.png){kind=spacer}
When renting a car outside of Canada and the United States, third party liability insurance is generally included in the base daily price of the vehicle. That means you generally don't have to worry about purchasing additional insurance to cover you for this.
However, if you are visiting Canada or the United States, this cover generally isn't included, or is very minimal. In this case, rental car liability insurance can be an important part of ensuring your travels go off without a hitch.
In this guide, we'll explain what rental car liability insurance is and how you can ensure you're protected when travelling in a hire car.
What is rental car liability insurance?
When travelling in Canada and the United States, 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 2 major types of rental car liability insurance you need to keep in mind when renting a car in Canada and the United States.
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.
Supplemental Liability Insurance
Want additional coverage for legal liability when travelling in Canada and the United States? 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.
For customers travelling in the United States, 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. Outside of Canada and the United States, CDWs are generally automatically included in the daily price of your rental vehicle.
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 when travelling in Canada and the United States, 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 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 unauthorised 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?
Additional rental car liability insurance policies generally aren't necessary outside of Canada and the United States, because the coverage that's included in the price of your rental vehicle is usually sufficient.
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. As a result, 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 in the US. 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
Travelling to Canada or the United States? Rental car liability insurance might seem intimidating and unfamiliar, but it's a crucial aspect of being protected when you hire a vehicle. RentalCover's Supplemental Liability Insurance 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 visit to the US.
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. Outside of Canada and the United States, this cover is usually automatically included in the price of your rental vehicle.
When travelling in Canada and the United States, 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. This policy is typically only available when travelling in Canada and the United States.
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?
Outside of Canada and the United States, liability insurance is generally automatically included in the price of your rental vehicle. This means you don't need to worry about buying any extra policies to cover it.
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?
In Canada and the United States, liability insurance can be very worthwhile when renting a car. If you have no liability cover otherwise available to you through another insurance policy, it's a great way to avoid paying massive out-of-pocket costs if things go wrong when you travel.
In the rest of the world, liability insurance is generally not necessary because your rental company will automatically provide sufficient coverage.
What is car hire excess insurance?
Car hire excess insurance offers financial protection if things go wrong when driving a rental vehicle. Outside of the United States and Canada, the price of your car rental usually includes the cost of a Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW).
Your CDW/LDW reduces your liability if your rental car is damaged or stolen. It's similar to basic insurance, covering you for some damage to your rental vehicle. However, it typically comes with a high excess, meaning you can face significant out-of-pocket costs.
Car hire excess insurance provides protection for this high excess. You can buy this cover from your car rental company at the rental desk. However, you can also choose an alternative provider who may offer a better deal for you.