Rental car insurance

Having the right rental car insurance through your credit card can save you hundreds per year if you rent cars often.

Rental car insurance is one of the most common benefits offered by travel credit cards, but the benefit isn't created equal across all cards. Look for primary rental car insurance with a high coverage limit.

Secondary coverage only kicks in after your own personal car insurance takes care of any damage, whereas primary coverage pays out first, regardless of any other policies you hold. Primary coverage is ideal because you can avoid filing a claim with your personal insurance company.

In addition to looking for a credit card that offers primary rental car insurance, pay attention to the coverage limits and exclusions. Some premium credit cards offer very high coverage limits, while others only cover vehicles valued at under $50,000, for example. Most cards also include restrictions on countries in which coverage is valid and on the maximum number of days you can have the rental car.

Finally, rental car insurance through your credit card only covers damage to your rental car. Liability, or damage to other cars and people for which you're liable, isn't covered by any credit card, so you'll have to purchase liability coverage separately.

Trip insurance

Travel is expensive, and there's nothing more stressful than spending hundreds of dollars on flights and hotels that are non-refundable. What if something happens?

That's where trip cancellation, trip interruption, and trip delay protection come in. If your trip is canceled, interrupted, or delayed for an eligible reason, credit cards that offer this protection will refund you for any forthcoming nonrefundable, prepaid travel expenses, such as hotel reservations or tours, that were placed on your card.

The key here is that your trip must be canceled for an eligible reason, and poor planning doesn't count. Eligible reasons usually include severe weather, flight delays, terrorist acts, jury duty, accidental death, injury, illness, or uninhabitable accommodations.

For this benefit, pay attention to who's covered and how much the coverage is worth. Some policies only cover the cardholder, while others cover the cardholder and immediate family traveling along. Coverage limits vary widely as well, from a few thousand dollars per trip to $10,000 per trip offered by premium travel credit cards.

Lost and delayed baggage insurance

If you've ever had your luggage lost or delayed, you know how much this common dilemma can cost you. Even if it's only delayed by a day or two, that could mean spending money on everything from cell phone chargers to toiletries to new outfits. If your luggage is lost forever, the cost of replacing your belongings can be astronomical.

Lost and delayed baggage insurance can cover the costs of this expensive airline mistake. Some travel credit cards only offer one or the other, while some offer both. Look for a credit card that offers high reimbursement limits -- $100 per day for delayed baggage and $3,000 per person for lost luggage is about as good as it gets.

Emergency medical insurance and medical evacuation

A select few premium credit cards offer emergency medical insurance and medical evacuation coverage, though it's a rarity. 

If you become severely injured or ill while traveling and aren't able to get to an appropriate medical facility -- say you're hiking in a remote area or the closest clinic can't perform a surgery you need -- you might be air-lifted to a hospital. This can cost upwards of $100,000, so going abroad without medical evacuation insurance can be one of the most costly travel mistakes. Whether it's through your credit card or a third-party insurance provider, it's wise to have some form of emergency medical insurance and medical evacuation coverage while traveling.

For folks who already have a travel credit card, check out your card's benefits guide to understand what kind of coverage you have. If you're looking for a good travel credit card, travel insurance is one of the key benefits to consider.

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