What Is Additional Liability Insurance?
Additional liability insurance (ALI) is optional coverage available from car rental companies, peer-to-peer ride-sharing programs, and moving rental companies. This insurance provides additional financial protection for you and other authorized drivers in the event that you injure or damage someone else's property while driving the rental car.
Definition and Examples of Additional Liability Insurance
Additional liability insurance provides optional, primary coverage for damages you cause to others while driving your rented car. This insurance usually has a higher limit (the maximum amount paid to the injured or damaged property) than any car rental insurance policy provided by the rental agency or possibly your auto policy.
This insurance is provided by the majority of major rental car companies. Moving-truck rental companies or peer-to-peer ride-sharing companies may also suggest additional liability coverage for hourly or daily trips. This insurance may be included with peer-to-peer ride-sharing apps or platforms. ALI policies for various sectors can differ depending on the state.
- Alternative names: liability protection, liability insurance supplement, or supplemental liability coverage.
- Abbreviation: ALI, SLP, or LIS
Assume you sign up for the liability insurance supplement when renting a car from Hertz and injure another driver in an accident. If the other driver's medical expenses exceed $100,000, your rental LIS may cover those expenses, and you will not be required to report the claim to your own insurance company.
However, your auto insurance policy might not cover box trucks or moving truck rentals. You may need to obtain additional insurance in the event that you injure someone while driving a moving van.
How Additional Liability Insurance Works
If you want to use additional liability or supplemental insurance, you must sign up for it when you rent the car for an additional per-day fee. It is an optional coverage, and you can opt out of it if you prefer.
- If you are at fault in an accident and the claim is less than your ALI coverage amount, the coverage helps protect your personal auto insurance policy and your financial assets.
The amount and type of insurance coverage vary by state. Coverage may be for up to $300,000, $1 million, or $2 million, for example. This coverage may be in addition to or a duplicate of your personal auto or umbrella policy.
Depending on the state you rent in and the rental agency, coverage and coverage amounts may or may not include damages caused by uninsured and underinsured motorists. If a state requires the rental agency to provide uninsured/underinsured motorist coverage, the standard liability policy will almost certainly include this coverage.
If you are in an accident, follow the instructions provided by your rental company for reporting an accident. If a claim is filed against you, you may be required to provide written notice to the insurer.
What Does Additional Liability Insurance Cover?
Up to the policy's limits, additional liability insurance or supplemental liability insurance will most likely cover the following:
- Claims made by other drivers resulting from injuries or deaths caused by you while driving the rental vehicle
- Claims for property damage caused by your rental car
- Damage caused by uninsured or underinsured motorists varies by state and company.
Injury, death, and property damage claims are typically covered only if they occur in the United States or Canada if the car was rented in the United States.
What’s Not Covered by Additional Liability Insurance?
Extra liability will not cover everything. Costs that ALI is unlikely to cover include:
- Physical harm to you, your family, or other members of your household
- Property damage to your rental vehicle
- Penalties or other fees
- Mexico suffered damage.
- Property damage or bodily injury caused by prohibited car use, such as driving under the influence of alcohol or drugs
- Use of a rental vehicle for business purposes
Decide Whether You Need Additional Rental Car Coverage
Call your insurance company and the rental or ride-sharing agency before accepting supplemental liability insurance to find out what's covered, what isn't, and how rental car coverage works in your specific situation. Additional liability insurance may be necessary if you:
- Have an existing auto policy, but the limits are low or it does not cover rental
- Have assets such as a home or savings that you want to protect from claims
- Do you already have claims on your driving record that are keeping your insurance rates high
- You don't want a new possible claim on your driving record.
- You want to participate in a car-sharing program, but your insurance policy does not cover such programs or rentals.
Supplemental liability insurance might not be a good fit if you:
- You already have high-limit personal auto or umbrella insurance that covers your car rental.
- Are you concerned about a costly claim affecting your assets or auto insurance rates
- Check to see if the rental includes a high-liability coverage amount.
- If you rent cars frequently, increased policy limits may make more financial sense, even if a claim occurs.
Frequently Asked Questions (FAQs)
Does your car insurance cover rental cars?
You should check with your insurer to see if your auto or umbrella insurance includes liability coverage for rental cars. In the event of an accident while driving a rental car, inquire about the limits and how your insurance works. Even if you have coverage, keep in mind that any damages you cause to others will be reported to your insurance company and may affect your rates.
What if you don’t have personal auto insurance?
If you don't have auto insurance and rent a car, you may need to sign up for the rental agency's liability policy if it isn't automatically included.
Does your credit card offer car rental insurance?
Your credit card may provide car rental coverage, but in most cases, this coverage is often limited to collision or theft damage to the rental car. The credit card company does not provide coverage for injuries to others or damage to their property.
How much does supplemental liability insurance cost?
Supplemental liability insurance can cost between $8 and $17 per day, depending on location, according to one car rental company. According to another company, the fee is around $15 per day.
Should I get additional liability insurance when traveling?
The countries in which you rent and travel will determine whether you need to purchase additional or supplemental liability insurance. Those renting in the United States but hoping to cross the border into Mexico, for example, must inquire about a Mexican insurance policy; this policy is required to enter Mexico and includes liability coverage for claims.