Debit Card Insurance Coverage Tips

Almost all Fraud-Bonds exclude a loss where the loss involves the use of a debit card. Coverage can be added back for an additional premium. Some insurers offer a separate, stand-alone policy.

Debit card coverage provides for losses resulting directly from the fraudulent use of a debit card to obtain cash or pay for products or services by gaining access to an electronic payment device of some kind. This usually means an ATM or point of purchase system. Look at your policy for some key coverage differentiators:

-Does the policy require that, as part of the transaction, the system electronically verifies the customer’s available funds in the customer’s depository account at the insured’s bank?

-Is coverage worldwide or is it limited to the US and Canada?

-Must the transaction involve a PIN?

-Must the fraud involve the actual use of the debit card – a card is present in the transaction; someone is holding a piece of plastic? Most insurers exclude “Card Not Present” transactions.

-Are fictitious cards covered?

-Is the use of a card to buy products and services included or only transactions where the customer obtains cash?

-Watch for limitations of coverage for events originating outside the United States.