Is card protection insurance worth the money if your plastic gets lost or stolen?
I had a phone call from the bank yesterday from someone trying to sell me Card Protection insurance. For a three-year policy it would cost me £50 or I could pay an annual fee of just £20.
I said thanks, but no thanks, and was asked why. (Don't you just hate it when they do that!)
The reason is because I have a photocopy of my debit and credit cards, each with the emergency telephone number written next to it so if my purse ever gets nicked, I should be able to cancel my cards with a series of quick phone calls. The only thing the card protection insurance would give me would be the ability to make just one phone call to report my cards stolen - the insurer would do the rest, including ordering replacement cards, and I rather think I'm capable of doing that myself.
The fact that I'd be covered for fraudulent use of my cards - up to £1,500 for the 24 hours before reporting the theft and up to £75,000 thereafter - didn't cut any ice with me either because the Banking Code already gives me protection.
It's the issuers of plastic cards rather than individual cardholders who bear the initial cost of fraudulent use (although from January, it'll be the responsibility of retailers if they haven't switched to Chip & PIN technology). Your maximum liability on credit, debit, and bank-issued charge cards is £50 for fraudulent transactions made before the issuer is notified and, in most cases, issuers waive even this small liability.
Obviously your liability is unlimited if you've been grossly negligent such as writing your PIN on the card or if you've played a part in the fraud yourself but an innocent person who gets his cards nicked is not liable for the money that's spent on it by a thief.
So what's the point of the card protection? Does it offer anything else other than the ability to make one free phone call instead of several?
Well, if they get nicked abroad, the card protection company will often advance you emergency cash if you're stranded. But so will your travel insurance so why pay twice for the same thing?
Don't forget you need to report the loss or theft the moment you realise they've been lost or stolen. All issuers have 24-hour emergency telephone numbers. And, if you're anywhere near a photocopier at the moment, just make a copy of all your cards and jot down the relevant telephone number - you'll usually find it on the back of the card. Unless you'd prefer to pay for card protection insurance, of course.
Find out more about keeping your cards safe in our Credit Card Centre.
