Two-thirds of American travelers hold at least one travel credit card, and most believe they know what it covers — but a new Squaremouth survey of 4,700 travelers suggests that confidence is largely misplaced, giving advisors a fresh set of talking points when clients push back on purchasing travel insurance.
Nine out of 10 respondents said they were familiar with their card’s protections, and 55 percent said they knew exactly what they have. When presented with basic facts about the differences between travel insurance and travel credit cards, however, those same travelers were largely unaware of the biggest gaps and exclusions.
The blind spots are significant. Sixty-two percent of respondents did not know that pre-existing health conditions aren’t always covered; most travel credit cards exclude claims tied to conditions diagnosed or treated 60 days or less before the initial trip deposit. The same share was unaware that cards carry a limited list of covered cancellation reasons and often cap reimbursement well below a trip’s total cost—most cap trip cancellation coverage at $10,000 per person, and one widely held card caps it at $2,000.
More than half (55 percent) did not realize card protection only applies to purchases made on that card, with most requiring the full fare to be charged to qualify. A trip paid partially with points, miles, or another card would not be covered. And 48 percent did not know travel credit cards offer little to no emergency medical coverage abroad: Squaremouth’s market analysis found only one travel credit card offers it at all, capped at $2,500 with a $50 deductible. One-third of travelers admitted they had no idea that travel credit cards aren’t an adequate substitute for comprehensive travel insurance.
Notably for advisors, the most popular cards tend to offer the weakest protection. Airline and hotel co-branded cards led the survey at 30.2 percent, ahead of Chase Sapphire (23.8 percent) and American Express (20.7 percent), yet those co-branded products generally carry the thinnest travel protections in the industry.
“Treat your credit card as a supplement to travel insurance, not a full replacement,” says Chrissy Valdez, senior director of operations at Squaremouth. “Our market analyses have repeatedly shown that the majority of travel cards are built to reward travel, not to insure it. Currently, 3 out of the 4 major premium travel cards offer no Emergency Medical coverage at all, which means if you get sick overseas, you’ll likely be paying out of pocket unless you have supplemental travel insurance.”
For advisors counseling clients ahead of a trip, Squaremouth recommends a few checkpoints. Clients traveling outside the U.S. should have medical protection meeting the recommended minimums of $50,000 in emergency medical coverage and $100,000 in medical evacuation coverage, since primary health insurance won’t follow them abroad. Travelers with a pre-existing condition in their party should skip card protection in favor of traditional travel insurance with a pre-existing condition waiver. Trips costing more than $10,000—or paid with a mix of points, miles, or multiple cards—call for a comprehensive plan covering the full trip cost. And cost shouldn’t be a deterrent: many policies run just a few dollars per day.
For more detail on how card protection compares to comprehensive coverage, see Squaremouth’s Credit Card Travel Insurance Guide.
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