If you are able to pay off your balance in full every month, here’s one more reason to pay for your purchase with a credit card: purchase protection. Purchase protection insurance will cover eligible purchases against damage, theft or loss typically for 90 days from the date of purchase.
Pretty much every credit card offers this benefit — I checked the American Express, Visa and MasterCard that we carry in our household and all of them offer purchase protection. There are some exclusions such as food, liquor and other perishables, automobiles, boats and even golf balls but most purchases are covered. There are also some limits to how much purchase protection will cover: a lifetime maximum per account holder as well as a maximum per incidence is typical. President’s Choice Financial MasterCard, for instance, limits purchase protection benefits to a lifetime maximum of $50,000 per account as well as a maximum of $1,000 per claim.
Unfortunately, there is some work involved if you do choose to file a claim for purchase protection. You’ll first have to notify the insurance company which provides purchase protection for your credit card that you have experienced a loss or damage. The insurance company will open a claim file and ask you to make a written claim with the original receipt, copy of credit card statement, repair invoice or estimate or a declaration that the item cannot be repaired and a copy of the homeowner’s insurance with deductible. The insurance company may also want you to mail the damaged item to them at your own expense. If the claim is accepted, the insurance company will refund the full purchase price of the item.
I was only vaguely aware of purchase protection benefits available to credit card purchases until one of my sons broke his shiny new Nintendo DS (and promptly blamed his sister for it). Fortunately, I had kept the store receipt and a closer reading of the terms and conditions of the credit card revealed that the damage will be covered. I filed a claim and sent in the paperwork and the broken item and received the refund shortly thereafter.