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Card protection policies
In today's cashless world, most of us feel totally lost without a sizeable wedge of credit, store and debit cards on us, at all times. So it's small wonder that our greatest financial nightmare is the idea of either losing them or having them stolen.
It's not just the horror of being cashless, but also the hassle of having to cancel cards that fills us with dread. After all, who wants to spend a chunk of their precious holiday ringing round credit card companies to report lost or stolen cards?
It's certainly not the greatest thing to have to do if you're 2,000 ft up a mountain enjoying some off-piste skiing or lounging by the pool sipping a cocktail.
Having your cards stolen is not only time consuming to report, but financially draining. With the contents of your wallet likely to be worth several thousand pounds, it is not surprising that card theft costs £430m a year, according to APACS, the Association of Payment Clearing Services.
A card protection policy will ensure that you will have access to emergency cash and that all your cards will be cancelled, and replacements ordered as soon as you report the loss or theft to the card protection company, so that they can’t be used by fraudsters.
How much?
Most banks and card companies offer protection policies, with the cheapest starting from around £12 a month or you can choose to pay more to insure all the cardholders in your household for around £29 a year.
Some protection policies offer you a discount, if you sign up for more than one year, typically £50 for three years.
How does it work?
You register the details of your cards, as well as important documents such as your passport and driving licence, so that if your wallet or handbag is lost or stolen, the card protection company will contact the card providers on your behalf so you don't have the hassle of having to make lots of phone calls.
Some policies even include the cost of replacing your passport and travel documents.
What should I do if my cards are lost or stolen?
First, don't panic. Once the credit card company has been notified of the loss, you will normally only be liable for the first £50, providing you haven’t lost your card through acting recklessly and you haven’t disclosed your PIN numbers to a third party.
A freephone or reverse charge number will be provided and your insurer will do the rest. Your insurer will normally have a 24 hours a day/ 365 day a year helpline, manned by staff who are trained to help deal with this type of situation.
What happens if someone else uses my cards?
Most card protection policies automatically include fraud protection, which means that you're covered if your cards are used before you report them lost or stolen.
But remember that most banks will normally only cover you after you have reported that your cards are missing. Depending on what type of cover you opt for, you can get between £1,000 and £5,000 worth of cover for fraudulent use of your cards before notifying your insurer and up to £100,000 afterwards.
Some policies also incorporate a protective registration service which is activated if identifying documents are lost when your cards are stolen. The service ensures that your details are registered with CIFAS, the UK’s fraud prevention service.
CIFAS will make extra checks on any subsequent applications for credit made in your name in order to block fraudulent attempts to use your cards.
Policy features
What about cash?
The worst thing about losing your cards is that you could find yourself marooned in the middle of nowhere without cash. But this is where your policy will come into its own, by helping you out with an emergency cash advance. If you are abroad, you can typically have emergency cash of up to £3,000 wired to you, as loan or advance.
You can also buy cover for any lost or stolen cash of up to £200 a year, for an extra premium.
Lost your keys?
If you lose your keys, some policies include a tag and retrieval service, whereby you are provided with a coded key ring so that if your house or car keys are found, they can be posted back to you. With premium cover you can also get up to £500 towards locksmith charges, car hire or transportation costs.
What about travel tickets?
Some policies include cover to replace your travel tickets, with some paying up to £5,000. Lost baggage cover of around £200 is also available with some policies.
Other expenses
Cover of up to £100 may be provided if you have to shell out on phone calls or emails as a result of your cards being lost or stolen. There may also be up to £200 of cover to replace a lost handbag or wallet, but you are likely to have to pay an excess of at least £25 on each and every claim.
But before you buy...
Before you buy card protection insurance, check that you are not covered by your home contents or travel insurance policy. Lost or stolen cash may be covered for when you are abroad under these policies, although you may not be able to claim for the lost cash until you get home.
It is also worth noting that some premier bank accounts include card protection within the monthly fee.
Where do I buy it?
The two main companies offering card protection are Card Protection Plan, or Sentinel Card Protection or your bank or credit card company may offer cover.