Is your debit or credit card insured? In recent years, the use of debit and credit cards has surged across India, driven by factors such as e-commerce growth, the government’s push towards digital payments, and increased awareness of financial technology. According to a Nielsen survey, about 65% of urban Indians now prefer using cards for daily transactions, citing reasons like convenience, cashback offers, and reward points.
With this increase in card usage, fraud cases have also risen sharply. The Reserve Bank of India (RBI) reports that fraud related to debit and credit cards has jumped by 425%, from Rs 277 crore in the previous financial year to Rs 1,457 crore in FY24.
Card fraud can seem like something that only happens to others until it happens to you. This is why credit and debit card insurance becomes vital.
“Card insurance is designed to cover losses from unauthorised transactions due to cyber fraud,” says Adhil Shetty, CEO of Bank Bazaar. However, Shetty warns, “you must report the fraud within a specific timeframe, usually between 48 to 72 hours, to make a successful claim.”
What other benefits come with card insurance?
Beyond fraud protection, card insurance can offer financial coverage for accidents, card theft, and loss of purchases. Shetty explains, “These insurance covers act as a safety net, protecting users from potential financial losses due to accidents, fraud, or misuse of the card.”
Here are the benefits of debit and credit card insurance:
— Protection against unauthorised transactions due to cyber fraud.
— Coverage for accidents, card theft, and purchase loss.
— Acts as a financial safety net during unforeseen events.
— Debit cards generally offer coverage for accidental death, card loss, and purchase protection.
— Credit cards often provide higher and more varied insurance coverage than debit cards.
— Some cards offer accident insurance for air, road, or rail travel.
— Certain cards include insurance for checked-in baggage loss during travel.
— International travel insurance is available with some cards, including high coverage for air travel accidents.
— Insurance can help clear outstanding dues in case of disability or income loss due to accidents.
— Premium cards offer enhanced insurance services, often without an extra charge, as part of the card’s annual fee.
These benefits vary by card type, so it’s important to check the specific features when applying for a card.
“You should always check the benefits at the time of applying for a debit or credit card,” adds Shetty, pointing out that credit cards tend to offer higher and varied insurance coverage compared to debit cards.
For instance, the SBI Gold Debit Card provides Rs 2 lakh in personal accident insurance and Rs 4 lakh in personal air accident insurance. Meanwhile, the SBI Platinum Debit Card offers Rs 5 lakh for personal accidents and Rs 10 lakh for air accidents. Additionally, the Gold Card comes with Rs 5,000 in purchase protection, while the Platinum Card offers Rs 50,000. Some SBI debit cards also include coverage for checked-in baggage loss, ranging from Rs 25,000 to Rs 50,000.
HDFC’s Millennia Debit Card offers personal accident death cover of up to Rs 10 lakh, while cardholders are entitled to a base cover of Rs 5 lakh for accidents occurring via air, road, or rail. The card also provides Rs 2 lakh in checked baggage insurance and, for international air travel, up to Rs 1 crore in insurance coverage when tickets are purchased using the card.
For credit cards, the HDFC Diners Club Black Metal Edition Credit Card offers Rs 2 crore in air accident insurance, emergency overseas hospitalisation cover of Rs 50 lakh, and travel insurance covering baggage delays up to Rs 55,000 for international flights. Meanwhile, the ICICI Bank Emeralde Private Metal Credit Card provides Rs 3 crore in personal accident air death coverage, Rs 1.4 lakh in purchase protection, and a credit shield of Rs 1 lakh.
While the RBI has not prescribed any requirement for insurance cover on debit or credit cards, both public and private banks in India provide insurance benefits with their debit and credit cards. Premium cards generally offer enhanced services and higher insurance coverage. “Banks like SBI, HDFC, and ICICI are among the top institutions offering insurance benefits with their cards, aiming to protect you, your belongings, and your purchases,” according to BankBazaar.
Do you have to pay extra for card insurance?
For many cards, insurance benefits come as a complimentary feature, with no additional charge. The cost of insurance is often built into the annual fee of the card. Premium cards, which offer higher insurance coverage, may have a higher annual fee to cover these costs.
What are some common frauds linked to cards?
Card fraud has evolved in sophistication. According to JPMorgan, some of the frauds are:
Skimming: This occurs when devices are installed at ATMs, point-of-sale terminals, and fuel pumps to capture card data and steal PINs. Fraudsters then use this information to create fake cards.
Phishing: In this scam, fraudsters use emails and text messages to trick you into giving away financial details. Phishing is aimed at getting you to click on links that lead to fake bank login pages or ask for your debit card information.
Hacking: Hackers can access your debit card details, especially when you bank or shop on public Wi-Fi networks. Using secure, private Wi-Fi is critical to avoiding this.
How does a credit card insurance plan work in case of an accident?
Credit card insurance plans can also cover outstanding dues if the cardholder experiences an accident that impacts their ability to repay. Kotak Mahindra Bank outlines an example where a cardholder who had made significant purchases is later involved in an accident and loses their income source. The cardholder can file a claim under their insurance plan, which will clear the outstanding balance without damaging their credit score.
Despite these benefits, it’s important to understand that not all types of fraud or incidents are covered. “Policy exclusions exist, so you must thoroughly review the terms of your card insurance policy, including the extent of coverage, premium costs, and claim procedures,” warns Shetty.
