Car Rental Insurance

Some credit cards offer this plus your travel insurance offers something, but these only cover the excess you have to pay. In places like the US the insurances offered by the companies by default, are the minimum required.

The following lifted from a number of overseas sites may give you some insight, but its not legal advice. Hopefully it just helps you get a better understanding into what is a confusing and complicated area and you do need to rely on your own research and assessment.

In Australia many times third party insurance is mandatory for registration, and covers third party injury claims. In the US its not always the case and liability is not capped as it is here. Different states have varying minimum requirements.

Cars can be rented without this insurance but this would be risky and is not something to be undertaken lightly, particularly in the USA where court awards of damages can be staggeringly high.

You don't have to take out excess insurance – it is completely voluntary but it may make good sense. You can buy it from the car rental company or you can purchase it in advance from an independent insurance company.

If you know you are going to take out an excess insurance policy it might be worth comparing the offerings of the independent brokers and the car rental companies. There may be fairly significant price differences. As with all types of insurance, always read the policy details as the excess insurance of some insurers/car rental agencies, may still exclude the most commonly damaged parts of the vehicle – windscreen, tyres, roof and undercarriage.

Rental companies in the US are required by law to have insurance. The limits are often expressed separated by slashes in the following form: “bodily injury per person”/“bodily injury per accident”/“property damage”. For example, California requires this minimum coverage:

  $15,000 for injury/death to one person
  $30,000 for injury/death to more than one person
  $5,000 for damage to property

This would be expressed as “$15,000/$30,000/$5,000”.

Now Car rental agencies, Supplemental Liability Insurance (SLI) – provides coverage in the event of an accident causing bodily injury or property damage to someone other than the renter and passengers, which increases the minimum that by law they are required to cover. As you can see in the Californian case, the minimum is woefully inadequate.

Loss Damage Waiver (LDW) – sometimes also referred to as Collision Damage Waiver (CDW) - covers the costs of damage to the rental vehicle in the event of an accident. Note the words waiver as the car rental companies are only waiving the excess they charge for an accident. In essence since they are not insuring you, they are saying they wont charge you for damages to their car, waiving their right to claim.

BUT note that although frequently not explicitly stated, US car rental companies are required by respective state law to provide minimal liability coverage as per the California example. This covers costs to a third party in the event of an accident. In most states it is illegal to drive a car without liability coverage therefore this must be included in the cost of rental.

Hence its good to take out the supplemental CDW/SLI from the car rental company OR buy a policy from a car rental insurance company. It depends on the length of the rental. You can buy 1 year policies for around $160, which gives you far greater coverage vs $20 a day from the car rental companies. Plus the annual policies are multiple use and the ones that cover the USA will often cover other areas of the world,

You might say that you have Credit card coverage/ Travel insurance policies that cover any excess.

BUT this is excess that the car rental company will charge you for damage to their vehicle, not to others, and often this will only cover the excess upto $5000.

So you crash the Rental car into someone else. The Travel Insurance covers the car rental company's excess charge of $4000, but where are you with the liability for the repairs on the other car plus injury to the occupants and with the basic coverage covered above $5000 to cover the other persons vehicle is pretty low.

SLI as offered by most companies increases this to more acceptable rates, you do need to scope out what this covers as it can vary according to the company. But this SLI does cost and thats where looking at third party coverage helps, as this may be far cheaper.

US customers can tap into their domestic car insurance policies for this “third party” liability. Australians can't. It can be a big money trap.

Where as independent insurance from a third party broker gives you much higher coverage in all aspects. This limit isnt discussed here as it depends on which one you go to. It can be as high as a million dollars coverage.

See http://www.insurance4carhire.com/index.asp?subRefID=0&curID=1&langID=1&refID=1351 for some good info. Although they now do not sell to anyone outside the EEU

also http://en.wikipedia.org/wiki/Damage_waiver

One company that does is https://www.questor-insurance.co.uk/vehicle-hire-excess-insurance.aspx However going thru this company can give you a discount on the insurance http://www.jml-insurance.co.uk/types.php?id=3&sec=2 and also other companies to compare rates with.

They have a blog which discusses this issue as well.


see also http://en.wikipedia.org/wiki/United_States_auto_insurance