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How does credit card cell phone protection work?

When you damage your cell phone or it happens to get stolen, it's nice to know that you have coverage. Here's how credit card cell phone protection can help you.

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If you are one of the many people who has ever dropped your cell phone, it may be reassuring to know that you can turn to your credit card for help.

Not every credit card offers cell phone protection or insurance, and not every card that does will necessarily be right for you. There are many factors to consider when choosing a credit card, yet it's valuable to know how to utilize the perk if your card does have it.

Below, CNBC Select reviews what to look for, what steps to make and how to take advantage of your credit card cell phone protection.

1. Read the fine print

Before deciding whether to purchase coverage through your cell phone carrier, such as Verizon, or to rely on your credit card for cell phone insurance, it's best to read the card's fine print.

"When you read the fine print, you might find that certain programs are null and void if you lose your phone or submit a claim for cosmetic damage," Priya Malani, a founding partner of Stash Wealth, a millennial-focused financial-planning firm, tells CNBC Select

Note that cell phone protection won't usually cover you if you misplace your phone. With a lost phone, there's rarely actual proof that it has gone missing; whereas with damage or theft you can either see the destruction yourself or you'll have to submit a police report.

2. Be ready to pay a deductible

There is generally a cap to what card issuers will pay when it comes to insuring your cell phone, so make sure you know what fees you'll be responsible for in the event you claim coverage.

"Some even put you on the hook for a certain dollar amount, like a $100 deductible, before the coverage kicks in," Malani says. However, credit card deductibles for cell phone insurance are usually lower than what your regular insurance may require.

Regardless of this payment threshold, cell phone protection is a perk that can often help offset or even cover the cost of repairing or replacing your phone. Eligible consumer cards include the Wells Fargo Propel American Express® Card and the U.S. Bank Visa® Platinum Card. And if you do end up filing a claim with a credit card like these, your APR won't go up because of it.

Just know that you can't go on a filing frenzy every time a new iPhone drops, as most credit cards only allow two claims per year.

3. Make sure you charge every monthly cell phone bill onto that credit card

There are a handful of credit cards that offer cell phone protection for events like damage or theft, but you must pay your monthly cell phone bill with that specific credit card in order to be protected. Your coverage lasts for as long as you continue to make your monthly payment with that credit card. For this reason, we recommend automating your credit card payment so not a month goes forgotten.

If your cell phone does get stolen, the credit card will reimburse it for equal value.

4. Consider dropping those insurance payments to your cell phone carrier

You don't need cell phone insurance through both your carrier and your credit card, so only choose one. This is particularly important if you are in a household paying insurance through your carrier for multiple cell phones, which can be quite costly (note, however, that credit card cell coverage won't always extend to every device in the family plan).

The same applies if you are managing a business and you're responsible for providing and insuring your employees' cell phones. In this case, business owners and their employees can benefit from cell phone protection with select small business credit cards, such as the Ink Business Preferred® Credit Card

Bottom line

Though cell phone protection is a nice perk to fall back on, we don't suggest focusing only on this benefit when deciding your next credit card. "The rewards and cash back programs are usually where you get the most bang for your buck," Malani says.

Information about the Wells Fargo Propel American Express® Card and the U.S. Bank Visa® Platinum Card has been collected independently by CNBC and has not been reviewed or provided by the issuer of the card prior to publication.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.