Travel insurance can be a confusing topic for travellers, especially if you’ve never used it. There are so many choices and terms to learn when buying travel insurance. This article will give you a brief overview of what travel insurance covers and why you need it.

Travelling can be a fun experience, but it can also have its drawbacks. And that’s why travel insurance is so important. It makes sure you have the necessary coverage to protect yourself in case something goes wrong during your travels—whether it’s a lost wallet or luggage, an illness, or a serious accident.

What travel insurance covers and how to choose the best travel insurance

With travel insurance, you can worry less about unexpected hospital bills and other costly health emergencies when you are away.

The options for travel insurance vary depending on your destination, cover, and interest requirements and there are many companies that offer travel insurance including your credit card provider, your banks or stand-alone travel insurance specialists.

I will explain below how they differ.

First of all, I have spent the last 20 years travelling the globe and visiting every country in the world. Yes, you can watch more about my achievement here on BBC or read this article by the ABC News.

I always purchase travel insurance, but in my younger years I bought the cheapest insurance policy. Looking back on it now, I realise that those insurance policies didn’t even cover me for the necessary things like medical, theft of property or cancelled flights. There were so many exclusions in the small print that I didn’t read or wasn’t made aware of. Luckily, nothing major happened to me back then.

You need to know what travel insurance covers to avoid making the same mistake as me.

Later on, I took more time to research and took out policies with travel insurance companies. And guess what? When I lost my luggage, had a flight cancelled or fell ill, I claimed it all on my travel insurance. And I always got all my money back so trust me, it is important to know what travel insurance covers before you buy it.

Here are the most important things to know about how your travel insurance works — and what it does or doesn’t cover.

What Travel Insurance Covers – From Credit Card to Comprehensive Travel Insurance:

1. What Travel Insurance Covers – The Credit Card Travel Insurance

Complimentary or ‘free’ credit card travel insurance is a widespread feature that many travellers rely on for cover during their travels. I hear this all the time: “Oh I have travel insurance with my credit card so I don’t need one“. 

But checking the fine print of your credit card travel insurance policy terms is essential – otherwise, you might find common exclusions leave you out of pocket or you might not be insured at all! 

Let me clarify. I also have included insurance with my credit card the American Express Explorer Card.

If you are an Australian resident I highly recommend applying for this card as it comes with amazing travel perks – lounge access & enough points for a free flight to Europe! And international travel insurance as well. 

But let’s talk about what travel insurance covers when it is provided with your credit card. You must always read the fine print – just having a credit card doesn’t always mean you are automatically covered! In my case I am only covered if I purchase my return flight with my credit card, otherwise, the policy is not valid

This is a common requirement, credit card travel insurance covers you only if you purchase your flights with itand if you have a confirmed return flight back home. One-way flight means that you are not insured

Also, the amount of what travel insurance covers when provided by your credit card is often less than the fully comprehensive insurance that you buy from travel insurance companies. 

So this can be the reason why you want to have a separate travel insurance policy in place when you travel.

Your credit card travel insurance covers medical (think serious injury, sickness and of course repatriation to return home for treatment) but it will have a limit. 

Comprehensive travel insurance usually offers medical expenses as unlimited.  

AMEX what travel insurance covers details

This is what travel insurance covers with my American Express Discoverer Credit Card

Another great example is called Travel Inconvenience Cover.

The most common claim would be delayed, cancelled, overbooked or missed onward scheduled flight.

With my credit card insurance, I can only claim up to $500 per flight (see photo below). Of course, this cost might be much higher, say my flight was $2000.

So if I take out a separate travel insurance policy that will most likely cover me for more and I can claim the full amount.

Travel inconvenience cover with AMEX what travel insurance covers

Travel inconvenience covered with AMEX – What travel insurance covers in case of a cancelled or delayed flight

This is what is the most important part when it comes to credit card travel insurance – you need to know the requirements to be covered (ie purchasing your flights with it) and you need to know what it covers.

You don’t need to contact your credit card insurer to find out, there is always an online booklet that outlines the conditions of your policy with all details.  

2. What Travel Insurance covers with Basic or Comprehensive policies

The second and most popular travel insurance coverage is Basic or Comprehensive Travel Insurance which is offered by various Travel Insurance Companies. 

Here is a quick outline of what travel insurance covers when it’s called Comprehensive:

  • Overseas medical and hospital expenses – an unlimited amount for the cost of unforeseen emergency medical and hospital treatment overseas.
  • Cancellation and amendment fees – the cost of pre-paid travel, accommodation, etc. in case you’re forced to call off or reschedule your trip due to an insured event (e.g. an unforeseen illness or injury). 
  • Luggage and personal effects – the cost of repairing, replacing or reimbursing you for your belongings if they are lost, stolen or damaged. Limits apply 
  • Additional expenses – extra travel, accommodation and meals expenses – over and above what you budgeted for – if your trip is disrupted or cut short due to an insured event.

When it comes to Basic policies, there are usually limits on how much you can claim in each category. So you might still be covered, but maybe not for the full amount. 

You can do online research and compare costs and read reviews of the different travel insurance companies, but I recommend buying travel insurance with VisitorsCoverage or