Extra Insurance Coverage Through Credit Cards: Use Those Perks

by Silicon Valley Blogger on 2010-04-167

Don’t let those credit card perks go to waste.

Most credit cards offer a plethora of extra rewards and benefits that a lot of cardholders may not be taking full advantage of. And one of those things is extra insurance. Yes, credit card debt is bad. However, credit cards, when used properly, can be a tool to help you save money on additional costs such as insurance. Granted that the free insurance you can expect here is what l’d classify as “fringe” insurance or the kind that’s nice to have (rather than something that is absolutely needed). By my definition, “fringe” insurance (I’m sure there’s a better word for this) covers smaller risks and thus, applies to the relatively smaller things. But if there’s no additional cost involved, I’d be happy to take it.

For instance, most credit cards offer insurance and warranties on large purchases. In addition, if you pay for travel expenses on your card (say, if you have a travel credit card), then you’re bound to find good insurance service benefits that are applicable for travel.

extra insurance coverage through credit cards

So, how do you find out more about what your card offers? You’ll find much of it on your card’s (or card company’s) web site, of course. You may want to pay your online credit card account a visit; this seems pretty basic and a whole lot of common sense, but surprisingly, not everyone really bothers to do this. For those without online access, give your credit card company a ring and request a list of the rewards or benefits that come with your card. Often, these extras are easy to miss because we’re so focused on what we got that card for — to get started on shopping and spending.

Use The Free, Extra Insurance Coverage Offered By Your Credit Cards

I reviewed the fine print on my American Express Platinum Business Card to see what kind of coverage it offered me:

1. Purchase Protection

I receive up to $50,000 of purchase protection on my card, with $1,000 maximum per occurrence. This protects me against theft or accidental damage for ninety days, starting from the date of my eligible purchase. I expect this coverage to repair, replace, or refund me up to the amount of the purchase that was charged on my card if anything goes wrong with what I’ve bought. I always recommend calling the credit card company to find out what they refer to as an “eligible purchase”. They should be able to send you some type of documentation for this. If you’ve had an experience where you were able to successfully invoke this coverage (or not), we’d love to hear your story.

2. Extended Warranties

If I purchase an item that carries a warranty, my credit card will double the warranty time for that item up to five years. While I tend to skip over extended warranties in general (I think they’re an unnecessary cost most of the time), it’s still good to know that with this card benefit, I can legitimately avoid the requisite upsell (on extended warranties) that many salespeople frequently spring upon me.

The bottom line: if you typically purchase such coverage, you can now skip the extended warranty on a laptop, television, treadmill, or anything else that often comes with this type of coverage.

3. Rental Car Loss and Damage Insurance

If you rent a car using your credit card, the card actually covers loss and damage of the car. So once more, there are savings to be had if you decide to decline the independent collision coverage at the rental office. In addition, you should also check out the details of your regular auto insurance coverage. Between your own car insurance policy and what your card offers you, you’re likely well covered when you decide to take out a rental, so no need to sign up for anything else.

4. Baggage Insurance

My credit card covers up to $1,250 for carry on baggage and up to $500 for checked baggage. While your airline decides to cover any losses incurred while you travel, your credit card (thanks to travel protection and benefits) may also help soften the blow in case any mishaps happen on your trip. At any rate, you should feel some relief even if your baggage decides to take a detour somewhere in the middle of the Pacific.

5. Travel Accident Insurance

If I use my card for travel expenses (i.e. airfare, hotel, etc), my card provides up to $100,000 in travel insurance for accidental death or dismemberment. Gee, I hope I NEVER have to use this insurance, but I am glad it is there.

Parting Thoughts On Credit Card Perks

On top of all this insurance coverage, I also receive savings on purchases such as rental cars, computers, hotels, and shipping services. In addition, my card is a cash back credit card. This means that I receive cash back on all purchases I make with the card. I was hoping that my credit card offered a benefit called trip cancellation insurance. Well, it actually does — for an extra fee (which I don’t think is worth it). This insurance, which is offered on some credit cards, protects you if you have to cancel you trip or vacation at the last minute.

Credit cards can offer benefits to those who take advantage of them. However, the key to getting the most out of your card is to first ensure that you can pay the complete balance on your card at the end of each month. Otherwise, the interest you pay on the balance will just override any savings or benefits that you receive from the card. So, keep this in mind when you decide that you need a new credit card.

Other ways to get your credit card to work for you:
Maximize Your Gas Credit Card Rewards! How To Pick The Right Card
Leverage Your Good Credit! Don’t Let Good Credit’s Rewards Pass You By

Copyright © 2010 The Digerati Life. All Rights Reserved.

{ 7 comments… read them below or add one }

ConsumerMiser April 16, 2010 at 11:06 pm

I use perk #3 (Rental Car Loss and Damage Insurance) that comes with my credit card so I avoid having to purchase car rental insurance. This is one of my favorite perks. It’s a great benefit because the charge for car rental insurance can be quite a significant additional cost on top of the daily car rental rate. I have also used baggage insurance although the last time we traveled as a family my wife bought baggage insurance sold through the online booking company because she was not aware that we had it on our cards. I try not to check baggage at all and I just pack light and carry on one bag.

Be careful, some credit card companies will try to sell you extra life/accident insurance for a fee and it only kicks in if you book with that card. When you get your bill, you will see extra charges. I dropped this given the relatively low chance of a plane crash and given I have other life insurance.

Chris W April 17, 2010 at 6:26 am

I completely forgot about these perks until my grandfather’s television broke. My parents bought it for him for a Christmas present in November 2007. It had a 2 year warranty and started having problems in December 2009 (out of warranty). Fortunately, they purchased the TV with their Costco American Express which provided an additional year of warranty so all the repairs were free! Great service and perk!

Guy G. April 17, 2010 at 8:58 am


I just wanted to point out that yes, there are some great extra features available with cards like the travel insurance and extended warranties.

The one feature that I wouldn’t suggest people opt in for however, is the accidental life insurance offered by many cards, or the balance protection insurance that pays the balance if you die. The cost per insurance is so much higher in many cases than a good quality term policy. That’s one of the tips on budgeting I often try to get clients to understand. Why pay for insurance twice. If you already have a life policy, why pay for another?


basicmoneytips April 17, 2010 at 5:25 pm

I think rental car insurance and purchase coverage are too of the most important perks that some credit cards offer.

I had a friend who bought a push lawnmower with a credit card and a few months later it was stolen. He reported it to the credit card company and they replaced the mower at no charge. Thats pretty good service.

Lewis G. April 19, 2010 at 4:45 pm

I never purchase the additional insurance when renting a car; my credit card covers that for me. Hmmm…I think I’ll log onto my cc account to see what else they offer.

Chris May 25, 2010 at 10:16 am

Great article, I just wrote one about rental car insurance and found that 34% of people purchase the rental car insurance from the company just because they had no idea they were already covered. Between your regular policy and your credit card, most people have sufficient coverage but just don’t realize it.

I had no idea credit cards covered all the other things you outlined though! These are great tips that can really help people out a lot.

George Carr November 12, 2010 at 10:50 am

I like to use my credit card to buy insurance online – whether it is car or home insurance. The days of cheques are long gone! Good tips!

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