Credit-card travel cover:good to go?

This article appeared in the 1st Quarter 2016 issue of Personal Finance, used with permission.

Many of us hop on a plane to an overseas destination thinking – or, rather, hoping – that the travel insurance we receive courtesy of our credit cards will be sufficient if something goes wrong. But, as Martin Hesse reports, the limits and exclusions on automatic credit-card insurance may leave you significantly exposed.

If you are about to go on holiday overseas and are relying for travel insurance on the automatic cover that comes with paying by credit card, you might need to take a closer look at what the policy covers. The chances are, very little indeed. On most of the lower-level (blue, classic and silver) cards, you have emergency medical cover of only about R150 000 – about US$11 000 when this article was written in November 2015 – and you are not covered for lost baggage, stolen personal effects or cancelled flights. Credit cards have been part of life in South Africa since the early 1970s, and one of their features is free (or "automatic", as it is referred to in this article) travel insurance, particularly for foreign trips, if you buy your travel tickets with your card. The number of people who have had the benefit of this insurance over the years probably amounts to millions, but how many of those travelled in the full knowledge of what they were covered for, and for how much? As with other types of insurance, many people read the small print only if they have to claim – or, worse, if their claims are rejected. But ignorance of policy conditions and even the basics of how much you are covered for versus how much you need, seems to be particularly common with travel insurance.

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