Check what you’re covered for before using complimentary travel insurance.
Check what you’re covered for before using complimentary travel insurance.

Free travel insurance stacks up

USING free travel insurance provided by credit card providers can seem scary.

There's no confirmation, policy number or policy documents, and you must rely on their word that you will be covered if things go wrong on your holiday.

However, this complimentary travel insurance is a money-saving opportunity for Australians with rewards credit cards, and can stack up nicely against traditional travel insurance.

Critics say it's not free because cardholders typically pay hundreds of dollars a year in annual fees plus higher interest rates, but for those who already collect card benefits such as frequent flyer points or travel credits, it costs nothing extra.

A recent report by consumer group Choice, which reviewed 59 travel insurance policies that come with credit cards, says the cover looks as good or even better than stand-alone policies, but is generally not as flexible and there are hoops that must be jumped through.

"Just having the credit card isn't enough: usually insurance only applies when you buy your tickets with it," Choice says.

"Some banks also require you to notify them to get full coverage for each trip. While base coverage will still give you emergency medical treatment, you might not get coverage for property damage or luggage delays. Check if you need to do anything to activate any extra features."

Travel insurance is a must-have item for most holidays.
Travel insurance is a must-have item for most holidays.

Excesses are also often higher - perhaps $250 instead of $100 - and pre-existing medical conditions are generally not covered. Sometimes domestic travel isn't covered, Choice says.

Phil Hoffmann Travel managing director Phil Hoffmann said travellers should check what complimentary insurance covered. "Make sure they cover all the things a normal policy covers," he said.

"Check what they cover and check what they don't and get it in writing."

Underwriters for the credit card insurance are often the same as traditional travel insurance products, so claiming is the same.

An American Express spokesman said customers signing up for the credit cards received a terms and conditions document "that acts as the policy document for the insurance".

"This insurance kicks in once you book eligible travel arrangements on the card," he said.

People should spend time finding the right policy for them and check it covered all their needs. "It's really important to take time to read and understand the insurance terms and conditions."