16 May 2023

What impact will recent changes mean for car hire insurance in the USA?

New Jersey becomes the latest US state which may offer car rental with no liability insurance

When it comes to car hire insurance for a rental in the United States there is a little more to consider than for hires within Europe. And now, a growing number of US states are changing their laws to mean that car rentals in the States could be provided with no liability insurance at all.

What are the changes in US car rental?

Car hire rules in California, Florida and Ohio changed more than a year ago and New Jersey has just joined them. Car rental companies in these states are no longer responsible for supplying a state minimum of liability insurance within their car hire packages. It is now up to the hirer to make sure they have adequate liability insurance.

Liability insurance provides cover for any damage or injury to a third party or their property. If you were to have an accident causing damage to another car liability insurance will pay for damage to that other vehicle.

In California rental firms have also been allowed to increase their charge for Collision Damage Waivers. They have a cap on charges but this has gone from $17 a day to $25 a day. If you are buying a CDW policy at the desk, this could make a serious dent in your budget.

Collision Damage Waiver is a waiver which means the cost of damage to your hire car is no longer your responsibility (provided you have driven within the terms and conditions of your rental). If you didn't have it and had an accident, then you would have to pay the bill to repair your rental car or replace it.

What do the car hire insurance changes in the US mean for my hire?

The car rental firms in the states mentioned above do not need to make sure you have any liability insurance and they may not be able to provide any which could mean you would drive away with no cover at all. HOWEVER it is against the law to drive a car in the states of California, Florida, New Jersey and Ohio without at least the state minimum of liability insurance.

US drivers are often covered to drive any vehicle under their private car insurance so it is not something the majority of renters require and therefore, to keep rates down, full insurance is often not provided as part of a hire.

So the upshot is you could find you have no cover and be in trouble with the authorities. If you have an accident or are stopped by the police and it is discovered that you are driving without the minimum liability insurance then you may find yourself with a rather large fine.

If you do have the state minimum of liability insurance you may still find this is far too low to cover possible claims. In some states this minimum could be as low as $10,000. But the good news is that this can easily be topped up with Supplementary Liability Insurance.

Could this happen with all car rentals in the USA?

If you use a UK website to book your US car hire then you will almost certainly have both CDW and Liability Insurance included but we always recommend checking any car hire carefully before you go ahead with it.

Our sister site www.clarifycarhire.co.uk for instance make it a precondition that CDW, Theft Protection and Liability Insurance is included with every car offered as we believe the danger of a user driving without adequate cover is just too risky.

The issue can appear when you do an internet search for your car rental and find yourself on an American website rather than a UK one. A car hire may appear much cheaper and that could be a clue that there is less insurance included (though not always!). If you book directly with a US car hire firm either from the UK or at a desk when you arrive you should be extra careful about checking what insurance you are getting.

We are here to help with US car hire insurance questions

You may find our comprehensive guide to car hire insurance in the Americas answers many of the questions you may have.

If you need additional insurance for your US car rental then get a quote from MoneyMaxim.. Our service provides CDW and SLI (Supplementary Liability Insurance) policies which can top up a state minimum liability insurance to a more generous $1million - along with car hire excess insurance.

There is one company through our car hire excess comparison service who can also provide an SLI policy that may also act as the primary liability insurance providing the state law deems the policy to provide such coverage – however in this case your cover would be limited to $250,000. In this situation we do suggest that you speak to the insurer before purchasing as they are the only ones that can confirm whether they are prepared to cover your situation or not.

$250,000 is still fairly low compared with the liability insurance that is usually offered as part of other rental packages. So, instead, you could buy the state minimum liability insurance from your hire company if they offer it and then top this up to $1million using an SLI policy through MoneyMaxim. A higher amount could give you greater peace of mind!

At MoneyMaxim we also have a car hire comparison service which allows you to easily weigh up the US car hire available alongside what insurance is included in each package. Our customer service team are also on hand should you have any further questions.

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