Imagine this: You are travelling this holiday season to a scenic beach to have a relaxing time. Suddenly you realise your wallet is missing, along with your cash, cards, and documents. However, you’re not worried because you have travel insurance. While your insurance will cover the loss of passports and documents depending on your plan, it will be of little assistance when it comes to protecting your cards. The extent of coverage in most cases is limited to reimbursement for unauthorised or fraudulent usage of your card, if available at all.

This is where a card protection plan (CPP) becomes significant. Read on to know how a CPP works, what are its numerous benefits and why it is useful even if you have a travel insurance plan.

CPP: Helpful Features and Benefits

1. Blocking lost cards

Once you realise that your credit card is lost or missing, the first step would be to report the loss. With a card protection plan, you can report the loss anytime as dedicated toll-free lines will be open 24×7. The agent will also help you place a request for a replacement card.

How is this feature different from simply calling your bank and reporting the loss?

With a CPP, you don’t need to call each bank with whom you hold a credit card and block them separately. You place just one call to a CPP agent and they will get all your cards blocked — not just credit cards, but also debit cards, membership cards, and loyalty cards from different financial institutions.

2. Hotel and travel assistance

If you have no way to pay for your hotel expenses, with a card protection plan, your issuer will take care of the payment directly with the hotel. And if your travel tickets are lost or stolen, they will also replace them, so you are not left stranded in a foreign country. The cash advanced to settle bills in many cases is interest-free for up to 28 days.

Doesn’t a travel insurance plan cover this?

Not in the same way. Travel insurance plans usually work on reimbursement basis. Meaning, you will have to pay for all expenses, and the insurer will later reimburse you for certain expenses if you submit the required documents. So, if you have no way to pay your hotel bill, you will have to take an emergency cash advance from the insurer, and then pay your hotel bill. Whereas, with a card protection plan, the issuer directly settles the bill with the hotel, leaving your emergency cash advance feature untouched for other expenses.

When it comes to replacing flight tickets, travel insurers may or may not offer coverage for this. In most cases, insurance policies only cover flight tickets in case of flight delays or trip cancellations. A CPP, on the other hand, covers flight tickets in case of loss or theft of tickets along with your belongings.

3. Emergency Cash Advance

In case you were carrying cash in your wallet that is now lost, the card protection plan offers emergency cash advance to cover any additional expenses you might incur. However, it is important you read the terms and conditions for a cash advance because CPPs offer this benefit mostly for travel within India only.

Doesn’t a travel insurance plan cover this?

Yes. A travel insurance plan offers cash advance too, and this benefit is often offered worldwide (unlike card protection plans). However, the difference is that you will get a fixed amount to cover all expenses with this advance, including paying your hotel bills and other expenses, while card protection plans offer coverage for every aspect of your trip separately.

4. Fraud protection

Fraud protection is the coverage offered against fraudulent or unauthorised transactions made using your card in case it is lost, stolen, or the PIN has been compromised. This protection kicks in up to a week prior to informing the issuer about the said loss or theft; meaning, CPP gives you the advantage to cover for fraudulent card transactions of the past as well (up to a week).

Isn’t this feature available on credit cards and travel insurance?

Yes. The RBI in their draft mentions, “The burden of proving customer liability in case of unauthorised electronic banking transactions shall lie on the bank”. However, this protection in most cases starts only after you have reported your card lost/missing to the bank. When it comes to travel insurance, not all plans offer fraud protection. With a CPP, your cover is enhanced and valid starting from a week before reporting the said loss.

5. Coverage for multiple family members

You have the option to insure multiple family members under a single insurance plan including a CPP. Do note this facility is offered by most standalone travel insurance policies and even some credit card-linked travel insurance plans as well.

6. Additional benefits on Card Protection Plans

Apart from offering specific benefits related to financial loss while on a trip, CPPs also come with some fringe benefits that are not covered under travel insurance:

# Replacement of PAN Card: A PAN Card is one of the most important ID cards that we many of us carry in our wallets. So, in case your PAN card is also lost along with your belongings, with the help of your CPP, you can get a free replacement of your PAN Card.

# Blocking SIM Cards and Temporary Replacement of Smartphones: All card protection plans offer SIM blocking feature in case of loss of your phone. However, certain plans also offer a temporary smartphone replacement in case your phone is stolen.

How to Avail CPP

The process of applying for a CPP is a fairly simple one – you can do so online, or by calling the bank offering the plan. You should ideally register all your important cards with the CPP provider beforehand to avoid any hassles later. Card protection plans start from Rs 599 per year and often involve multiple protection levels with different pricing.

Should You Get a Card Protection Plan Along with Travel Insurance?

The type of coverage for a card protection plan is completely different when compared to a travel insurance policy. The focus of travel insurance coverage is offering medical benefits, and travel inconvenience benefits that you can face at the airport such as flight delay, baggage delay and/or loss, etc. Protection of your wallet and credit cards are fringe benefits at best. With a CPP, the contents of your wallet are the top priority.

In conclusion, you might want to take a CPP over and above your travel insurance plan for complete peace of mind during a trip. Not just that, CPPs once purchased usually last for a year, which can be a great asset to safeguard your financial interests against fraudulent card transactions even when you’re not travelling. Do ensure you compare different options for the best deal and thoroughly read the fineprint before going for your chosen CPP.

(The author is CEO, BankBazaar.com)