Why pay for travel insurance? You may already be covered.

Increasingly, more Americans are jumping on the travel insurance train. Nearly one-third (31%) of U.S. travelers say they are more likely to purchase travel insurance for their trips planned between now and the end of 2022, according to an August 2021 AAA survey of more than 1,100 American adults. And Americans are following through with what they say they’ll do. AAA’s travel insurance sales increased between August 2020 and August 2021.

But there’s a good chance you can get travel protections without buying a separate travel insurance policy. That’s because many credit cards provide travel insurance as a built-in benefit to customers.

Credit card travel insurance is comparable to standard travel insurance, which you’d purchase through a typical travel insurance company, like Allianz or World Nomads.

But while standard trip insurance requires you to go through the work of actually acquiring a plan, your credit card’s travel insurance provides automatic coverage — as long as you pay for the trip using a card that offers the benefit.

Standard trip insurance is typically priced between 5% and 10% of your total trip cost, according to insurance comparison site Squaremouth. However, exact costs vary based on factors such as your age, type of trip, duration and expense. With credit card travel insurance, the type of insurance coverage and the maximum dollar amount covered can vary.

In general, expect coverage between $6,000 and $20,000 per trip among cards with trip cancellation and interruption benefits. For other types of coverage, like baggage delay, it’s typically less. For example, lost luggage insurance coverage of up to $3,000 per passenger is standard, and travel accident insurance typically covers between $500,000 and $1 million.

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What does credit card travel insurance cover?

Travel insurance is a broad umbrella term, and some credit cards provide greater degrees of coverage than others. For example, cards with higher annual fees tend to offer more coverage with higher dollar values.

Common types of credit card travel insurance coverage are:

• Baggage delay. If your checked bags don’t show up at the carousel, this coverage will reimburse you for necessities such as clothing, toiletries, etc.
• Lost/damaged baggage. If your bags are lost or damaged by a carrier (or perhaps articles have been stolen from your luggage), you will be reimbursed for the lost/stolen items.
• Trip delay. Suppose you’re delayed for a covered reason. In that case, you can receive monetary compensation for meals, hotels, transportation and other covered purchases made due to the delay, like an extra night’s stay at a hotel.
• Trip cancellation. If you need to cancel a prepaid, nonrefundable trip, you may receive compensation to offset the lost funds. This benefit generally applies to cancellations for covered reasons, which vary by card.
• Trip interruption. Maybe you’re already on a trip, and plans changed midway. You can be reimbursed for any unused, prepaid, nonrefundable reservations for a covered reason.

Read your card’s terms to see which types of incidents are covered — and the maximum dollar value they’ll pay.

Some credit cards also provide rental car insurance

Similarly, some credit cards offer complimentary rental car insurance, which can be primary or secondary to your personal auto insurance, depending on the card. Coverage is typically a collision damage waiver or loss damage waiver, meaning you’re covered for costs to repair or replace your rental car if there was a crash or it was stolen. The insurance might also cover related costs, such as towing expenses and administrative fees.

Typically, you must pay for your car rental with a credit card that offers the coverage and decline the rental car company’s collision coverage to get this benefit. This type of coverage usually won’t cover liability and injury, which comes into play if your car damages other property or hurts you or someone else.

In addition, it generally won’t cover loss or theft of personal belongings inside the car, so don’t expect relief if someone breaks into your rental car and steals the suitcase you had sitting on the seat.

And take heed if you’re renting from a nontraditional rental car company, like Turo or Getaround. Peer-to-peer car rentals are not likely to be covered by credit card rental insurance.

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How to file a claim when using credit card travel insurance

If your trip is canceled or delayed due to a reason that is covered, you’ll need to file a claim to get reimbursed, which can typically be done through your credit card issuer’s website.

You likely won’t deal with your credit card company but rather the insurer itself. Most benefits are underwritten and managed by third-party insurance companies. Be prepared with paperwork to show proof.

The window to make a claim can be short. For instance, for Chase JPM, +1.61%, it is up to 20 days after the occurrence — so don’t wait. You’ll typically have more time to provide documentation, which is 90 days for Chase.

Documentation requirements vary, but you’ll likely need to provide the following to get reimbursed:

• Proof of your covered reason (such as a doctor’s note or a death certificate).
• Receipts for your expenses.
• A copy of your account statement reflecting those charges.
• A copy of the cancellation or refund policies of your travel provider.

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Why won’t my credit card insurance cover my trip?

Travel insurance can be a lifesaver in covered situations. But many problems that come up during your trip, which you might expect to be covered for, don’t fall neatly within the lines of what’s covered.

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That’s true for standard trip insurance and your credit card coverage. While coverage varies by the insurance provider, common situations that aren’t covered include:

• Travel arrangements canceled or changed by the travel provider. Unless it’s due to severe weather or an organized strike affecting public transportation, issues that were the travel provider’s fault might not be covered. For example, you might be out of luck if your airline canceled your flight because the pilot called out sick and you missed a hotel night that you paid for.
• Changes in your plans due to financial circumstances. If you realize after booking that you can’t afford the expense you committed to, well, you’re still on the hook.
• Having a pre-existing condition or traveling against the advice of a physician. This can be tricky, but the insurer might dispute your complaint if they can prove your reason for canceling resulted from a condition you already knew about or your doctor warned you about.
• Extremely long or short trips. Typically one-day trips, as well as those that exceed 60 days in duration, are not covered.

If you need to cancel a trip for a reason that’s not covered, you might be better off obtaining Cancel For Any Reason coverage, which lets you do just that. It’s an extra expense, but this can get you some money back if you cancel for any reason (including those otherwise not-covered reasons).

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Sally French writes for NerdWallet. Email: sfrench@nerdwallet.com. Twitter: @SAFmedia.