Understand your credit card’s insurance policy before your trip
One woman made a $9,440 mistake when she cancelled a vacation due to illness
Last November, Donna Hopkins booked a two-week bus tour to Scotland and Ireland with her husband to celebrate their 45th wedding anniversary.
On the departure date (May 26), she went to a hospital’s emergency department, suffering from pain on her right side. It turned out to be an infected gall bladder.
Still feeling awful, she decided with her husband to cancel the long-awaited trip and take it at a later date. Later, she realized she had made a $9,440 mistake. The bus tour company said it required notice of cancellation at least 30 days before departure. Now it was too late to find others to take their place.
RBC Insurance, the benefit supplier for her WestJet RBC World Elite MasterCard, also had bad news when she called.
“My husband and I found ‘Trip Interruption Insurance’ on page 24 and 25 of the RBC booklet. We felt this should have covered us,” she said.
“I tried to explain this was an interruption to our travels. I was told it would be considered an interruption only if we were on the plane, not in our dining room.”
Hopkins had mixed up two travel insurance benefits. It’s a common problem.
Trip cancellation coverage is what you need to qualify for a refund if something happens before the start of your trip.
Trip interruption coverage is what you need to qualify for a refund if something happens after the start of the trip.
Hopkins’ chosen credit card — the WestJet RBC World Elite MasterCard, with a $99 annual fee — offered trip interruption coverage, but no cancellation coverage.
To get both types of coverage on an RBC travel credit card, you need to sign up for Avion Visa Infinite Privilege ($399 a year) or Infinite Visa Avion ($120).
Alexey Saltykov, co-founder and CEO of Insureye.com, says it’s not enough to have a credit card with trip cancellation coverage. You also need high limits.
With the RBC Infinite Avion credit card, for example, the trip cancellation limit is $1,500 for each covered person. The overall maximum is $5,000.
This means Hopkins and her husband could have got back only $3,000 through the RBC Infinite Avion’s cancellation insurance (if they had the card). They’d be left to pay another $6,440 out of pocket.
“Coverage limits matter, especially when purchasing very expensive trips,” Saltykov points out.
“For small trips ($1,000 to $2,000 per person), consider relying on your credit card in case it has trip cancellation. I always suggest calling your bank to confirm you have this coverage. Reading an insurance policy can be tricky for some people.
“Ask about the limits for this coverage. They are normally indicated per traveller covered by your card, such as your spouse and kids.
“Remember, more credit cards have trip interruption than trip cancellation.”
For large trips, consider getting separate insurance that covers trip cancellation and trip interruption. Understand its details: What are the coverage limits and who is covered?
You can buy insurance packages to supplement a credit card’s coverage at most travel agencies, but Saltykov doesn’t recommend buying them.
“A travel agency may have an agreement with only one insurer, so it may be a more expensive option. Insurers know that need-driven purchases are more profitable for them, such as offering mortgage insurance when you buy a house,” he says.
If you have any pre-existing health conditions, you want to make sure your policy covers them. Talk directly to an insurance broker or find an insurance company that offers policies for people with health issues.
Make sure your travel insurance doesn’t stop at a certain age. Many credit cards have age limits on their coverage. This is especially important if you plan to celebrate your 65th or 70th birthday abroad.
Hopkins recently called her travel agent to ask about cancellation coverage for the cancelled Scotland and Ireland trip. She was told it would have cost $529.
“We would have paid that, if only we had known, but it was never brought up before I asked,” she says.
“It’s a hard lesson to have learned, for sure.
“I’ve just booked a trip for next summer to Italy with a different travel agent. The first question asked was, ‘What about cancellation insurance?’ ”
My advice: You can compare travel reward credit cards at the RewardsCanada.ca website. Another site that compares credit card benefits is Insureye.com.
Do your homework and compare trip insurance packages online. You can find competitive quotes at Insurance Hotline and Kanetix.ca, plus informative articles at Travel Insurance File, offered by travel insurance broker Ingle International. Ellen Roseman appears in Smart Money ( eroseman@thestar.ca).