This Credit Card Perk Can Save You $10,000 -- And It Has Nothing to Do with Rewards

Recently, I got the Bilt Mastercard® to help me earn points on my rent payments. The card comes with a unique account number that registers as an ACH/e-check payment, thus dodging the processing fees that most credit cards trigger.

It earns 1x points on rent payments through Bilt with no transaction fee, up to 100,000 points per calendar year. 2x points on flights, hotels, rental cars, and cruises when booked directly with airlines, hotels, and car rental agencies. 3x points at restaurants. You can earn double points, up to 6x, on first day of each month (excluding rent payments). You must make 5 transactions that post each statement period to earn points. Points can also be transferred to different travel partners, like Hilton and American Airlines.

As I was digging through the card's benefits, I came across one that struck me. It's a free perk I've seen on other cards, but didn't expect it with this one. The perk is purchase security, sometimes known as "purchase protection" or "damage protection," and it's one of the most overlooked yet majorly money-saving benefits a credit card can have.

Purchase security covers damaged or stolen items

Purchase security is a type of insurance that will cover the cost to repair or replace (or fully reimburse you for) purchases made within a certain timeframe.

For example, the Bilt Mastercard® offers up to $10,000 of coverage for items that are damaged or stolen within the first 90 days from the date of purchase. This $10,000 maximum is per incident with a maximum coverage of $50,000 per 12-month period per account.

Depending on the incident, purchase security might:

• Cover the cost to replace the item with an item of like kind and quality
• Cover costs associated with repairing the damaged item
• Reimburse the amount charged on the credit card.

Often, your credit card company will decide which of these three it will carry out.

Let's say you just bought a new iPhone and happen to be fishing out on a lake. While you're caught up in the moment of reeling in a fish, your phone falls out of your pocket into the water. The lake is shallow enough that you can retrieve your phone, but it's dead when you pull it out. If you bought the phone with a card that has purchase security, this incident might be covered.

As another example, let's say you were walking in the city. You get pickpocketed and your phone disappears. As long as you file a police report -- and can show evidence that you have -- purchase protection might cover this incident.

Speaking of which, you'll likely have to provide ample documentation when you file a claim. At the very least, you'll need a copy of your monthly billing statement showing the purchase was made on your card, plus a receipt. You might also need a police report (for theft) or other documents that support your claim.

Not every incident will be covered

This perk is indispensable for a klutz like me. But it has a ton of restrictions.

For example, the Bilt Mastercard®'s purchase security doesn't apply to theft or damage resulting from abuse, fraud, hostilities (like war), confiscation by authorities, normal wear and tear, and radioactive contamination. It also doesn't cover damages from certain natural disasters, items sold "as is," or items that "mysteriously disappeared," among several others. There are also certain purchases that don't receive coverage, like boats, jewelry, watches, animals, and computer software. These only scratch the surface of what's restricted, so check your card's benefits page for more information.

Finally, these conditions are specific to Mastercard. Other credit card issuers, like Visa and American Express, may have different terms and conditions.

If you're interested in this perk, check out the Bilt Mastercard®. While this card doesn't have as much earning power as some of the best cash back credit cards, it does have some surprising benefits, like purchase security. You can also compare its perks with the best rewards cards to see which might be the best fit for you.