Make sure you have the right policy before you fly. Photo / Pexels
Make sure you have the right policy before you fly. Photo / Pexels
Opinion by Diana Clement
Diana Clement is a freelance journalist who has written a column for the Herald since 2004. Before that, she was personal finance editor for the Sunday Business (now The Business) newspaper in London.
Credit card travel insurance is a lot better than many people think. I’m surprised how often New Zealanders I speak to assume that it’s not worth the paper it’s written on. I beg to differ.
It’s not a marketing gimmick with nothing behind it. What you get is travel insuranceunderwritten by mainstream insurers. There is a policy with the same sort of wording you see in regular travel insurance policies, inclusions, exclusions and excesses.
In terms of cover, regular travel insurance may have higher limits or cover more activities. On the other hand, the limits on credit card policies are sufficient for most people.
The main point of difference is that travellers need to “activate” their credit card insurance before every trip. That usually means buying 50 per cent or another portion of the travel using the credit card in question.
Another thing to be aware of is that instead of buying travel insurance for a certain number of days or weeks, you’re limited to a maximum of 30/40/90 days depending on the bank or specific credit card. One day over and you have no insurance.
Just like regular travel insurance, credit card travel insurance requires that the traveller declare any pre-existing conditions such as heart problems or high blood pressure. And just like regular travel insurance, there are limits on things like electronic equipment and jewellery.
The good news is that most regular and credit card policies now cover medical and cancellation costs for Covid-19/pandemics, although there are some laggards in both groups.
Most credit card policies added Covid-19/pandemic cover last year. For example, credit card insurance with ANZ, Kiwibank and TSB, underwritten by Allianz/Hollard, all cover medical expenses and cancellation should you fall ill. BNZ, which is underwritten by AIG, has similar cover. I wouldn’t travel without adequate pandemic cover.
The devil is in the detail, as with every insurance policy ever written. ASB’s Platinum Card travel insurance only covers Covid-19 if you’re “medically unfit to travel”. Not everyone who is diagnosed with Covid-19 is medically unfit for travel, even if they can’t fly due to airline rules and government isolation requirements. Westpac has a blanket exclusion for pandemics, although it says its insurer will assess claims on a case-by-case basis. That’s a bit uncertain for me, but policies are changing all the time to remain competitive.
On the subject of pandemic cover, don’t expect any travel insurance to cover you for disinclination to fly, closed borders, or destinations with “do not travel” warnings in place from Safetravel.govt.nz.
One interesting change to credit card travel insurance over the past few years is that some policies, including TSB and American Express now include domestic travel insurance. Most of the others only cover international travel.
Cover for Coivd-19/pandemic is included in most policies now. Photo / AP
New Zealanders often think that free public healthcare, ACC and their household contents insurance is enough cover for a domestic holiday. Add up flights and accommodation and it’s well worth having the cancellation cover offered by these policies.
As well the inability to fly due to Covid-19 or other illness, domestic cover can also kick in for other causes of cancellation such as a death in the family.
BNZ doesn’t have general domestic cover but does offer domestic rental vehicle excess cover. It isn’t the only credit card with useful add-ons such as extended warranties and purchase protection cover from Westpac.
One thing that most people don’t realise about credit card travel insurance is that it’s possible to pay an additional premium before travelling to extend for a trip longer than the limit or to cover pre-existing conditions. Last time I did that it was $70 extra, which was a whole heap less than a full standalone policy.
When doing the maths, consider the cost of the annual fee. Looking back at 2021 and 2022, I didn’t use my credit card travel insurance, which is the main reason for having the card. The points added up to more over the year than the annual fee but it’s worth remembering that behavioural studies have shown humans spend more when they use credit cards than they do in cash. That makes the points value dubious.
Always read the policy. When I was comparing different banks’ offerings I realised that one card which looked very good on the surface failed to offer rental car excess cover, but most of the others did. That could be a game-changer. Likewise, most had unlimited medical cover but some had limits as low as $100,000 for some countries, which doesn’t go a long way if you have a serious accident or illness.
