Those heading overseas during the upcoming school holidays could be buying travel insurance they do not need.
Many credit cards come with travel insurance, often not just covering the card-holder but also the spouse and up to two children, provided they are still students.
Online comparator Mozo says 87 out of 201 cards on its database come with travel insurance that could render the typical $300 to $500 cost of comprehensive family cover from a travel agent a waste of money.
"Many people do not know they have travel insurance as part of their credit card," says Mozo director Kirsty Lamont.
Mozo reviewed the cover provided by eight major providers, including those of the big four banks. Typically, a provider offers insurance on only some of its cards. It is more commonly a benefit of high-end cards, such as platinum cards. However, some "ordinary" cards also have the insurance.
The cover is usually triggered by the card-holder paying for part of the journey on the card or, in some cases, the full cost of a return overseas flight. Be aware there is often a credit card surcharge on airfare bookings that goes under a variety of names and can add a lot to the purchase price of the tickets.
Seven of the eight card providers reviewed by Mozo, offer unlimited medical cover, with Amex the only provider to cap medical cover at $2.5 million.
NAB cards cover "actual costs" of medical and dental emergencies while the others have caps on dental charges of between $750 and $2000.
"This is still generous as a stand-alone travel policy would usually cap dental cover at around $500 to $750," Lamont says.
"Resumption of journey" cover, where travel is cancelled in the case of emergency and resumed at a later date, is more generous with cards than stand-alone insurance, Lamont says. Cover for loss of luggage and personal effects is also more generous.
However, permanent disability or accidental death cover is likely to be better with a comprehensive stand-alone policy, Lamont says. And the age limit of cover for card-holders can be as low as 70: though most cover anyone up to 80 years of age.
"It is really important to read the fine print and check the detail to know what is covered and what it not." Card cover is not for those with pre-existing medical conditions, Lamont says.
"In-built credit card insurance is great for people who are healthy, relatively young and travelling to standard rather than dangerous places and are not engaging in dangerous activities. If you fall outside of that you will need to take-out a stand-alone policy," she says.
Dr Allan Manning, the managing director LMI Group, a risk management company, says: "I am in the [insurance] industry and, personally, I would not rely on my credit card."
He says travellers would be doubling-up on some of the cover by buying stand-alone insurance. "But, I would bet that the policies that are paid for are going to have broader cover."
Manning says the cards could be used as a back-up in case the claim with the stand-alone policy is excluded or the limits of the cover are exhausted. "You have a right to claim on either policy, the choice is yours.
"You just cannot claim on both unless the first policy does not cover your loss fully." And then each insurer would have to be informed of the claim that you have made with the other insurer.
Medical cover is the most important part of a travel policy for most people and requires the most attention when shopping around for insurance, he says. Also pay attention to the cover for cancellation due to illness or accidents.
Claims for cancellations are increasing and loss of airfares can add up tens of thousands of dollars, Manning says.
