Valuing Complimentary Credit Card Travel Insurance

[MEL_Traveller]

The problem is that with a CC policy you have to really scrutinise the T&C's depending on what you want. So if you want to go hiking even, you may not be covered. Scuba generally is not covered regardless of depth or license. In fact, no license no cover. They are always looking for a reason NOT to pay you.
The other factor with CC insurance is checking which part of your trip you have paid for with the CC and if that fits their T&C's for the cover.
For the sake of $120.00 I generally get a cover to suit.

absolutely zero difference between what you describe and a regular paid policy

 

[MEL_Traveller]

Given the number of people responding here to using Complimentary Credit Card Travel Insurance, the other interesting question associated with valuing it is who is actually paying for it?

Assuming Travel Insurance purchased directly from the insurance companies is a fair price for the products being offered, then plainly the frequent travellers here are getting an amazingly good deal relative to direct purchase of the policy. Also banks would ultimately have to pay the insurance companies something approaching their retail fee for direct purchase, but with a discount for volume - else the Travel Companies would go broke. I can't see how the card annual fee pays for Travel Insurance, nor how the money put through the card pays for it for most people (especially if points are earned on those transactions).

I could speculate that perhaps other fee-paying people with such credit cards, who don't travel much, are subsidizing the frequent travellers with their annual fees. But then again, looking at American Express, it seems to offer back to most customers of cards with Complimentary insurance a Travel Credit of around the same amount as the annual fees paid - so how are they funding the Travel Insurance?

I suspect we can thank shareholders of the organizations for ultimately funding our cheap insurance.
Regards,
Renato

The fundamental problem with the basis of your post is ‘assuming travel insurance is a fair price’. It’s not. Commissions on standard policies can be 40, 50 or 60%.

meaning your $100 policy is only really a $40 policy. The rest goes in commission. Oh, and out of the $40, take out some more for profit for the insurance company. So now your $100 policy might be as little as $20 cover.

Given the actual cost of the insurance ... maybe $20, it implies the risk overall is not that high, or the sheer volume of policies covers the cost of claims, plus a profit for the insurance company.

Banks probably have a master cover which doesn’t cost very much yet is an invaluable benefit of their cards.

 

[ozjuice]

Adventure pack (optional extra)

Abseiling
Animal conservation and handling (under appropriate supervision)
Battle re-enactment (but not with firearms)
Cave/river tubing
Caving/potholing
Contact sports (including any form of rugby, Australian Rules football or American football)
Deep sea fishing
Diving underwater using an artificial breathing apparatus at a depth no greater than 30 metres (you must hold an open water diving licence recognised in Australia or dive under licensed instruction)
Expeditions to or on the Kokoda Track/Trail
Flying fox/zip lining
Hiking, trekking or tramping, peaking at altitudes from 3,000 metres up to 6,000 metres, where specialist climbing equipment is not required.
Martial arts (but not training)
Outdoor rock climbing (with ropes and appropriate safety gear)
Quad biking (but only single rider)
Sailing from 11 to 15 nautical miles off any land mass
Shooting (but only moving target, e.g. clay pigeon)
Surface water activities in rivers or rapids graded 4 or 5 under the International Scale of River Difficulty
Tandem parachuting, tandem sky diving, tandem hang gliding, tandem gliding and tandem paragliding (but you must be in tandem with a licensed instructor for all these activities)
Use of motorcycles with engine capacities greater than 250 cc

 

[ozjuice]

absolutely zero difference between what you describe and a regular paid policy

Totally disagree because a regular policy is quite limited.

 

[Peter D]

Adventure pack (optional extra)

Abseiling
Animal conservation and handling (under appropriate supervision)
Battle re-enactment (but not with firearms)
Cave/river tubing
Caving/potholing
Contact sports (including any form of rugby, Australian Rules football or American football)
Deep sea fishing
Diving underwater using an artificial breathing apparatus at a depth no greater than 30 metres (you must hold an open water diving licence recognised in Australia or dive under licensed instruction)
Expeditions to or on the Kokoda Track/Trail
Flying fox/zip lining
Hiking, trekking or tramping, peaking at altitudes from 3,000 metres up to 6,000 metres, where specialist climbing equipment is not required.
Martial arts (but not training)
Outdoor rock climbing (with ropes and appropriate safety gear)
Quad biking (but only single rider)
Sailing from 11 to 15 nautical miles off any land mass
Shooting (but only moving target, e.g. clay pigeon)
Surface water activities in rivers or rapids graded 4 or 5 under the International Scale of River Difficulty
Tandem parachuting, tandem sky diving, tandem hang gliding, tandem gliding and tandem paragliding (but you must be in tandem with a licensed instructor for all these activities)
Use of motorcycles with engine capacities greater than 250 cc

I suspect that several of the items listed are just there to make the list look like a substantial add on.

If they are not already in the associated base policy then it would indeed be a poor policy.

Several of these items are not excluded from most credit card or standard policies. Such as diving as discussed before. In fact this list has the same limitation on diving (almost word for word) as most CC policies.

