When it comes time to choose a credit card, most consumers first look at cash back, travel points or rewards. However, many credit cards also offer a variety of insurance protections that can help you save hundreds, or even thousands, of dollars each year.

But not all insurance coverage included with credit cards is created equal. Some protections offer real added value, while others are much more limited than they may seem.

Here are the main types of insurance coverage found on credit cards in Canada, along with the ones that are truly worth your attention.

Why do credit cards offer insurance coverage?

Financial institutions use insurance benefits as a selling point to attract new customers and justify the annual fees of certain cards.

These protections can cover different aspects of your everyday life:

• Travel
• Vehicle rentals
• Major purchases
• Electronic devices
• Accidents
• Medical emergencies

To benefit from most of these protections, you generally need to pay for the purchase or trip with the credit card in question.

1. Travel insurance: often the most valuable protection

For travellers, travel insurance is probably the most valuable protection offered by many credit cards.

Depending on the card you choose, it may include:

• Emergency medical insurance
• Trip cancellation insurance
• Trip interruption insurance
• Flight delay insurance
• Baggage delay insurance
• Lost or stolen baggage insurance

Individual travel insurance can easily cost between $75 and $300 for a single trip, depending on the destination and length of stay. For people who travel a few times a year, a credit card with strong travel insurance coverage can quickly make its annual fee worthwhile.

Watch out for limits

Coverage varies greatly from one card to another.

Make sure to check:

• The maximum number of days covered
• Medical exclusions
• Age limits
• Reimbursement limits
• Excluded countries
• Etc.

When travelling, regardless of your credit card coverage, it is still always safer to purchase complete travel insurance, which will cover the aspects that are not covered by your credit card.

2. Rental car insurance

This protection is often underestimated, but it can represent significant savings.

When you rent a car, the rental company will usually offer you collision damage insurance, which can cost between $20 and $40 per day. However, many credit cards already include this protection.

For a two-week rental, this can represent savings of several hundred dollars.

Watch out for exclusions

Coverage generally does not apply to:

• Luxury vehicles
• Exotic cars
• Heavy trucks
• Long-term rentals

Also, some countries, including Costa Rica, require certain special insurance coverage that is not covered by your credit card or your travel insurance. Always read the terms and conditions before you leave and make sure your credit card truly covers your needs. When in doubt, call the credit card issuer.

3. Purchase protection

This insurance protects items purchased with your card against:

• Theft
• Accidental damage
• Destruction

Coverage is generally offered for the first 90 days after the purchase. This protection is particularly useful for:

• Smartphones
• Laptops
• Televisions
• Electronic devices

A device that is dropped or stolen shortly after purchase could be reimbursed by your card’s insurer.

4. Extended warranty

Many cards automatically double the manufacturer’s warranty.

For example:

• Manufacturer’s warranty: 1 year
• Card warranty: 1 additional year

You therefore get a total of 2 years of protection. This coverage is particularly useful for expensive purchases:

• Appliances
• Televisions
• Computers
• Electronic equipment

It can also often help you avoid purchasing an extended warranty sold in store.

5. Mobile phone insurance

More and more premium cards offer protection for mobile devices.

Depending on the card, you may be covered in the event of:

• Theft
• Accidental breakage
• Cracked screen
• Damage

Considering that a smartphone can easily cost more than $1,000, this protection can represent a significant benefit.

6. Travel accident insurance

This insurance generally provides a payout in the event of death or serious injury during a trip paid for with the card. For most consumers, this protection is more of a complementary benefit than a main criterion when choosing a card. It is normally included only with ultra-premium credit cards.

The insurance protections that generally offer the most value

When comparing the most useful protections for the average consumer, the following stand out the most:

Mistakes to avoid

• Assuming all cards offer the same protections: Two cards with similar annual fees may offer completely different coverage.
• Not reading the insurance certificate: Exclusions are often numerous:
  • Pre-existing medical conditions
  • Age limits
  • Maximum trip duration
  • Excluded vehicle types
• Forgetting to pay with the card: In most cases, you must have paid for the purchase or trip with the card to benefit from the protection.

How to choose a credit card based on its insurance coverage

Before comparing rewards or cash back, ask yourself the following questions:

• Do you travel regularly?
• Do you rent vehicles several times a year?
• Do you often buy electronic devices?
• Do you want protection for your mobile phone?
• Are you looking for insurance coverage rather than rewards points?

The answers to these questions will help you identify which protections are truly valuable for your situation.

Compare cards based on the protections that matter to you

The insurance coverage included with a card can sometimes represent greater savings than the rewards or cash back it offers.

Whether you are looking for complete travel insurance, purchase protection or rental vehicle coverage, it is important to compare the credit card options before making your choice.

Compare the best credit cards offered in Canada today and find the one that best combines rewards, benefits and insurance protections based on your needs.