Credit card insurance changes travellers can't afford to ignore
Millions of Australians could be boarding their next flight with far less protection than they realise as banks slash rewards and wind back perks ahead of the October 1 ban on card surcharges.
From earning frequent flyer points to accessing perks like airport lounge passes, there are plenty of reasons why Australians have been drawn to premium credit cards, despite their higher cost.
One of the more valuable features has been complimentary travel insurance - cover many jet-setting cardholders will have relied on while travelling abroad.
But with card providers flagging major changes ahead of the upcoming ban on debit and credit card surcharges, cardholders may need to think twice before assuming they're covered.
So, what's changing, and can travellers still rely on their credit cards for travel insurance?
Has your bank cut credit card travel insurance?
Ahead of the October 1 ban on card surcharging, card providers have announced some significant changes, including higher annual fees, lower points earn rates and scaled-back insurance cover.
"Some of the country's biggest banks are winding back or cutting their travel insurance cover benefits, with each adopting a different strategy which adds to the confusion," says Warren Duke, travel insurance expert at Compare the Market.
"In some cases, new criteria have been added to access benefits, such as ANZ's move to three levels of insurance benefits from December 9.
"ANZ says some cards will have reduced cover or will have benefits removed, while other cards will no longer include complimentary travel insurance."
ANZ isn't the only major bank taking action. Travel insurance benefits like baggage cover and interstate flight inconvenience cover will no longer be included on CommBank's Gold and Gold and Platinum Awards cards from September 29.
Westpac is also reducing the scope of the travel insurance across its Black and Platinum card suite from October 1, removing cover for trip cancellation, travel delays and luggage.
NAB, on the other hand, already removed travel insurance from a number of its credit cards back in May.
Given the extent and variety of changes being rolled out, Duke has urged cardholders to dig into the details related to their own cards - especially those with upcoming travel plans.
"Travellers who have relied on complimentary credit card based travel insurance will need to be even more wary due to these changes, and should always double-check the bank's fine print.
The insurance fine print travellers often miss
Beyond keeping an eye out for any future changes, cardholders may also want to ensure that they don't fall into the trap of assuming that they're automatically covered.
"Card-based travel insurance can provide valuable cover, but there are often more conditions attached than travellers realise," says Natalie Smith, travel insurance expert and head of marketing at Comparetravelinsurance.com.au.
"One of the crucial things to check is whether you actually meet the eligibility requirements. In many cases, travellers need to have paid for a minimum amount of their trip using the eligible credit card, and some policies may only cover the cardholder rather than everyone travelling with them."
Travellers should also take a close look at the level of coverage being provided, Smith suggests.
"Card-based policies can have lower limits for certain benefits, higher excesses and restrictions around things like age and pre-existing medical conditions.
"Some credit card policies don't provide cover for pre-existing medical conditions, while others may offer cover subject to specific conditions, so travellers should check the policy carefully.
Are rewards cards still worth it for travel insurance?
Whether it's points or insurance, the recent credit card shake-up will have prompted plenty of customers to ask themselves whether their rewards card still stacks up.
Ultimately, the calculation will depend on whether cardholders still feel that the value the insurance provides outweighs the cost of the card.
"Many customers that travel overseas frequently will feel like they're losing a great perk, but it's worth remembering that insurance included on a credit card that has a high annual fee was never really free to begin with," Duke argues.
"So, unless you were already using the card and taking advantage of the other points benefits, getting a credit card for travel insurance cover alone probably wasn't the best-value option in today's competitive travel insurance market."
When does standalone travel insurance make sense?
While card-based insurance may still be a more convenient option for some cardholders, there are situations when it might not be enough for a traveller's needs. An alternative is a standalone policy from a travel insurer.
"If your card insurance has lower medical or cancellation limits, a high excess, age restrictions or doesn't cover a pre-existing medical condition, a standalone policy is likely a better option," Smith says.
"The same applies if you're travelling with family and the card policy doesn't provide adequate cover for everyone in your travelling party.
"Travellers should also consider the type of trip they're taking. If you're planning activities such as skiing, cruising or trekking, check that your card-based policy covers those activities and any specific conditions that apply."
Before you fly: 6 things to check in your credit card insurance policy
1. Have you met the required spend?
Some policies only apply if you've paid for flights, accommodation or a minimum portion of your trip using the eligible credit card.
2. Do you need to activate your cover?
Complimentary insurance isn't always switched on automatically. Some providers require cardholders to register or activate the cover before departing.
3. Is your family covered?
Don't assume that a partner or children are automatically included in your cover. Some policies only cover the primary cardholder.
4. Are there exclusions for medical conditions?
Pre-existing medical conditions can be excluded entirely or only covered under specific circumstances with some policies.
5. Does it cover your type of trip?
Cruises, as well as trips that feature skiing, climbing, scuba diving and other adventure activities, can have different limits, exclusions or eligibility rules.
6. Are the benefit limits high enough?
Check the available cover for medical expenses, trip cancellation, delays and lost luggage. Recent changes mean some cards now offer lower benefits than they once did.
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