I have never found hiking as an exclusion on either CC or standard policies with or without altitude restrictions.

Obviously I am a fan of CC insurance. But with all policies we must read the product disclosure statements. I would not be happy traveling without reading them particularly for places without Medicare reciprocity.

 

[MEL_Traveller]

Totally disagree because a regular policy is quite limited.

ANZ CC insurance only excludes the following activities - which I think is quite reasonable:

(g) hunts, plays polo, races (except amateur racing on foot), mountaineers using support ropes, rock climbs, abseils, participates in base jumping, running with the bulls, or pot holing; or
(h) travels in international waters in a private sail vessel or privately registered sail vessel; or
(i) participates in, or trains for, a professional sporting activity; or
(j) scuba dives unless they hold an open water diving licence or were diving under licensed instruction; or
(k) rides a motor cycle without wearing a helmet, or without an unrestricted motorcycle licence that is valid in their country of residence, or with an engine capacity greater than 250cc; or
(l) rides a 4 wheel motor cycle even as a pillion passenger.

and

aerial activity for example, hang-gliding, base jumping and skydiving

 

[TheRealTMA]

Adventure pack (optional extra)

Abseiling
Animal conservation and handling (under appropriate supervision)
Battle re-enactment (but not with firearms)
Cave/river tubing
Caving/potholing
Contact sports (including any form of rugby, Australian Rules football or American football)
Deep sea fishing
Diving underwater using an artificial breathing apparatus at a depth no greater than 30 metres (you must hold an open water diving licence recognised in Australia or dive under licensed instruction)
Expeditions to or on the Kokoda Track/Trail
Flying fox/zip lining
Hiking, trekking or tramping, peaking at altitudes from 3,000 metres up to 6,000 metres, where specialist climbing equipment is not required.
Martial arts (but not training)
Outdoor rock climbing (with ropes and appropriate safety gear)
Quad biking (but only single rider)
Sailing from 11 to 15 nautical miles off any land mass
Shooting (but only moving target, e.g. clay pigeon)
Surface water activities in rivers or rapids graded 4 or 5 under the International Scale of River Difficulty
Tandem parachuting, tandem sky diving, tandem hang gliding, tandem gliding and tandem paragliding (but you must be in tandem with a licensed instructor for all these activities)
Use of motorcycles with engine capacities greater than 250 cc

Nope. Couldn’t pay me to do any of those things.

 

[Matt_01]

Each to their own, T's and C's are a mind-field at the best of times and from what I have read most insurance policies are worded with more "get of jail free" clauses that benefits the insurer rather than the purchaser. I just have an annual family plan that covers all of our domestic and international medical. I then do not have to be concerned if the original travel booked via CC (still is still open/active and/or cancelled) when making changes to the original booking using a different card.

I also take out additional "global coverage" from home and contents insurance to cover specific items we travel with e.g. watches and jewellery.

 

[Renato1]

The fundamental problem with the basis of your post is ‘assuming travel insurance is a fair price’. It’s not. Commissions on standard policies can be 40, 50 or 60%.

meaning your $100 policy is only really a $40 policy. The rest goes in commission. Oh, and out of the $40, take out some more for profit for the insurance company. So now your $100 policy might be as little as $20 cover.

Given the actual cost of the insurance ... maybe $20, it implies the risk overall is not that high, or the sheer volume of policies covers the cost of claims, plus a profit for the insurance company.

Banks probably have a master cover which doesn’t cost very much yet is an invaluable benefit of their cards.

Thanks - very good point about the commission.

I went and checked how much the top cover that would have cost me $1117 at Allianz would cost at 1Cover and InsureandGo and they came up with $806 and $763 respectively. Which, with all things being equal (which may not be the case) would imply a 46% commission.

I think your 20% actual cost figure seems too low. Most general insurance companies don't usually make much money on the difference between premiums versus payouts, but instead they make it on the investment income they earn on the money they hold from when they collect it to when they pay it out. I don't know that such is necessarily the case with Travel Insurance companies.

At around a 50% commission, I think there would still have to be effective cross-subsidization to the frequent travellers at this site using the complimentary insurance. I'm not complaining.
Cheers,
Renato

 

[MEL_Traveller]

Thanks - very good point about the commission.

I went and checked how much the top cover that would have cost me $1117 at Allianz would cost at 1Cover and InsureandGo and they came up with $806 and $763 respectively. Which, with all things being equal (which may not be the case) would imply a 46% commission.

I think your 20% actual cost figure seems too low. Most general insurance companies don't usually make much money on the difference between premiums versus payouts, but instead they make it on the investment income they earn on the money they hold from when they collect it to when they pay it out. I don't know that such is necessarily the case with Travel Insurance companies.

At around a 50% commission, I think there would still have to be effective cross-subsidization to the frequent travellers at this site using the complimentary insurance. I'm not complaining.
Cheers,
Renato

Good point about holding the money! I hadn't thought of that.

The only thing to add is that both 1Cover and InsureandGo would also have their 40-60% commissions on their policies. So the $763 could be as low as $305.

