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Do I Need Rental Car Insurance?

by | Jun 27, 2019 | Firm News, Personal Injury and Wrongful Death |

Frequently Asked Questions

Part 1 of a 5-Part Series on Rental Car Insurance in the U.S.A.

Do I need rental car insurance?

For car renters coming from outside of the United States, the answer is usually yes.  For most renters who do not maintain their own insured vehicle in the United States, their own insurance will not cover them for an accident in the United States.  Even for renters who do have their own insured vehicle in the United States, their insurance may be inadequate and only provide limited protection.

How do I know what insurance I should purchase?

There are several main types of insurance products offered by rental car companies in the United States that can help protect you from liability to others. (Part 2of this series includes a summary chart of the various insurance coverages offered by different rental companies.)  If you already have automobile insurance for a vehicle in the United States, then that insurance may protect you as well. In that case, purchasing additional insurance with the rental vehicle may be redundant and unnecessary if you deem your own coverage limits to be sufficient.  However, if you are visiting from outside of the United States or if you do not have your own automobile insurance, we encourage you to strongly consider one or more of the insurance products offered.  The main insurance types offered are Collision Damage Waiver, Supplemental Liability Insurance, Personal Accident Insurance, and Personal Effects Coverage.

What is a Collision Damage Waiver?

A Collision Damage Waiver, sometimes called a Loss Damage Waiver (or even just a Damage Waiver in the case of Enterprise Rent-A-Car), is technically not an insurance policy at all. It is simply a waiver that releases the renter from liability for financial responsibility if something happens to damage the rental vehicle. For example, if you hit a curb and it dents the vehicle, you would not be financially responsible for that damage. It may also protect you if the rental vehicle is stolen. This would not protect you from liability against damages to another vehicle in the event of an accident.

What is Supplemental Liability Insurance?

Supplemental Liability Insurance, sometimes called a Liability Insurance Supplement or Supplemental Liability Protection, covers damages to other people and their property for which you may be responsible as the at fault driver in an accident. Every state in the United States requires a minimum amount of liability insurance for each driver. Usually the required minimum amount is between US$10,000 and US$30,000 but varies from state to state and may be even more.  Supplemental Liability Insurance often covers the renter for up to one million dollars in liability insurance.  It may also include other benefits such as Uninsured and Underinsured Motorist coverage which may benefit you in the event of an accident that is not your fault and where the at fault driver (of the other vehicle involved in an accident) has no or insufficient insurance.  It usually also requires the insurance company to pay to defend you in any lawsuit related to your liability for the accident.

What is Personal Accident Insurance?

Personal Accident Insurance covers you and your passengers for medical purposes, ambulance trips, and death as a result of accidents that occur in the rental vehicle. In some cases, this insurance will cover the renter even if they are involved in an accident outside of the vehicle.

What is Personal Effects Coverage?

Personal Effects Coverage covers you for the theft or damage of your possessions that you take with you in the rental vehicle. It is very often offered as part of an insurance package along with Personal Accident Insurance.

What about Roadside Assistance and Emergency Sickness Plans?

Roadside Assistance, offered by Alamo, Enterprise, and National, is a plan that covers you for the cost of incidental problems, such as lost keys, towing, flat tire repair, being locked out of the rental vehicle, jumpstarts, and fuel in case you run out of gas.

Emergency Sickness Plans, offered by Budget, Dollar Car Rental, and Thrifty, cover non-United States citizens for the costs they might incur if they require medical treatment for some type of illness during their visit to the United States.

What if I refuse to buy any insurance offered by the rental company?

You have the right to refuse to purchase any of the offered insurance coverages.  In that event, should you be involved in an accident, the rental company will usually be responsible to cover you for the state’s minimum financial responsibility amount (this varies from state to state, is usually based on the laws of the state where you first picked up the rental vehicle, and is automatic).  However, the rental company may pursue you to recover any amounts it pays and you will be responsible to pay for the damages and injuries you cause to others in excess of the state’s minimum, as well as your legal defense in the event that you are sued.

Do the rental companies really honor the insurance policies they sell?

In our experience, absolutely yes.  The rental company is usually responsible for the state minimum financial responsibility amount and a licensed national insurance company is usually responsible for all amounts above the state minimum up to the insurance policy amount. For example, if you cause an accident which results in injuries and property damage, and you purchased Supplemental Liability Insurance, you would be covered for up to US$1,000,000 and the insurance company would have to pay to defend you in any lawsuit against you related to the accident.

Do I need rental car insurance as a non-US citizen?

You may think that since have a car insurance policy that means you are already covered for many of these rental car insurance policies. But, if you are a non-United States citizen, it is actually very likely that you are not covered by your car insurance in the United States. European insurance policies may often cover drivers in other European nations than their own, but those policies often do not extend coverage to the United States. This means that you may want to purchase a Collision Damage Waiver and Supplemental Liability Insurance to protect you in case of an accident involving the rental vehicle.

