Credit Card Purchase Protection Explained

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Credit card purchase protection is one of the most overlooked benefits of using your credit card when making a purchase. I’m going to generalize a bit here, but purchase protection insurance (sometimes known as purchase assurance) will cover your eligible purchases against damage, theft or loss for 90 days from the date of purchase.

Not every credit card has purchase protection, but it’s becoming a standard benefit even with no-fee credit cards. To simply put it, if you’ve purchased an eligible product and immediately lose or damage it, you’ll probably be covered. Even if you’re the one that did the damage to the product, you’ll most likely still be covered.

credit card purchase protection

Should you use purchase protection?

There’s absolutely no reason why you shouldn’t take advantage of your credit card purchase protection if you have it. Why would you pay for repairs or buy your product again when you don’t have to? This insurance is on top of your store warranty so it’s basically getting an extended warranty without having to pay extra for it.

The best part of purchase protection is the fact that it covers our own mistakes. There’s been more than one time where I’ve damaged something I recently purchased and felt like a complete idiot. Merchant return policies don’t usually accept “user error” as grounds for a refund so this is why purchase protection is incredibly handy.

Purchase protection can be a bit confusing at times as some people confuse it with the add-ons that credit card providers try to get you to purchase or extended store warranty. Even though it’s a standard benefit, not everyone looks into the details to figure what they’re covered for. Not every card offers this benefit, but if you have a card with a yearly fee, the odds are it’s included.

With any insurance policy, you should read the details so you know exactly what you’re covered for. In most cases, there’s a maximum lifetime amount and possibly a maximum amount for each individual claim. For example, you might be covered for $50,000 for your life but you may only claim up to $1,000 each time.

Making a purchase protection claim

Making a claim is a pretty straightforward process, but there is some work involved. First, you need to contact the insurance company that provides the purchase protection for your credit card. If you’re not sure which company does that, then contact your credit card provider for the details.

The insurance company is required to open a claim file and will ask that you make a written claim with all the relevant supporting materials. e.g. the original receipt, your credit card statement with the purchase, and a repair invoice (if the item was stolen, you may need a police report). They may even ask to see your home insurance policy. They basically need to build their own case as each claim is made on a case-by-case basis.

Once you have all the paperwork ready, you’ll need to send that in by mail along with the damaged item (assuming it’s not lost) so they can verify your claim. The reason you need to send in the physical product is so they can make sure your not committing fraud. This may sound a bit complicated and annoying, but if you were making any type of insurance claim, the odds are the insurer would have a similar process.

Assuming the insurance company is satisfied with your claim request and the supporting materials, you’ll be refunded the full purchase price.

Final thoughts

You may not think of credit card purchase protection as a major benefit, but like all insurance, when you need it, you’ll be glad that you have it. Some people prefer credit cards without an annual fee, but when you factor in all the additional benefits and insurance you get, that yearly fee may well be worth your while.

About Barry Choi

Barry Choi is a Toronto-based personal finance and travel expert who frequently makes media appearances. His blog Money We Have is one of Canada’s most trusted sources when it comes to money and travel. You can find him on Twitter:@barrychoi

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