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How does credit card travel insurance work?

Travel insurance is a perk frequently offered by the best travel credit card. CNBC Select reviews the most common types of travel insurance offered by the best travel rewards credit cards so you can make sure your next trip is protected.

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Vacation should be relaxing, but there are plenty of things that can go wrong: Your flight is delayed or your luggage gets lost. You may wind up booking last-minute hotel accommodations or repurchasing the lost items, and find yourself spending a lot of extra money you didn't plan for.

But it can be a lot less expensive managing these travel disruptions if you paid for eligible travel, such as the flight, hotel or car rental, with a credit card. Many of the best travel credit cards offer travel insurance that can cover the cost of unexpected expenses.

The specific terms of the travel insurance benefits vary by card issuer. In most cases, you have to pay for your trip in full with your credit card, though some card issuers only may require a portion of the trip to be paid with the eligible card. And card issuers often implement different limitations on the coverage you receive and what expenses are eligible for protection. Make sure you review the specific terms before booking travel.

Below, CNBC Select reviews the types of travel insurance offered as a credit card benefit, along with a list of cards that provide these kinds of travel protections.

How credit card travel insurance works

Car rental insurance

If you've ever rented a car before, you've likely received a long agreement with various terms of the rental. One of the options the salesperson often tries to push is car rental insurance. But signing up for the insurance may not be necessary if you're using the right credit card.

Credit card car rental insurance often covers you and additional drivers added to the rental agreement. Coverage is for damage or theft of the rental car up to a certain dollar amount.

There are two types of car rental insurance: primary and secondary.

  • Primary car rental insurance is the premium version, which means eligible car rental loss and damage will be covered by your credit card issuer with no affect on your personal auto insurance policy. That means you don't have to file a claim with your car insurance and you avoid an increase to your premium.
  • Secondary car rental insurance is supplementary to your personal auto insurance and covers what your personal insurer doesn't. You will need to file a claim with your personal insurance and the credit card issuer.

In order to take advantage of car rental insurance, you need to decline the rental company's insurance and pay for the entire car rental with your eligible card.

Cards with car rental insurance

Baggage delay insurance and lost luggage reimbursement

If you're traveling on a common carrier (airplane, train, bus) and your luggage is lost or delayed, you may receive reimbursement through credit card baggage insurance. This may also be referred to as lost luggage reimbursement or baggage delay insurance.

  • Lost luggage reimbursement covers damage or loss of your luggage by the carrier for you and immediate family members on the same trip.
  • Baggage delay insurance covers select items you purchase, such as clothes or toiletries, when your baggage is delayed a certain amount of time.

Cards with baggage insurance

Trip delay insurance

If your flight is significantly delayed, you may have to scramble to make last-minute arrangements, such as booking a hotel and buying additional meals. These unexpected expenses can add up to hundreds of dollars pretty quickly.

If your credit card offers trip delay insurance, you may be reimbursed for lodging and meals up to a certain dollar amount per common carrier ticket, such as an airplane, bus or train ticket, when your trip is delayed a certain number of hours.

Credit cards with trip delay insurance

Trip cancellation and interruption insurance

There's any number of events that could occur that would force you to cancel your trip or cut it short. If you didn't pay for travel insurance, you could be out a lot of money for missing out on part or all of your trip.

However, some credit cards offer trip cancellation or trip interruption insurance that may provide reimbursement if you need to cancel your trip due to sickness, severe weather or other covered situations.

Credit cards with trip cancellation and interruption insurance

Travel accident insurance

While you may not want to think about accidents that can occur when you travel, events may be out of your hands. If you or an immediate family member gets hurt, it can lead to unexpected expenses.

If you purchase your trip with a credit card that offers travel accident insurance, you may be covered for certain situations, such as accidental death or dismemberment, or a loss of speech, sight or hearing, experienced while on a common carrier (air, bus, train or cruise transportation) or during a covered trip.

Credit cards with travel accident insurance

Emergency evacuation insurance

Another benefit a few cards provide is emergency evacuation insurance, which differs from travel accident insurance. If you or an immediate family member become sick or are injured during a trip and you require an emergency evacuation, you may be covered for eligible medical services and transportation.

Take note that coverage is secondary to any valid and collectible insurance or other reimbursement.

Credit cards with emergency evacuation insurance

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Information about the Bank of America® Premium Rewards® Credit Card, Capital One® Venture® Rewards Credit Card, Capital One® VentureOne® Rewards Credit Card, and Wells Fargo Propel American Express® Card has been collected independently by CNBC and has not been reviewed or provided by the issuer of the cards prior to publication.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.