Do you typically decline rental car insurance at the counter? As our Primer on Rental Car Insurance explains, you may already be covered by your personal auto insurance policy or through a credit card benefit.
You may need to rethink this strategy when renting a car in California.
Do You Need Rental Car Insurance?
First let's have a quick refresher. There are generally two types of insurance—collision damage and liability—each of which covers a different scenario.
If there's an incident that results in damage to the rental car, you need damage protection. Most credit cards provide secondary damage protection, meaning that it only kicks in after the primary coverage limit has been hit. If you own a car, your own auto insurance policy is the primary coverage for collision damage.
The second type of insurance is liability. If there's an incident that results in harm to other individuals and property, the potential liability is huge.
In most states, the rental company must provide state minimum coverage by law, so you usually don't need to buy any extra coverage to meet legal requirements. If you have a personal auto insurance policy, it should also cover you when you operate a rental vehicle.
The Insurance Gotcha with California Car Rentals
California marches to its own tune. In the Golden State, rental car companies do not automatically provide liability protection as part of the standard rental agreement. (Some companies may provide the minimum primary liability protection to international renters with driver's licenses that show an address outside the U.S..)
This means drivers may need to provide their own liability insurance when renting in California. In general, US residents should already be covered by their regular auto insurance but drivers should confirm that they have the minimum level of liability insurance from their own insurance company. If not, renters will need to purchase purchase liability insurance through either the car rental company.
3 Options for Rental Car Liability Insurance in California
If you're renting a car in California, you are in one of three situations:
You Already Have Valid Liability Insurance
If you have a valid insurance policy that covers rental cars in California (a personal policy or a non-owners policy), you don't really have to worry about liability since you are covered to the limits listed on your policy.
If you fall into this bucket, you only really have to worry if you choose a car that is much more valuable than the car you own, since your coverage may be limited.
You Don't Have Insurance and Buy Liability Coverage
If you buy liability coverage from the rental car company, you are covered at least the minimum requirement to operate a car in the State of California.
You Don't Have Insurance and Don't Buy Liability Coverage
The rental car companies do not require liability insurance, yet liability insurance is required in order to legally operate a vehicle in California. A rental car company has no responsibility to check that a driver has liability insurance, nor can a rental car company mandate that a driver purchase insurance. Complying with California's law on rental car insurance is the responsibility of the renter.
This means a driver can leave the rental car company's lot without legally required liability insurance. But this would be ridiculously stupid. The cost of this mistake can be huge; a driver without liability insurance who causes an accident would be solely responsible for any claims of injury or damage to other persons or property.
Furthermore, if you happen to interact with police for any reason—such as a traffic infraction or accident—driving without liability insurance can result in penalties such as fines, points, and/or loss of license. Even as a non-resident in California, it's your responsibility to read the rental rules, understand the law, and follow steps to protect yourself with liability insurance.
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