Lost luggage forced me to put free credit card travel insurance to the test

Can you trust the free travel insurance that comes with your credit card?

It’s a question that pops up from time to time in my mailbox, and a recent experience in Morocco put our own credit card insurance to the test. In October last year my wife and I landed in Marrakesh at the start of a three-week trip. My bag arrived, hers didn’t. It’s the second time that’s happened on that exact same route.

Some credit cards will offer you complimentary travel insurance, provided you pay for a minimum amount of your travel on the card.Credit: Adobe

There followed a long and complicated saga, but with no prospect of a speedy reunion with her luggage, a shopping trip was essential. After an expedition to the local Marrakesh Zara and H&M stores she returned with clothes, toiletries, cosmetics and the world’s cheapest suitcase to get her through the trip. Total cost a little over $1200.

Two weeks later, after an adventurous journey from Rome to Singapore and back to Marrakesh, her suitcase was returned, but who was going to reimburse us for the cost of the clothing purchased in Marrakesh? ITA Airways, with whom we made the original booking, said “Not our problem,” which is ITA’s standard response to everything, and fobbed us off to Air France, which was the actual carrier.

Emails to Air France flew to and fro, time elapsed and eventually an Air France customer care assistant sent an email saying “Under the international legal liability regime set by the Montreal Convention, also mentioned in our General Conditions of Carriage, passengers must submit a reimbursement request for the expenses incurred whilst waiting for their delayed baggage within 21 days of the reception of their baggage. Therefore, you are unfortunately not entitled to compensation.”

The next best option was a claim against our travel insurer, Cover-More, but a quick look at their product disclosure statement put the kibosh on that. “You must advise us of any claim or occurrence which may result in creating a travel insurance claim as soon as possible and within 60 days of the return date,” said the PDS and that date had already passed while we went back and forth with the airlines.

Since we’d booked our air tickets using our American Express credit card, our last roll of the dice was a claim with Chubb Insurance Australia, the underwriter for American Express Travel Insurance. The claim was submitted on January 31 this year. On March 7, it was paid in full.

What you need to know about credit card travel insurance

The travel insurance that might apply when you pay for your travels using your credit card can save you heaps, but how does it stack up against a standalone travel insurance policy you might buy online or from a travel agent?

It’s free, provided you comply with the conditions, which require you to charge a specific minimum cost of your travels to your credit card. That’s not a particularly high bar. A return airfare is often sufficient. While this free travel insurance applies only to cards with an annual fee, that fee might be less than the cost of even an inexpensive standalone travel insurance policy.

The age limits are often generous, making credit card travel insurance a valuable option for senior travellers, who often face horrendous costs for a standalone policy.

The premium on a standard travel insurance policy varies depending on where you’re going. This is often felt with travel insurance coverage in the US, where the cost of providing medical cover jacks up the premium. Not so with a credit card policy. As long as your travels do not include anywhere with a “Do Not Travel” advisory from Australia’s Department of Foreign Affairs and Trade, you’re covered.

If medical cover is a high priority, you might be better off with a standalone travel insurance policy. Although most credit card travel insurance policies provide unlimited cover for accidents, injuries and medical repatriations, standalone policies are often more generous with incidental expenses incurred during a hospital stay.

If the cardholder is eligible for cover, a spouse and dependents might also be eligible for the same level of cover provided they meet certain conditions. Typically, these include a requirement that they reside in Australia, that their journey begins and ends in Australia and the spouse and dependents are travelling with the cardholder for at least fifty per cent of the cardholder’s trip. Importantly, a minimum spend per person charged to the cardholder’s account is another common requirement.

You might only be covered for damage to your rental car if you have used your eligible credit card to reserve and pay for the entire vehicle rental. It’s also important to decline the collision damage waiver or any similar option offered by the rental company. Some vehicle types might not be covered, and insurance might not apply in some countries.

Your credit card provider is not the insurer. They will have a contract with an insurance underwriter, and it’s that company who sets the terms and conditions. As far as your credit card provider is concerned it’s an arm’s-length relationship and any concerns, claims or disputes should be referred to the underwriter.

Maximum trip length varies but it’s often up to 60 days. It’s essential to read the fine print, available as a Product Disclosure Statement on your card issuer’s website.

Was our experience with Amex a one-off?

As featured in last weekend’s Traveller Letters, reader Simon Richards of Glen Iris was crossing from Costa Rica to Panama on an extended holiday when he was denied entry due to the condition of his passport, requiring a two-week stay in San Jose waiting for a replacement. The cost of hotel accommodation and extra travel expenses was significant, according to Richards. He’d paid for his nine-week tour of Central America and the US with his Westpac Altitude credit card, which includes complimentary Allianz Travel Insurance. When he returned to Australia, Richards submitted a claim to Allianz and was reimbursed in full.