Credit Card Purchase Protection: What You Need to Know

Purchase protection insurance can cover your credit card purchases if they are lost, stolen or accidentally damaged. Here’s how it works.

Image: Konstantin Kolosov/

Many premium credit cards come with a range of complimentary insurance cover. This can include complimentary travel insurance, as well as lesser-known insurances like purchase protection insurance.

What is purchase protection on a credit card?

Purchase protection is a type of insurance that covers you financially if something you have bought with your credit card is lost, stolen or accidentally damaged.

For example, say you purchased a new iPhone with your credit card and a few days later you accidentally dropped and damaged it. If your credit card has purchase protection, you may be covered and reimbursed for the phone.

Limits and exclusions apply. For example, most providers don’t cover items that were left unattended in a public place or a car.

How does purchase protection work?

Purchase protection covers eligible items bought with your credit card. It usually covers personal items, but some policies also cover business items. It usually applies to items purchased anywhere in the world or items given as a gift, so long as they were bought in full using the card.

You typically have around 90 days of cover starting from the date of the purchase, but some credit card providers offer longer terms of cover.

There are also limits and sub-limits that apply per claim and per year (for example, a policy may cover the purchase price in full up to $10,000 per covered item, and up to $135,000 for all claims in a 12-month period). Generally, there are lower sub-limits for items such as jewellery, watches and art.

Depending on the provider, you may also need to pay an excess when you make a claim. Some providers have no excess, while others on Canstar’s database have excesses up to $300 at the time of writing.

Terms and conditions will vary depending on the provider and credit card you choose, so it’s important to read these as well as other relevant documents, such as the Target Market Determination and Key Facts Sheet.

Which credit cards have purchase protection?

Purchase protection is typically offered by more premium credit cards. But there are some low-rate and low-fee credit cards on Canstar’s database that offer the insurance as well.

Purchase protection is offered by the financial institution issuing the card, rather than the payment network like Visa or Mastercard. So it’s worth checking with the provider directly to see whether purchase protection is available.

In some cases the insurance will be issued and managed by an insurance provider and you will need to claim through them, rather than through your credit card provider.

How do I make a claim for credit card purchase protection?

The claims process will vary depending on your credit card provider or insurer, but generally the following steps apply:

  1. Contact your credit card provider or the issuing insurance provider.
  2. Provide details of the claim.
  3. Provide documents and information to support your claim, such as original receipts and police reports.

If your item was stolen or lost, some providers specify that you need to report it immediately to the police or the appropriate person (such as the airline or accommodation provider) and get a written report before your claim can be approved.

If your claim is successful, you will typically be reimbursed the purchase price of the item, or the limit per claim if the item cost more than this.

Other types of credit card insurance

Credit cards can come with a range of other complimentary insurances for purchases. These include:

  • Extended warranty cover: This extends the warranty period beyond the manufacturer’s original warranty period. For example, if the warranty period was six months, the extended warranty period may be a further six months.
  • guaranteed pricing scheme: This refunds you the difference in price if you purchase an item and you find the same item at a nearby store for a cheaper price. Usually you will need to find the item within a certain time period, and there may be limits on the price difference.

This is just a summary of some types of cover that may be available. It’s a good idea to read the terms and conditions and other policy documents so you understand what you are covered for and the exclusions and limits that apply.

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