Credit cards purchase protection insurance

Credit cards are probably one of the most used financial products on a daily basis. We are usually clear about the financial conditions of these products, however, we are not always so clear about the insurance policies associated with them.

Credit cards are a financial product with a high presence of associated insurance, insurance of all kinds that evolve from the most basic, such as purchase protection insurance, to complex coverage for high-end cards.

It goes without saying that for personal finances these insurances can be decisive in specific situations, for example, the purchase protection insurance can make the difference between a refund or recovery of money paid in case of a fraudulent purchase or simply losing the money.

Credit cards and insurance

The use of credit cards in our country is tremendously widespread, in fact, we are a country that uses more cards on average per person than necessary. If the recommendation is not to have much more than one credit card, a credit card and a virtual one for Internet payments, the truth is that the wallets of the Spaniards are filled with cards that in many cases we do not use or underuse.

In our country there are close to 50 million credit cards issued and no less than 25 million debit cards, not counting virtual or prepaid cards. Evidently, this is a sufficiently large volume of financial products for the security of their operations to be relevant. If the technological security of cards has been evolving and improving over the years, the association of insurance with plastic money is also a constant to be taken into account.

Curiously, we tend to focus on the advantages of cards associated with their ability to defer payment, to reduce the cost of cash withdrawals, or on the bonuses and discounts that their use can bring us. And, we say curiously because, probably the free and associated insurances are an advantage so interesting or more to which many cases we renounce by ignorance, or simply we are not conscious of being holders of such insurances.

In fact, the vast majority of users are unaware of the insurance associated with our credit card, if it has them, what they cover, what we save in duplicity of insurance, and so on.

In short, we can say that a significant number of credit card holders are insured with insurance that they do not know about, i.e., they have useful coverage that they do not know they have.

Purchase protection insurance

We will review them briefly below. The insurances usually associated with credit cards, but in this case we are going to focus on the so-called payment protection or purchase protection insurances.

It is important to begin by saying that these insurances are not always the same, i.e., we can find them under different names and even with different scopes in terms of coverage.

From a general point of view, they are insurance policies linked to the use of the specific card with which they are associated. These insurances can offer protection against theft or accidental damage to those goods or objects that we have acquired through the card. On paper this poses an almost idyllic scenario in which, for example, if a contingency occurs with a purchase made, we can claim it from the card insurance if we have made the purchase through it. However, the restrictions of these insurances to access the indemnities are high.

Three of the basic conditions that you will find in practically all purchase protection insurances associated with credit cards are the following:

  • Total payment with the card associated to the insurance: this is an essential condition, although there may be some exceptions in which partial payment is contemplated, generally in order to be able to make a claim on a purchase, the total purchase must have been made through the card associated to the insurance. If a partial payment is made and a claim is to be made on such payment, it must be taken into account that the claim will not be on the total purchase but on the amount paid through the card.
  • Respect the claim times of the particular conditions of the insurance: this is another basic and logical condition in which the insurer requires a minimum period to communicate the contingency. This period is usually high, that is to say, it can go between two months and three months since the purchase was made, but, it is not always like that and therefore it is obligatory to know this particularity of the insurance before making the claim.
  • Theft only, almost never theft: as with other types of insurance, semantics is very important. In this case, most purchase protection insurances will be activated in the event of theft, but not in the event of robbery. The difference is that it is considered theft when intimidation and violence have been used, i.e. if we are mugged, but it is not considered theft when the object has been taken from us carelessly, for example by removing it from our purse, wallet, etcetera. The theft of vehicles in this case can lead to controversies especially when violence is used to force the vehicle, because although it can be considered theft the damage caused and the violence used can serve as a point of claim in some cases, but not in all.

What to take into account regarding our purchase protection insurance

In the particular credit card contract the particular conditions of the associated insurance must be included. As we have already insisted before, we do not always pay attention to these insurances and much less to their particular conditions, this is in any case the first thing we should take into account about a purchase protection insurance associated to our card:

  • What are the situations and contingencies that the insurance covers and what are the exclusions that it proposes to us.
  • What type of goods are those that the insurance is able to cover.
  • What are the minimum claim periods and what is the maximum period in which we can claim a contingency.
  • The possible franchises that the insurance presents, that is to say, those minimum amounts from which the company will pay us the indemnity.
  • The minimum and maximum amounts of the coverages as well as the maximum amounts of the possible indemnities. Remember that they will not always coincide, in some cases the maximum indemnities will be percentages stipulated on the final amount of the purchase.

Added coverages or extra coverages of the purchase protection insurances

In some cases, purchase protection insurance policies offer additional or extra coverage. These coverages either appear as a particular advantage of the insurance or can be contracted additionally.

The most common would be the following:

  • Refund or replacement of products purchased over the Internet that are not received, are defective or do not match the items paid for. In this case it is necessary to watch out if the payment gateway or the online store where the purchase was made does not offer a similar purchase protection system, since duplicity in the coverage would not be admitted by the insurance.
  • Extension of the manufacturer’s warranty: warranty extensions are becoming a business in themselves within the insurance industry in relation to technological devices. Before independently contracting an extended warranty when purchasing a device, it is important to check whether our insurance card offers such a possibility. What the warranty extension does is to increase the original warranty period of the purchased product, but only for those conditions and types of products covered by the policy.

Of course there are other options such as the possibility of obtaining refunds of the difference between a lower and higher price in the same purchase, very infrequent and more associated with payment gateways or online stores, or other types of bonuses and added benefits. In any case, as always, it is appropriate to thoroughly review the conditions proposed in the insurance contract.

Where to find purchase protection insurance

The first thing to point out is that not all credit cards, far from it, carry these insurances. Moreover, not even all cards that offer purchase protection insurance will offer the same type and model of insurance.

Depending on each bank, insurance company and type of card, different associated options will be proposed which, the higher the level of the card as a financial product, the greater the coverage and associated insurance coverage.

However, it is very useful to consult with the financial entity all these particular conditions of our card before contracting it since, as we can see, it can be really interesting and make the difference with respect to other cards that do not have insurance and have similar costs.

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