Can credit card insurance save you from a Southwest-style meltdown?

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Southwest Airlines suffered a highly publicized meltdown over the holiday season. In just one week, it had to cancel more than 15,000 flights. Many travelers have found themselves stranded for days and stuck with hefty extra bills for things like hotels, meals, and alternative transportation as they attempt to reach their destinations.

The airline said it would honor reasonable reimbursement requests for these types of expenses. It is also offering 25,000 Rapid Rewards points to customers affected by travel disruptions. Hopefully everyone affected will be reimbursed without issue. But let’s be honest: sometimes getting money from a tour operator is like pulling your teeth. There can be delays and disputes over what constitutes a “reasonable” expense.

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Many credit cards advertise that they offer free travel insurance. You might be wondering if this will help you in this situation, especially if you were one of those concerned Southwest travelers. Luckily, if your credit card has travel protections, you might get your money back that way.

How credit card insurance protects you from theft problems

There are a few credit card travel protections that may apply for theft issues. They are:

  • Travel delay reimbursement: Provides reimbursement for reasonable expenses you incur when your trip is delayed, up to a maximum amount. To qualify, the delay must generally be at least 12 hours or require an overnight stay.
  • Trip cancellation and interruption insurance: Reimbursement of eligible travel expenses if your trip is canceled or curtailed, up to a maximum amount.
  • Baggage insurance: Provides reimbursement for baggage problems, up to a maximum amount. Depending on the policy, this may cover delayed, damaged and/or lost baggage.

The exact protections depend on the credit card. Some credit cards offer all three protections. Others offer less or none at all. Coverage conditions and limits also depend on the card and its policy. For example, some cards offer up to $500 in travel delay reimbursement, while others offer $300.

You can learn all about the protections offered by a card in its benefits guide. Or, if you’re looking for a new credit card and want one with certain travel protections, you can find that information on a card’s webpage.

Although the rules vary from card to card, some apply to most credit cards:

  • You must pay for the trip with the credit card for their travel insurance to apply. For example, if your credit card offers trip delay insurance and baggage loss insurance, you will need to pay for the plane ticket with that card to receive these benefits.
  • Coverage is normally secondary, meaning it applies to excess expenses after all other reimbursements have been exhausted. Let’s say you have $1,000 in reasonable expenses, but Southwest only reimburses you $700. If you also have coverage through your credit card, your credit card will refund the remaining $300.
  • You need documents to file a claim. Be sure to keep all of your receipts and records of the travel issue you encountered.

How to use credit card travel protections

If you’ve had extra expenses due to flight issues with Southwest, or want to prepare for the next airline crisis, here’s what to do.

Ask the carrier for reimbursement first

For the South West, you can get all the information you need for this on its disrupted holiday travel page. If you have other travel insurance, you will also need to file a claim with that company.

You may want to wait for a response before filing a credit card insurance claim. Remember that you must file your claim within a certain time after the incident, often 60 days. If the carrier is slow to respond or unwilling to refund you, be sure to file your credit card insurance claim on time.

Then file a claim with your credit card benefits administrator

You can find out how to file a claim in your card’s benefits guide or by calling the number on the back of your card. Most card issuers allow you to deposit online or over the phone.

You will need to submit your supporting documents during the claims process. If you have an eligible claim, you will receive a refund.

Southwest’s vacation flight issues are a perfect example of why it’s always good to have travel insurance. Many people don’t want to pay extra each trip for an insurance policy, so credit card insurance is a smart way to get coverage at no extra cost. If you don’t have a card with these protections, look for travel credit cards that can protect you on every trip.

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We are firm believers in the Golden Rule, which is why editorial opinions are our own and have not been previously reviewed, approved or endorsed by the advertisers included. The Ascent does not cover all offers on the market. The editorial content of The Ascent is separate from the editorial content of The Motley Fool and is created by a different team of analysts. Lyle Daly has no position in the stocks mentioned. The Motley Fool recommends Southwest Airlines. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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