How Credit Cards Protect Your Purchases From Damage or Theft

You’ve bought a pricey new camera and within weeks, your kid drops it and breaks it — or worse, it’s stolen from your house. What can you do? Your credit card may be able to help if it comes with a purchase protection policy. (See also: 4 Surprising Reasons to Always Pay with Your Credit Card)

What Is Purchase Protection?

Purchase protection covers eligible items purchased on the card against covered losses. Typically, these policies cover theft and accidental damage, but not losses due to misplacement or theft from vehicles. Other common exceptions can include losses due to natural disasters, confiscation by the government, and normal wear and tear.

In addition, certain kinds of purchases are typically excluded, such as antiques, used goods, computer software, as well as motorized vehicles and parts. And in many cases, you may be required to file a claim with your homeowners insurance first, and this policy will cover you for the deductible in any uncovered loss. Finally, these policies are limited to a certain amount of damages per claim and in many cases a certain amount per year.

About half of all U.S. credit cards offer purchase protection. Payment networks such as MasterCard and Visa provide the benefit, and banks choose whether or not to include it with individual cards. Premium cards may have better benefits (a higher coverage limit or longer protection period) than standard cards, even from the same issuer.

Filing a Claim

To file a claim, contact the issuer of the card you used to make the purchase. In the event of theft, it’s important to file a police report as soon as possible, as you will need to include a copy of it with your claim. If your purchase is damaged, then you should take pictures of it, and you may be required to provide a repair bill or a statement indicating that it can’t be repaired and must be replaced. Once these and any other required documents are submitted, most of these policies specify a maximum amount of time that it will take to pay the claim, typically 30 to 60 days. Thankfully, in practice many cardholders receive their reimbursement sooner than that.

Policy Details

Coverage is usually up to $1,000 per claim, but can range from $500 to $10,000 depending on the specific card. Purchases are usually covered within 90 days of purchase, but again, varies between cards with some only going up to 60 days and others up to 120 days. There’s usually a $50,000 limit on claims per year.

The best way to keep up to date on your cards’ purchase protection details is to review the cardholder agreement (or if you threw that away the moment you received your card, call them). That will help you decide on the best card to use for pricey purchases. 

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