Car Rental Insurance USA: Guide to CDW & SLI

UPDATE (December 2011): Great news! The much cheaper CDW/SLI insurance policies through iCarHireInsurance have become available again to residents of Australia and NZ, in addition to UK/EU residents.

UPDATE (November 2011): Please note that it has been brought to our attention (cheers Gary M.) that both our previously recommended CDW/SLI insurance cheaper alternatives – iCarHireInsurance and Insurance4CarHire – have just recently become unavailable to non-UK/EU residents. This is a VERY unfortunate turn of events for renters who already had such limited options and is due to their insurers imposing more restrictive acceptance criteria. That leaves everyone else completely out of luck. We are all losing out big time and will have to work to find suitable alternatives if they exist. You’ll be the first to know.

Car hires in the USA and their insurance options are a whole other can of worms. It’s a little off our main agenda of Australian car hire but after receiving many queries from readers, we realised dedicating a page to this topic is in order.

Types of Car Hire Insurance

First and foremost, in the USA, there are two primary forms of insurance to consider for your rental:

1. Rental Car Cover: Collision / Loss Damage Waiver (CDW / LDW)
This is the insurance that limits your financial responsibility for loss or damages to your hire car.

2. Third Party Cover: Supplementary Liability Insurance (SLI / LIS)
This covers your third party liability i.e. claims against you by an injured person or for property damages caused by an accident involving your hire car.

How It Works In The US

Here’s where it gets “interesting”. Laws vary from state to state (and rules vary from company to company) meaning it’s hard to say exactly what may or may not already be covered. Unlike other countries, it is not uncommon for USA rentals to come totally unprotected since Americans tend to already have their own cover from personal insurance policies or credit cards. You often have a choice of having inclusive hire with CDW and/or SLI (but this will be significantly more expensive), or an exclusive hire.

Protection for your rental car
Choosing exclusive hire will often mean your basic rental comes with NO level of CDW/LDW car insurance i.e. you’re liable up to the full, current value of the car plus any losses the hire company bears as a result of its loss of use. No good. That means even if you have excess cover from existing travel insurance or similar, if your rental has no insurance at all to begin with, then there is no excess in the first place so your excess insurance won’t apply. That means if your chosen rental company doesn’t automatically include any CDW, you’ll have to pay for it (typically $10-20/day) which ironically may make your excess cover redundant anyway.

Protection for third party liability
In terms of third party liability (with the exception of California and maybe a couple others), state law requires car hire companies to include at least a minimum level of coverage, the exact amount of which varies from state to state. If you’re unsure, call the company and ask them if this cover comes standard with all rentals and see if you’re comfortable with the level of cover. Remember, California rentals typically come with NO cover at all so if you’re heading there, be aware! You’ll have to add this on before you can rent the car (typically $10-15/day). Excess insurance can’t be used as a substitute for this.

Typical Insurance Prices from Car Hire Companies

As a guide to the daily charges, have a look the table below (do bear in mind prices may have shifted). It’s a wide range of prices but we reckon you should expect to pay between US$20-30/day:

Cheaper Alternatives

Rather than purchase the insurance directly from the car hire company, there is one alternative to consider and compare – specialized car hire insurance policies designed for US rentals. There is currently one company that provides both CDW and SLI at relatively affordable prices and will cover Australians for US hires.

iCarHireInsurance offers a daily ‘USA and Canada’ policy at £6.99/day (A$10.80), or an annual policy for £120 (A$185). It includes unlimited use for 1 year provided each hire is not longer than 60 days. You’ll be indemnified for up to approx. US$100,000 for damages/theft/loss of use of your rental car, and up to approx. US$1,000,000 for third party injury/damages as well as any excess you are liable for.

You have a couple more options if you live in the UK or EU. Insurance4CarHire offers an annual policy for £119 (A$185). This also includes unlimited use for 1 year but each hire must not be longer than 31 days. Alternatively, Worldwide Insure also offers an annual USA/Canada cover for £116 (A$175) but their daily policy is more costly at £12/day (A$18). Each have different types of extras so make a comparison to see which set of benefits suits you better.

If you already live in the USA, these policies won’t work for you. Instead, check your personal insurance policies and with your credit card company to see if its already included. We’ve heard of people forking out precious sums of money before realizing they were already insured.

In any case, read the policy document carefully to make sure it’s right for your situation and if you get it, do not let car hire company employees scare you into buying extra cover from them! Turn down all their insurance. If it’s already included in your quote, check if you can get a cheaper price by removing it. Finally, print out your policy too as proof of your coverage to make sure they allow you to rent the car.