Credit Card Travel Insurance: The Limits People Find Too Late

A travel insurance benefit attached to a credit card is not a marketing line. It is a real insurance contract, with a real insurer behind it and real conditions inside it. The trouble is that the conditions are the part nobody has read, and two of them decide whether the benefit exists at all on a given trip.

It is a real contract, and that cuts both ways

The Quebec regulator confirms the benefit rather than warning people off it. Some credit cards include travel insurance, it says, and the issuers of such cards generally charge an annual fee.

That single sentence contains the reason the benefit is taken seriously and the reason it is misunderstood. It is taken seriously because it is paid for: the annual fee on the card is, in part, the price of the coverage. It is misunderstood because a benefit that arrives with a card does not feel like a contract, and so the questions a person would ask an insurer never get asked.

Everything below is a condition the regulator publishes about this product. None of it is unusual for an insurance contract. All of it is invisible to somebody who has not opened the documentation.

The first condition: how the trip was paid for

The regulator states it twice, in two different documents, which is usually a sign that a point is being missed in practice. The insurance is usually conditional on the credit card being used to pay for the trip. Coverage is often conditional on use of the credit card.

This is the condition that fails quietly. A trip booked with points, paid from a chequing account, split across two cards, booked by an adult child on their own card for a parent, or paid by a travel agent who took a transfer, can be a trip with no benefit attached, because the event that triggers the coverage is the payment, not the cardholding.

Nothing about the trip looks different afterwards. The card is in the wallet, the documentation is in the drawer, and the condition failed at the moment of booking, months before anybody has a reason to look.

The second condition: how long the trip is

Here the regulator is blunt. Travel insurance offered through credit cards is often limited to very short trips outside Quebec.

It adds a second ceiling that applies to travel insurance generally and not only to a card benefit: most of the time, travel insurance does not apply to trips longer than 183 days outside Quebec during the same year. That figure will be familiar to anybody who has read about provincial coverage, where the same number governs whether a person remains eligible at all, and the coincidence is not one: both rules are built on the same idea of what a resident is.

Then the sentence that catches snowbirds and long stay travellers. If a trip is scheduled to last longer than the total duration of the coverage, the regulator says a person may not be covered at all. Not covered for the first weeks and uncovered afterwards. Not covered at all. A benefit written for a two week holiday does not stretch to cover the first two weeks of a five month winter.

The third condition: what was declared about health

Emergency medical products most often contain an important exclusion for pre-existing health conditions. The regulator says so plainly, and it attaches an obligation to it that has two moments rather than one.

Health problems a person has or has had must be declared to the insurer when the travel insurance is bought, and again when they are about to leave. The second moment is the one that surprises people. A declaration made when a card was issued years ago is not a declaration made before this trip, and a change in health between the two is exactly what the second declaration exists to capture.

How a particular benefit handles this, what period it looks back over and what it asks, is in the documentation for that benefit. The point here is only that the obligation exists and that it is not a formality.

What Quebec gives a purchaser, which most people never use

Insurance offered to a client by a lender or a merchant rather than by a representative is its own regime in Quebec, and the regulator publishes what it entitles a purchaser to.

A summary explaining the insurance offered must be given. A fact sheet informing the purchaser of their rights must be given as well. And there is a cancellation right: ten days to cancel the contract, after which a cancellation fee may apply, though some insurers grant more time.

Those documents are the shortest route into this subject that exists. They are written to be read by somebody who is not in the business, they are free, and they were already handed over.

The one instruction the regulator actually gives

Across several pages and a consumer publication, the Quebec regulator gives one instruction about this product, and it is a sentence long: carefully check the documentation received with the credit card.

Beside it sits the general rule for any travel insurance, which is to be sure of eligibility for the coverage offered taking into account age, state of health and destination. Age, health and destination, in one sentence, alongside the trip length and the payment condition. That is the whole of what decides whether a card benefit answers on a given trip, and every part of it is knowable before departure.

A benefit that answers on a short holiday to one destination, paid for in the right way, by somebody whose health has not changed, is a genuine benefit. The conditions are not traps. They are simply conditions, and they are only dangerous when they are assumed away.

Frequently Asked Questions

Continue Learning

The 183 day figure appears on the public side as well, and that rule is set out in how long you can leave your province. What the public plan pays while a traveller is away is in what your provincial health plan pays when you are ill abroad, and the product itself is on the travel insurance page.