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When purchasing rental car insurance, you might spend a lot of time thinking about cover for damage caused to the rental car itself. However, there's another category of expense that you should be protected from when traveling in a rental car.
Rental car liability insurance provides cover for your liability in the event of an accident. In this guide, we'll explain what rental car liability insurance is and how you can ensure you're protected when traveling in a hire car.
What is rental car liability insurance?
Rental car liability insurance offers cover for your legal liability in the event of a car accident. If you're found to be at fault for causing an accident, you may be legally required to cover damages.
It usually refers to your liabilities to third parties, such as other people or even corporations in the case of property damage. While you can be held "liable" for damage to a vehicle you rent, these costs are covered through policies like Collision Damage Waivers (CDWs).
Third party costs you could be held liable for if you're found to be at fault in a car accident include:
- Injuries to other people.
- Damage to other vehicles.
- Damage to property such as fences, structures and more.
Rental car liability insurance comes in a range of different policy forms, each offering a different kind of cover.
What are the different types of rental car liability insurance?
There are 3 major types of rental car liability insurance you need to keep in mind when renting a car.
Basic rental car liability insurance
In Canada and the United States, the base price of your rental vehicle may include some level of third party liability insurance. This will offer some level of cover if you're held liable for costs incurred by others.
However, this is not the case in all states. Even if you have this cover included in your vehicle, it is usually aligned to the minimum amount required in that state. These amounts can be very low, meaning you can be on the hook for significant amounts of money.
While this basic level of insurance can offer some peace of mind, you should consider other options for more substantive cover if things go wrong on your travels in a rental car.
Personal auto policy liability insurance
Your personal auto insurance coverage may also include some level of liability coverage. This can provide significantly more cover than the minimum amount included in the daily price of a rental car.
However, relying on liability insurance through your personal auto policy has its downsides. Making a claim on this policy will generally have an impact on future monthly premiums, meaning you'll carry a long-term cost for using it.
It's important to remember that you'll also have to pay the deductible for your personal policy before taking advantage of insurance.
Supplemental Liability Insurance
Want additional coverage for legal liability? Your car rental company may also offer Supplemental Liability Insurance (SLI).
SLI usually offers significantly more coverage than what comes built-in to the price of your rental car. Often, SLI offers cover up to $1,000,000. This means you have extensive cover for liabilities if you're found to be at fault for injury or damages.
RentalCover also offers an SLI product which tops up your liability coverage, up to $1,000,000. Prices at the rental desk can be up to 50% higher†.
Supplemental Liability Insurance is generally an important purchase for many travellers. Without it, you could find yourself facing massive out-of-pocket costs if you're at fault for a car accident.
Get a quote for SLI cover with RentalCover today and find out how we can affordably add more peace of mind to your journey.
What about Collision Damage Waivers?
One of the most common forms of rental car insurance is a Collision Damage Waiver (CDW), also known as a Loss Damage Waiver (LDW).
Technically, a CDW isn't "insurance". It's a document that transfers your liability for damages to a rental vehicle to the rental company.
A CDW can help ensure you aren't on the hook for very large sums of money if your rental vehicle is damaged or stolen. While you might find yourself facing a hard sell to buy a CDW when you pick up your rental vehicle, that doesn't mean these policies offer the right value for you.
A RentalCover policy offers similar coverage to the CDWs offered by rental companies. However, our coverage is more comprehensive while also being 50% cheaper†.
What does rental car liability insurance not cover?
Rental car liability insurance is important, but it doesn't include all the cover you need for peace of mind on your travels. Here are the gaps in rental car liability insurance you'll need to fill with other policies:
- The rental vehicle: Rental car liability insurance doesn't cover your rental car. Instead, policies like CDWs offer this cover.
- Your own medical bills: While liability insurance can cover the costs of third parties injured in car accidents, your own medical expenses aren't covered. This falls on your personal health insurance policy or policies like Personal Accident Insurance (PAI).
- Your personal belongings: Personal items aren't covered under liability insurance, even if they're damaged in a car accident. Policies like Personal Effects Coverage (PEC) offer cover in this area.
- Costs above coverage limit: Liability policies have caps on their coverage. The basic liability cover that may be included in the price of your rental car is typically very low and aligned to state minimums. Coverage limits for Supplemental Liability Insurance policies are typically much higher.
- Rental agreement breaches: Your cover may be voided if you breach the terms of your rental agreement. This may apply if an unauthorized driver is driving the vehicle, if you drive off-road or you cause an accident while under the influence.
Is rental car liability insurance necessary?
Around the US, you’re required to have some liability insurance before getting behind the wheel. In some states, rental companies are required to include the cost of the legal minimum amount in the base price of your rental vehicle.
In other states, the driver is responsible for ensuring that they meet legal requirements for liability insurance. You could achieve this through your personal auto insurance, or you may need to purchase a separate policy to meet minimum levels of cover.
Cover your rental vehicle with RentalCover
RentalCover's Supplemental Liability Insurance coverage offers up to $1,000,000 for third party liability expenses you may face when renting a car. This provides much-needed peace of mind when renting a vehicle that you won't face massive out-of-pocket costs in the event of an accident.
Our policies can be 50% cheaper than what you pay at the rental desk†. Get a quote today and find out how we can help you enjoy true relaxation the next time you rent a vehicle.
Hear from our rental car insurance expert
"Rental car liability insurance might seem like an intimidating concept, but it's a crucial aspect of being protected when you hire a vehicle. RentalCover's SLI policy keeps it simple.
You get up to $1,000,000 in liability cover. The cost of RentalCover's policy can be 50% cheaper than the rental companies†, so it's well worth considering making it part of your next trip in a hire car."
Frequently asked questions
What's the difference between liability insurance and Collision Damage Waivers?
In the context of rental car insurance, liability insurance refers to cover for third party charges you may face for injuries to people or property damage while driving a rental vehicle. By contrast, a Collision Damage Waiver provides cover for the rental vehicle you are driving.
It does this by transferring liability to the rental company.
What is third party liability insurance?
Third party insurance is cover for injuries caused to other people or damage caused to other people's property. These costs can be covered by products like Supplemental Liability Insurance, which is often offered by rental companies. RentalCover also offers an SLI policy with cover up to $1,000,000.
What is Supplemental Liability Insurance in car rental?
Supplemental Liability Insurance is a type of add-on (non-compulsory) cover that increases your protection against third party claims for bodily injury and property damage.
SLI protects you if you are at fault for an accident and boosts the amount of coverage for damage, such as high-cost accidents, medical expenses or vehicle repairs.
SLI is generally offered by car hire companies. RentalCover also offers an SLI policy that can be 50% cheaper than those offered by rental companies†.
Is liability insurance included in car rental costs?
The inclusion of liability insurance in base-level car rental costs depends on the state you're renting the vehicle in. Some states mandate the inclusion of this cover with rental cars, meaning the state minimum level of cover will be included.
However, in other parts of the country, there is no legal requirement for liability insurance to be included in base car rental costs. In this case, you may need to purchase liability insurance cover through policies like Supplemental Liability Insurance (SLI).
Should I get liability insurance when renting a car?
Liability insurance can be very worthwhile when renting a car. If you have no liability cover otherwise available to you through another insurance policy, such as your personal auto insurance, it's a great way to avoid paying massive out-of-pocket costs if things go wrong when you travel.