What Your Credit Card Covers When You Rent a Car

When you rent a car, the fees can add up quickly. One of the heftiest can be rental car insurance, or collision damage waiver, which can cost $20 to $30 a day. Rental car agents are trained to make this insurance sound nonnegotiable, but you probably don't need it.

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As Jessica Anderson writes in the April issue of Kiplinger's Personal Finance, your auto insurance policy will cover rental car damage and liability and your credit card will likely fill any gaps.

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Here's her rundown of what your credit card will cover when you rent a car:

Most credit cards cover any gaps in your primary auto insurance coverage, such as the deductible -- as long as you decline the rental company's insurance. If you don't have an auto policy, or you dropped collision or comprehensive coverage from your policy, your credit card will cover damage to the rental car and probably theft.

Note that you have to use the card for all rental transactions, from reservation to payment. Vehicles worth more than $50,000 are often excluded from coverage. And there may be limits to card coverage (Discover caps benefits at $25,000, and many cards limit coverage to 15 consecutive days).

American Express charges just $24.95 ($17.95 for California residents) per rental for primary coverage against theft and damage of up to $100,000 with no deductible. After you enroll your card, whenever you use it to rent a car (whether on the rental company's site or through a third party such as Hotwire), you'll be charged the fee and be covered.

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