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A debit card for disaster victims
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Fees may apply
In addition to greater possibility of fraud, a check cashed at a nonbank location can incur fees between 2 percent and 10 percent. While there are fees for some CAT card usage, they are decidedly lower than nonbank fees.

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Just as with other debit cards, the usual ATM fees are charged on CAT cards issued by The Hartford if they are used at a non-network ATM. As long as an insured of The Hartford uses his card at a JP Morgan Chase ATM or at, say, the local Kroger's, the transaction will be fee-less. "But if the transaction is at a non-JP Morgan ATM, there would be fees," Pace says.

Travelers helps pay the non-network fees by loading a few extra dollars on its CAT cards to defray the cost of using a non-US Bank ATM, according to Ray Stone, vice president of catastrophe management. "There is no fee to the customer," he says.

If anything distinguishes a CAT card from its paper cousins, it's mobility. Like a regular debit or credit card, you can use a CAT card virtually anywhere, anytime, for anything -- a feature the Katrina victims who ended up in Houston and Utah would have appreciated.

"It's those kinds of catastrophes, where people are displaced from their homes and living and eating in hotels for a significant amount of time, where this card has its greatest application," Stone says.

Unlike checks, CAT cards can also be reloaded, a capability that, again, appeals to the displaced. According to Stone, all it takes is a phone call from the insured and verification by the insurance company that expenses have gone beyond what the claims representative had originally loaded on the card. "With a flick of a switch, we can reload the card. It's very convenient for the customer."   

No drinks, no dice
Though neither The Hartford nor Travelers puts restrictions on how their insureds can use a card once it's funded, the CAT card payment mechanism does have that capability. According to the white paper "Catastrophe Cards: Providing Victim Care, Program Control and New Business Opportunities" by Jim Dean and Kirsten Trusko of BearingPoint, insurance carriers "may restrict card use against nonessential merchant types, such as alcohol, adult entertainment and gambling." In fact, they say, "control can be imposed down to the cash register within a store or by line-item purchases."

Of course, CAT cards don't solve everything. For instance, you still need to find a claims adjuster and file your claim. And if you file a claim for ABC but use your card to buy XYZ, your insurance company isn't likely to put more money on your card for more "emergency" expenses.

But in this ATM, point-of-sale world, CAT cards will soon be commonplace, "particularly for those who are displaced from their homes," Stone says. "The more of those kinds of catastrophes we have, the more people will become familiar with these cards, the more the use of these cards will snowball."

And, of course, they can be used after blizzards, too.

Gregory Taggart is a freelance financial writer in Orem, Utah.

Bankrate.com's corrections policy -- Posted: Sept. 5, 2006
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