The cost of insurance should be the same for all the major players. The difference in the price we pay for policies is profit to the insurance companies.

 

[theblank]

The problem is that with a CC policy you have to really scrutinise the T&C's depending on what you want.

I dont understand why you say this is a problem?

a person should do that whether they are paying for TI or have got a free one.

They are always looking for a reason NOT to pay you.

I think thats a myth. I have never had a problem with any insurer paying out claims no matter what it is. They of course do have an obligation to check a claim is valid.

The other factor with CC insurance is checking which part of your trip you have paid for with the CC and if that fits their T&C's for the cover.

thats not complicated. If you buy the airfare then its done. Its a bit tricky if you use FF points, but seriously, If someone is clever enough to earn FF points then they are not going to be intimidated by checking CC T&C, takes 2 mins.

 

[ozjuice]

That's cool and that's your opinion. If it takes you 2 minutes to check all the possible variables then you are a better person than me. Good luck. I'd say we have all had different life experiences.

 

[Renato1]

I dont understand why you say this is a problem?

a person should do that whether they are paying for TI or have got a free one.

Until starting this thread, I'd have entirely agreed with you. But only now have I found out that my Amex Platinum Edge card's Complimentary Travel Insurance doesn't appear to contain any reference to Rental Vehicle Excess or insurance that I can locate so far.

It's not a problem for me as I have another card with that feature, but it would be a problem for others who either have it as their sole card with travel insurance, or who in a quick reading may not have noticed that feature was missing.among all the other staandard features that are present.
Regards,
Renato

 

[TheRealTMA]

Until starting this thread, I'd have entirely agreed with you. But only now have I found out that my Amex Platinum Edge card's Complimentary Travel Insurance doesn't appear to contain any reference to Rental Vehicle Excess or insurance that I can locate so far.

It's not a problem for me as I have another card with that feature, but it would be a problem for others who either have it as their sole card with travel insurance, or who in a quick reading may not have noticed that feature was missing.among all the other staandard features that are present.
Regards,
Renato

Seems like you may need need to to a bank sponsored card such as Westpac Earth Platinum or similar. These (Earth Black for example) include free TI that includes rental car excess and only required $500 spend on travel to activate the card, unlike Amex where the full cost of the airfares needs to be on the card.

 

[get me outta here]

As I almost always fly on points this is the first thing I check and then get in writing by email, that points bkgs are covered and that I get to fly home in F that's what I booked, all others things aside.

It takes me a lot more than 2 mins to read a PDS.

... Its a bit tricky if you use FF points, but seriously, If someone is clever enough to earn FF points then they are not going to be intimidated by checking CC T&C, takes 2 mins.

 

[MEL_Traveller]

As I almost always fly on points this is the first thing I check and then get in writing by email, that points bkgs are covered and that I get to fly home in F that's what I booked, all others things aside.

It takes me a lot more than 2 mins to read a PDS.

It may take more than 2 minutes to read a PDF, but it takes the same time as any paid policy. Maybe a fraction longer to ensure you have met the eligibility criteria.

 

[ozjuice]

It may take more than 2 minutes to read a PDF, but it takes the same time as any paid policy. Maybe a fraction longer to ensure you have met the eligibility criteria.

and there lies the variables. But when you buy a policy it's a lot easier to go for one that suits, rather than find one you have to fit. Hence the thread i guess. Policies are complicated. You really have to be on your guard and to have peace of mind i am cautious. Some people hope for the best. You are switched on! We aren't all as lucky.

 

[TheRealTMA]

and there lies the variables. But when you buy a policy it's a lot easier to go for one that suits, rather than find one you have to fit. Hence the thread i guess. Policies are complicated. You really have to be on your guard and to have peace of mind i am cautious. Some people hope for the best. You are switched on! We aren't all as lucky.

It makes little difference. You still have to carefully read the T&Cs. It’s not hard to understand the CC TI T&Cs and you can always call up and ask if you have any doubts.

 

[MEL_Traveller]

and there lies the variables. But when you buy a policy it's a lot easier to go for one that suits, rather than find one you have to fit. Hence the thread i guess. Policies are complicated. You really have to be on your guard and to have peace of mind i am cautious. Some people hope for the best. You are switched on! We aren't all as lucky.

But you still have to find the policy that fits either through a comparison site or direct with the insurer. Most of the policies are along the lines of 'bronze', 'silver', and 'gold' (the names vary by insurer). Knowing which one of those covers bags, which ones don't. Which ones cover missed connections. Which ones cover vehicle rental excess. Do they cover FF points? Some don't cover delays, or a lost phone, or incidental expenses if you are in hospital.

At least with a CC policy there's only one type. It either suits you or not.

I guess people with ANZ Platinum have lucked out. Very low threshold eligibility (almost impossible to not meet it, unless you forget to use the card! Which has happened to me ). Don't need to buy your ticket on it. Covers FF points. Covers vehicle rental excess. Covers up to 6 months away. It's hard to go past a fully comprehensive policy that is equivalent to a top tier equivalent on a paid example.

 

[ozjuice]

More variables...and hence the thread. See it really can be complicated.