Q: We rented a car in Costa Rica a few years ago, and the rates seemed reasonable until you added in the mandatory insurance. We showed the rental car agent our American Express rental car coverage, but they insisted that the law required us to buy additional insurance anyway. Is this still the case?

A: From what I can gather, it is. You are required by the government to buy liability insurance, which covers you, for example, in case you hit a pedestrian, but does not cover the rental car itself. This insurance can add $10-$20 per day to the cost of the rental. Many people don't realize it, but their credit cards do not cover personal liability when renting a car, leaving them open to potentially devastating law suits (personal auto insurance on your own car may cover you in the United States, but not overseas). In addition, when renting a car in Costa Rica (and many other countries), you may be required to purchase collision damage insurance (CDW or LDW), which costs an additional $10-20 per day depending on vehicle type. But this insurance has loopholes too: as its name suggests, it covers only collisions with another vehicle. It does not cover a collision, say, with a building, nor does it cover vandalism to the vehicle or a damaged wheel if you have a close encounter with one of Costa Rica's notorious potholes. So you may want to buy additional insurance that reduces your liability to near zero. You'll also be stuck with an airport concession fee of 12 percent and a fee for additional drivers. These extra charges can easily surpass the daily rental fee itself. Almost makes you want to take a taxi everywhere or public transportation!

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