How Will Credit Card Protections and Insurance Change in 2021?

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Credit card protections and insurance don't get as much attention as credit card rewards—but the long list of lesser-known card benefits is worth keeping an eye on. These perks often include purchase-related protections, such as extended warranties, as well as travel-related insurance, including trip delay and cancellation insurance.

The benefits can save you money and put you at ease knowing that your purchases and travel plans are protected. However, the benefits, exclusions and coverage limits can vary by card, and issuers can change a credit card's benefits without notice. Below, we explore how card protections and insurance benefits may change in 2021.

Credit Card Travel Protection Trends in 2021

Credit cards' travel purchase and insurance benefits may include:

  • Auto rental collision damage waiver: Primary or secondary coverage for when a rental car is damaged or stolen.
  • Trip accident insurance: Offers coverage for when a traveler is killed during a trip or seriously injured, such as losing speech, sight, hearing or a limb.
  • Trip cancellation and interruption insurance: May reimburse you if your trip is cancelled or cut short due to a covered event, such as sickness (which may include the coronavirus) or severe weather.
  • Trip delay insurance: Can cover expenses, including meals, transportation and lodging, if your planned trip is delayed or canceled.
  • Baggage delay insurance: Can reimburse you for necessary purchases, such as clothing and toiletries, while you wait for your bags to arrive.
  • Roadside dispatch or assistance: Could either help connect you with nearby roadside help while you're on the road or help cover the cost of certain services.

The coronavirus pandemic upended travel in 2020, and after a flurry of initial claims, some of these benefits lost their value as people stayed at home. However, the vaccine rollout means people may be ready to follow through on their delayed travel plans.

Travel Insurance Becomes More Valuable as Travel Picks Up

Travel bookings for 2021 are already on the rise, according to many travel companies. "So travel insurance benefits are going to be as or more important" this year, says Peter Alter, vice president at CBSI, which provides benefits services to card issuers.

Airlines and hotels may have cut routes and staff over the past year, however, impacting travel plans. "You're going to have a lot of people get onto planes and go to hotels that have less availability than before COVID," Alter says. "When that happens, there's going to be a greater chance for missed baggage and people getting bumped from seats or rooms."

As a result, booking your travel with a card that offers trip cancellation, delay and interruption coverage could be important. But review your card benefit's fine print, as the eligible circumstances and benefit amount can vary.

For example, The Platinum Card® from American Express has trip delay insurance that offers up to $500 in coverage if your trip is delayed by more than six hours. However, the Delta SkyMiles® Platinum American Express Card offers up to $300 per trip in coverage if your trip is delayed by more than 12 hours. Terms apply to American Express offers.

Some Cards Lose the Auto Rental Collision Damage Waiver Benefit

While the pandemic initially led to a steep decline in car rentals, that was followed by an increase in rentals for summer travel in 2020.

If the road trip trend continues, or you're renting a car rather than using public transportation, credit cards' auto rental collision damage waiver benefit could be especially valuable. Purchasing similar coverage directly from a rental car agency could cost up to $30 per day.

However, many Visa cardholders received announcements in 2020 that their card's rental car collision damage waiver benefit would end on February 1, 2021. Some cards also dropped extended warranty and purchase protection benefits.

Alter says one of the reasons may be that the rental collision damage waiver has become relatively expensive. "The cost of repairing and replacing vehicles has gone up," he explains, "which has driven up the cost of auto rental collision damage waiver coverage."

If your card continues to offer the benefit, you should find out if it offers secondary or primary coverage. With secondary coverage, you have to use your own auto insurance before the card's benefit kicks in.

Credit Card Purchase Protection Trends in 2021

Most credit cards include zero liability for unauthorized purchase, and many offer additional protections on products you purchase or pay for with your credit card:

  • Return protection: Allows you to return a product and get a refund when the original retailer doesn't accept the return.
  • Purchase protection (or purchase security): Get reimbursed for products that are damaged, lost or stolen.
  • Extended warranties: Extends the manufacturer's warranty on a product.
  • Price protection: Can cover the difference between your purchase price and a lower advertised price after you make a purchase.
  • Cellphone protection: Reimburses you if your phone is stolen or damaged.

All the card benefits have requirements and limits. For example, return and purchase protections usually only last a few months from the purchase date, and there may be per-claim and annual limits. Or, the extended warranty benefit may only apply to purchases when the original manufacturer's warranty was for one or two years.

"The benefits that we see the greatest traction on on the retail side are cellphone insurance, purchase security and double warranty," Alter says. "And, to a lesser extent, return protection."

Purchase Protection Shines as Porch Package Theft Rises

Credit card purchase protection generally lasts 60 to 120 days from the date of purchase, but the benefit limits can vary considerably. For example, the Chase Freedom Unlimited® has a $500 per-claim limit ($50,000 per account), while the Chase Sapphire Reserve® covers up to $10,000 per claim ($50,000 per year).

The benefit typically applies whether the item you buy is lost, stolen or damaged accidentally. As shelter-in-place orders led to an increase in online shopping, there have also been rises in package theft. Alter says they've seen an increase in purchase protection claims directly related to so-called porch piracy.

While the benefit may be increasingly valuable if you shop online, unfortunately, some Visa cards may have cut purchase protection as of February 1, 2021.

Price Protection Remains Rare

Price protection is an increasingly rare benefit that only a few cards offer. Alter doesn't expect it to make a comeback, because it no longer serves its original purchase.

"When price protection started, it was a meaningful benefit because it was pre-price comparison shopping apps," he says. "When the internet became a giant price-shopping tool, it reduced the value of the benefit."

Cellphone Insurance Becomes More Valuable

On the other hand, there's no indication that the cellphone insurance benefit is going away, and it may become more valuable in the coming year.

"Cellphone insurance will be more important as the rollout of 5G leads to more new phones," says Alter. "Whenever that happens, we see an increase in cellphone insurance claims."

There's often a deductible, as well as per-claim and annual limits for the benefit. For example, the Chase Freedom Flex℠ credit card offers up to $800 per claim with a $1,000 annual limit. You can make two claims per 12-month period, and there's a $50 deductible per claim.

New Benefits in 2021 and Beyond

While some existing credit card benefits may be taken away or become more valuable, it will also be interesting to see which brand-new benefits you might receive.

For example, Alter sees the potential for card issuers to offer more non-insurance benefits, such as telehealth services and tech support for items you purchase. He doesn't have a timeline for when these might happen, however.

No matter the specific benefit, you may notice a shift as benefits and insurance providers move to digital platforms that make reviewing and filing claims easier.

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