With many cards offering travel insurance, transit accident cover, purchase security and extended warranty protection, we ask the question: is included insurance any good?
I recently heard a story from a reader who purchased travel insurance for an overseas trip. After purchasing insurance, he decided to extend his stay by one extra day and, luckily, thought to inform his insurance company. As it turns out, hidden away in the fine print of his PDS was the clause that if he had embarked upon his trip knowingly uninsured for even a day of his door-to-door journey, his entire policy would have been void.
Insurance can be tricky like that. Everyone knows someone who has had an insurance claim rejected on a technicality. Comparing the coverage of different insurance products can be difficult - just like any other product, there are a range of options available which will offer different coverage for different amounts under different circumstances.
Which led me to think about the included insurance on credit cards. A lot of credit cards, particularly premium cards have begun offering various types of insurance as an included feature. Overseas travel insurance is popular, as is purchase security insurance which covers the cardholder for the accidental loss or damage of products purchased on their card for a short period (usually thirty days).
But included insurance is, necessarily, a one-size-fits-all approach. You don't get to choose your level of cover or excess. So is that really the best approach to insurance (particularly travel insurance)?
Can credit card insurance be considered a viable alternative to the diligent comparison and consideration of a broad range of insurance products from a broad range of providers?
Choice Magazine recently reported that the Australian Insurance Ombudsman Service "warns against the pitfalls of free travel insurance with some credit cards". They refer to the story of a consumer who had a travel insurance claim rejected on the basis that the deposit for the trip was paid for in cash and not on the credit card.
It's common for included credit card insurance to only offer coverage for trips up to a certain duration (e.g. three months, six months etc). Others may only cover the cardholder and not their spouse or dependent children. Some cover international trips, but not domestic.
Some card insurance only provides cover for injuries at the point of departure or arrival and not while you're at your destination. Others can require a minimum amount of money to be spent on the card, or a certain credit limit, in order for the coverage to be valid.
If you're planning an overseas trip and are thinking about using your credit card insurance, make sure you contact your bank and ask questions about the included insurance:
- What am I covered for?
- How much coverage (dollar value) does the cover provide in each circumstance?
- Is there an excess and how much is it?
- Do I need to purchase my tickets or pay the trip deposit on the card?
- Is my family covered under the same policy?
As always, make sure you read and understand your insurance product disclosure statement and if you need clarification, request the answers to any of your questions in writing from your bank or the insurance product underwriter before you embark upon your trip.
Also consider shopping around and exploring other insurance products before you leave.
