Broken Stuff? Purchase Protection To The Rescue

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Reward cards are great for their cash back and loyalty points, but it is easy to forget that there are other benefits that come with your card, even if it is not a rewards card.  One example is purchase protection.

How It Works

Credit card companies offer a host of benefits that are often administered by third parties.  In the case of purchase protection, Visa, Mastercard, Amex and Discover all offer some sort of coverage.   Let’s take a look at each offering:

American Express:

Amex offers $1,000 purchase protection per item with a limit of $50,000 per year.   It covers theft or damage of items purchased within 90 days.  The limitations include coins, gift cards, rare items, and consumables.   In addition, virtually anything associated with a motorized vehicle is excluded. 

Visa

Visa provides $500 in Purchase Security protection with a maximum of $50,000 for items purchased within 90 days.  The restrictions on which items are covered are similar to Amex in terms of motorized vehicles and parts, consumables, and rare and collectible items.   According to their policy, your purchases are protected against damage due to “aircraft, spacecraft, or other vehicles”.   I would be interested to know how many spacecraft related claims they have had.

MasterCard

Mastercard does offer purchase assurance, but it varies depending on the bank.  There is very little information out there on Mastercard’s site.   For example, the USAA Mastercard offers $1,000 protection from theft or damage, with a $25,000 annual cap.  Items must have been purchased within 90 days.   The restrictions mirror those of Visa and Mastercard.

Discover

I got to thinking about this subject after reading this account of someone who smashed his television and was later compensated by Discover.  The problem is, I couldn’t find any information about purchase protection on Discover’s consumer cards, only their business cards.   That doesn’t mean it isn’t there, it just means that it may be there, but they aren’t really clear on their web site.   They do have a page on Merchandise Protection under their small business card section. Their coverage is limited to $500 and the usual restrictions apply.

What About Loss?

These policies primarily cover theft or damage.  There are some indications that loss may be covered, but there are no clear explanations.   If you loose something, it certainly could not hurt to try to submit a claim, but don’t count on it.

How To Take Advantage Of Purchase Protection

In the case of theft, you need to file a police report.  In many cases, that can be done quickly online.  In the case of damage, you should take a picture of the item.   In all cases, it is imperative that you file the claim within 90 days of purchase.   You will always need the receipt for the item you purchased.   In the case of online purchases, it should be fairly easy to print out the receipt from the site or from your email.  Another factor is that these coverages are not primary.  They will only pay if the item is not covered by your homeowner’s, renter’s, or another insurance policy.  If the theft or damage is small and your deductible is high, that shouldn’t be a problem.

What Is My Story?

These policies seem a little bit too good to be true.  They continue to exist because few people are aware of them and ever take advantage of their provisions.   I have never even filed a claim, although I am sure I must have purchased something that was damaged or stolen within 90 days.   Clearly, Amex and Visa are the better policies here, that have $1,000 limits, but the $500 limits of Mastercard and Discover aren’t bad either.

The key here is to file a claim whenever you think you might be eligible.   These benefits can be a real lifesaver when you have an unfortunate incident with a recently purchased item.

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