When most people think of credit card benefits, they envision perks like airport lounge access, annual travel credits and fee credits to cover Global Entry or TSA PreCheck membership. However, some credit cards offer a range of valuable insurance benefits for cardholders -- from travel insurance to cell phone protection.
If you’re planning a European vacation, using the right travel credit card can help you protect your purchase. And if you’re guilty of breaking cell phone screens more times than you care to admit, paying for your cell phone bill with a credit card that has phone protection can keep you covered.
And that’s just the start. Here are the most common types of insurance and protections your credit card might offer.
Types of credit card insurance
The most common types of credit card insurance include travel insurance and shopping protections. While included insurance benefits vary from card to card, remember that these protections are typically complimentary but only apply when consumers use their cards for eligible purchases.
What is travel insurance?
Travel insurance provides financial protection for travelers before or during a trip away from home and comes in many different forms. Note that many types of travel insurance you get with a credit card provide secondary coverage to your own insurance. Secondary coverage means your own insurance policy kicks in before your credit card travel insurance coverage pays a dime.
Common types of travel insurance you can get with a credit card include:
Trip cancellation and interruption insurance
This type of coverage reimburses you for prepaid travel expenses when a trip must be canceled or interrupted for reasons beyond your control. If a natural disaster makes it so you cannot depart for your destination, for example, this coverage may apply. The same is true if you break a bone while on vacation and need to return home for medical care.
Limits for this type of coverage vary from card to card. With the Chase Sapphire Preferred® Card, for example, cardholders get trip cancellation and interruption coverage worth up to $10,000 per covered person and up to $20,000 per eligible trip.
Rental car insurance
Credit cards can also include rental car insurance as a covered benefit, although many cards only include secondary coverage that applies after you exhaust coverage offered through your existing personal auto insurance policy.
The best credit cards with travel insurance offer primary coverage. For example, the Chase Sapphire Reserve®, which offers primary auto rental collision damage waiver worth up to $75,000 for theft and collision damage.
Travel accident insurance
Some credit cards also offer travel accident insurance that kicks in to cover events like loss of a limb, hearing, speech, or vision or even a death during a covered trip. The limits for this coverage vary significantly across cards that offer it, and cardholders have to pay for travel with a common carrier for this protection to apply.
Baggage delay insurance
Credit card baggage delay insurance works the same as if you purchased this coverage directly from a travel insurance provider. This insurance can reimburse you for essential purchases when your bags are delayed by a minimum amount of time -- usually 6 or 12 hours.
Essential purchases can include toiletries, clothing and charging cords for your electronic devices.
Lost or damaged luggage reimbursement
This coverage protects your bags if they’re lost or stolen while in the care of a common carrier. Some coverage also provides reimbursement if your bags are damaged while in transit.
While credit card policies vary, many plans cover checked or carry-on luggage for up to $3,000 per person.
Trip delay insurance
Trip delay insurance covers incidental expenses that occur when a trip is delayed for a certain length of time, usually 6 hours or longer. This coverage is typically offered on a per-traveler basis and covers unexpected hotel stays, unplanned airport meals and other surprise expenses that occur while waiting to depart.
What are shopping protections?
There are also purchase protections that work similarly to travel insurance. For these coverages to apply, you have to pay for an item or bill with your credit card.
Purchase protection
Purchase protection is a type of coverage that protects new purchases against damage or theft within a certain number of days after you make the purchase, usually up to 90 or 120 days.
If you buy a new laptop and it stops working within a few weeks later, for example, you can file a purchase protection claim as long as you paid for the laptop with a credit card that offers this coverage.
The amount of protection you get with purchase protection varies from card to card. The Blue Cash Preferred® Card from American Express*, for example, offers purchase protection** for up to 90 days from the date of purchase with limits of $1,000 per occurrence and up to $50,000 per calendar year.
Terms apply to American Express benefits and offers. Enrollment may be required for select American Express benefits and offers. Visit americanexpress.com to learn more.
Extended warranty protection
Some credit cards also offer extended warranty protection on eligible purchases that already come with a manufacturer’s warranty. This type of coverage can also include limits for each occurrence and each account.
With extended warranty protection** on the American Express® Gold Card* for instance, eligible purchases with a manufacturer’s warranty of five years or less qualify for up to an additional year of warranty coverage worth up to $10,000 per purchase and up to $50,000 per card each year.
Terms apply to American Express benefits and offers. Enrollment may be required for select American Express benefits and offers. Visit americanexpress.com to learn more.
Cell phone protection
Some cards also come with built-in cell phone protection, but this coverage only applies when you pay your regular phone bill with the card. You might also have a deductible and coverage limits.
The Wells Fargo Active Cash® Card is a good example of a credit card with cell phone protection. The Active Cash covers your cell phone against damage or theft for up to $600 per claim, but you’ll have to pay a $25 deductible per claim and you can only file a maximum of two claims within 12 months.
Return protection
Finally, some credit cards also offer guaranteed returns or “return protection.” This coverage provides reimbursement for eligible purchases when a store will not take an item back within a few months of the purchase date.
Time limits apply to this coverage, and there are limits on how much you can get reimbursed for. For example, you might get reimbursement protection with some cards for up to 90 days with a maximum benefit of up to $300 per item and up to $1,000 per account.
Should you choose a card based on the insurance it offers?
While credit card insurance can be valuable, it shouldn’t be the sole driver for opening a new credit product. You should compare credit cards based on their credit score requirements, rewards, fees, APRs and other cardholder benefits.
Credit card insurance can be nice to have, but it won’t always replace the need for purchasing a separate insurance policy -- particularly since card insurance plan limits tend to be on the low end.
Travel insurance from credit cards rarely covers emergency medical expenses and may not take care of the total financial losses you experience when missing or canceling a trip. This is particularly important for people traveling overseas. If you want to have travel insurance with higher limits and more types of coverage overall, you’ll be better off buying a comprehensive travel insurance plan instead.
The bottom line
The best credit cards on the market tend to offer credit card insurance and shopping protection benefits, along with traditional credit card perks.
These insurance products can prove useful and financially rewarding if you need to use them, but you should make sure to understand their limitations and practical applications. Limitations include many plans being secondary coverage, meaning they’ll only take effect once your personal insurance pays out.
*All information about the Blue Cash Preferred Card and American Express Gold Card has been collected independently by CNET and has not been reviewed by the issuer.
**Eligibility and Benefit level varies by Card. Terms, Conditions, and Limitations Apply. Please visit americanexpress.com/benefitsguide for more details. Underwritten by Amex Assurance Company.
The editorial content on this page is based solely on objective, independent assessments by our writers and is not influenced by advertising or partnerships. It has not been provided or commissioned by any third party. However, we may receive compensation when you click on links to products or services offered by our partners.