When it comes to Personal Accident Insurance and Personal Effects Coverage, you may find that you would be better served by purchasing travel insurance for your trip. Travel insurance often covers medical expenses that take place during the time of your trip regardless of whether or not they are connected to an accident in a rental vehicle. Additionally, travel insurance often covers the replacement of your personal belongings if they are lost or stolen while you are on your trip to the United States.

What if I pay for my rental vehicle with a credit card?

Of the four large credit card companies, three of them offer rental car insurance as a benefit. That means that if you pay for your rental vehicle with your American Express, MasterCard, or Visa you may be partially covered with regard to your rental car insurance.

Generally speaking, the three credit card companies listed above will cover you for the equivalent of a rental car company’s Collision Damage Waiver. There are a few exclusions when it comes to whether these credit card benefits will cover you, and those exclusions are usually dependent upon the issuer of the card. Some issuers provide a death benefit if the renter dies while using the rental vehicle charged to the card.

What are the exclusions to credit card benefits for rental car insurance?

The exclusions begin with the length of the rental for the vehicle. For the most part, these cards will cover car rentals that are less than thirty days in length provided that they are out-of-country rentals. If you plan to use the rental for more than 30 days, you should check your credit card’s policy very carefully to see if you might be better off with your personal car insurance or even with the Collision Damage Waiver offered by the rental company.

The second major exclusion to credit card coverage of the Collision Damage Waiver for a rental vehicle is the actual value of the rental vehicle itself. Most credit card companies won’t cover trucks, exotic vehicles, motorcycles, or even SUVs, but they also commonly deny coverage to vehicles valued at over $50,000. This means that it may not be in your best interest to accept the offer of an upgrade to a luxury car when the rental company is running low on vehicles.

Is there any overlap between the different policy options?

For many renters these insurance packages that rental companies try to add on to your rental prices are redundant to coverage that you already have.

For instance, Collision Damage Waivers are redundant to collision and comprehensive coverage by your United States based car insurance policy. You still have to pay your deductible for damage to the rental vehicle, but generally after the deductible your car insurance policy will extend to a rental vehicle.

Supplemental Liability Insurance is also often redundant to coverage provided by United States based car insurance policies. As mentioned in the Supplemental Liability Insurance section above, every state in the United States requires a minimum amount of liability insurance for every driver on the road. Since the purpose of Supplemental Liability Insurance is to supplement the minimum liability required by US states, then this additional coverage may already be provided by your car insurance. However, if you are only paying for minimal liability insurance for your personal vehicle, then this supplemental insurance policy may be worthwhile.

Personal Accident Insurance, which covers you for injuires that you sustain during an accident in a rental vehice, may be largely redundant because such injuries likely are covered by your personal health insurance. Your health insurance won’t cover death benefits for you, but if you have a life insurance policy for yourself you are also covered in this regard.

Personal Effects Coverage may be similarly redundant. Your belongings, even if you are away from home on a vacation or business trip, are likely covered by either renter’s insurance or homeowner’s insurance. To make a claim for stolen property, you would simply need to file a police report and submit it to your insurance company.

So, do I really need these types of insurance?

Ultimately, the decision about whether to purchase these insurance options is yours to make. As with any insurance, it is wasted money unless and until you need the protection. However, especially for out of country visitors, we strongly recommend purchasing at least the Supplemental Liability Insurance offerings.  Even though it is not cheap, sometimes even exceeding the daily car rental price, it provides peace of mind and is worth every dollar in the event that you are involved in an accident.

Where can I turn if I am involved in an accident?

If you are involved in an accident in the United States, your first call should be to 911 to report the accident, to summon emergency medical responders as needed, and to have the accident formally reported to and documented by the proper authorities. Your next call should be to a law firm of your choosing to ensure that you are aware of your legal rights and obligations. Urban Thier & Federer, P.A. is an international law firm that has helped hundreds of clients recover millions of dollars in personal injury and wrongful death cases. We have offices located throughout the United States and in Europe (including London, UK and Aachen and Munich, Germany) which allow us to offer our services to a wide variety of clients. Many of the personal injury and wrongful death clients that we have assisted have been tourists or other visitors, many from outside the United States. Please contact us to have an attorney review your case.

* This article and this website are for informational purposes only and does not constitute legal advice. This information provided should not be used as a substitute for obtaining legal advice from an attorney licensed or authorized to practice in your jurisdiction. You should always consult a suitably qualified attorney regarding any specific legal problem or matter and not rely on the content of this article. Nothing on this site is intended to create an attorney-client relationship and nothing posted constitutes legal advice. We cannot guarantee that the information is accurate, complete or up to date.