Purchase protection is available against some debit cards automatically, or it may be available as an optional extra. These policies give protection against theft, damage or loss over goods that are purchased using the debit card.
Purchase protection has become common on credit cards. This is particularly the case because card providers operating in other markets, such as the UK, have to provide purchase protection by law for credit card transactions and some of the providers have used the expertise that they’ve gained in this area to provide the cover as a market differentiating offering in Australia. Some debit cards are also offering this service.
Purchase protection works in that if a good is purchased with a certain card is lost, damaged or stolen then the card holder can claim the money back for the purchase. There is a time limit on most of these policies, so the damage needs to happen within a certain amount of time, for example ninety days. There is also a requirement, as with most insurance policies, to report the loss in a timely manner and not to be partially culpable for this loss.
There are other limitations. There is often a maximum that can be claimed every month, and a higher maximum that can be covered over the year. This means that some purchases, for example a car, will not be covered very thoroughly. There are also lower limits on the pay out when goods are left unattended, and some policies may not pay out at all in these circumstances.
Purchase protection is usually offered as an extra service to the debit card, although there are a growing number of debit cards which offer the insurance as an integral part of the service. An example of this is National Australia Bank, or NAB, who offer purchase protection as part of their debit card offering.
The debit card provider is often not the underwriter of the insurance. This will mean that the card holder has to deal with a separate company to claim back on the insurance, a company that may not have the direct incentive to please any long standing customers.
Purchase protection should not be confused with the zero liability policy that many card providers have. The zero liability policy covers losses through an unauthorized use of the card, while purchase protection covers goods that have been consciously bought with the card.
