Do Credit Cards Protect You When Something You Bought Is Stolen?

Buying an item with your credit card can give you theft protection.

Buying an item with your credit card can give you theft protection.

Many people who use credit cards are correctly and wisely aware of the cards' credit limits and repayment terms, such as interest charges and minimum payment requirements. However, many credit cards also offer special benefits to their users that most are not aware of. One of these benefits is a purchase protection plan, which can protect you if the item you bought using your credit card is stolen.

Purchase Protection Plans

All four of the major, nationwide credit card companies -- American Express, Discover, MasterCard and Visa -- offer some type of purchase protection plan. These plans offer you protection if the item you purchased with your credit card gets stolen after you bought it. The plans are basically a form of insurance protection, and like other kinds of insurance, there are eligibility requirements for coverage as well as coverage limitations. These coverage details vary among the different types of credit cards.

Coverage Amounts

As of publication, all four of the major credit card issuers provide protection for 90 days following your purchase of the items. American Express will protect your purchase against theft during that time period for up to $1,000 per claim, limited to $50,000 per year. Discover provides up to $500 per claim, also with a $50,000 annual limit. MasterCard provides up to $1,000 per claim with a $25,000 annual limit for cards labeled World MasterCard. Visa Signature cards offer a $500 claim limit with a $50,000 annual maximum.

Limitations and Conditions

All of the credit card issuers have certain limitations and conditions for their protection plans. In all cases, you will have to show some sort of proof of the theft, at minimum a timely filed official police report. Many plans will not cover you if you left the items in your unattended car or it appears you were careless or otherwise negligent in safeguarding the items. American Express will only cover you after you have made claims to other applicable insurance you may have, such as your homeowner's insurance policy.

Claim Filing Considerations

A key consideration is the requirement for proof of the theft. The card issuer is usually not going to just take your word for it. Make sure you file an official police report with the police department that has jurisdiction of the location where the theft occurred. File this report as quickly as possible and obtain and keep a copy of it. Have this report, receipts of the purchase and all other details on hand before filing your claim. Keep in mind that the credit card companies have broad discretion in handling these claims, so be sure you are fully prepared before you contact them.

About the Author

Kerry Zias has been a strategic business consultant and college instructor of business administration courses since 1990. He has taught courses and performed professional consulting work in the areas of marketing, management, business start-ups, entrepreneurship, real estate, sales psychology and performance, business communications, business law and political/governmental relations. Zias holds a Master of Business Administration in marketing from National University.

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