Wednesday, March 25, 2009


The thought of writing this piece came while I was watching news where Delhi Police claimed to have solved Soumya and Jigisha murder mystery. They did so by tracing the credit card transactions of Jigisha. The murderers took Jigisha’s credit card after murdering her and went on a shopping spree buying LCD TV, Reebok Shoes etc. People can and do misplace/loose their cards. Sometimes they are stolen. After your card is stolen, the first thing that you need to do is to call the card call centre and report loss/theft of the card and get it blocked immediately so that no one can use it from that moment onwards. But, there are chances of the card being misused from the time it was stolen till you call the call centre and get it blocked. So how can you protect yourself from the consequent liability on your card? Or god forbid, if something were to happen to you causing total or partial disability because of which you are not able to work and hence unable to earn, who will pay your card bills then? Or what if the card details of the card you are using for Internet transaction is hacked and then is used for multiple other transactions by hackers setting you back dearly. In fact, as per the 2007 Online credit card fraud report, the total looses due to online credit card fraud in 2006 itself was $53 billion. How can you protect yourself from all this? The answer to this is Payment Protection Insurance.

While this is an old concept in US, in India, it is a relatively new concept. Here the card issuing company offers you a insurance on the payment liabilities arising due to fraud, death, total or partial disability etc. Once the card holder has this insurance on his card , he is protected from any liability on his card due to theft, fraud, death, disability etc to the extent of the insurance cover . The card issuer will issue the card and the insurance is generally provided from a general insurance company. For example HDFC Bank offers Payment Protection Insurance on its credit cards from SBI Life.
In India, some of the popular cards having this insurance cover are HDFC Credit Cards, Citibank Credit Cards, Standard Chartered Credit cards.Lets see some of the salient features of these cards.
HDFC Payment Protection Insurance cover
This cover is also provided by SBI Life. It protects the primary cardholder's family from the burden of payment on the outstanding balance in the credit card, subject to a maximum of Rs 1 lac, in the unfortunate event of death or TPD (Total Permanent Disability) of the primary cardholder, due to any cause.
Payment Protection Insurance cover comes at a premium of 0.075% of the monthly outstanding. This premium will vary from month to month depending on the outstanding balance.
Citibank Card Protection Plan
Fraud Protection:
Fraud Protection Prior to notification- Rs. 50,000 for classic card and Rs. 1,00,000 for premium card.
Fraud Protection Post notification- Rs. 15,00,000 for classic and Rs. 20,00,000 premium
Standard Chartered Plus Extended Protection Plan
The Plus Extended Protection Plan (PEPP) is a 1 year general insurance benefit package, underwritten by TATA AIG General Insurance.

-Reimbursement of the unauthorized charges that you are responsible for on your lost or stolen payment card, up to 12 hours prior to your first reporting the event to your payment card issuer(s). - Maximum Sum Insured INR 100000.

- Reimbursement of the money you withdrew from any ATM around the world using your payment card against a robbery event that occurs within 15 minutes of the withdrawal of the money. - Maximum Sum Insured INR 100000.

- Reimbursement for replacement costs for the lost or stolen wallet as well as the personal papers and payment cards that were in the wallet.-Maximum Sum Insured INR 15000.

-Cover for items purchased entirely with your payment card from loss due to burglary, theft or accidental damage within 90 days from the date of purchase.-Maximum Sum Insured INR 500000.

Some credit card companies provide credit shield insurance. Here the due on the card is paid off by the insurance company in case of death or disability of the card holder. This too is quite useful protection plan.

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