View Full Version : Car rental in US - under insured - what is it and consequences?

Andy Rylance
27th Aug 2008, 13:50
I am confused. I was speaking to a mate whose son has just come out of university here and wanted to do a driving holiday in the US before starting work.

He found several fly drive packages, which give you flight from UK and car rental. But the confusion of insurance is huge. According to the small print, he can drive the car out of the car rental place and will be insured for third party risks up to about $75,000. We all know that if you had a serious accident that would not cover anything in terms of massive medical bills for the other person. However the student son said "what would they do to me if I had no money anyway and had an accident - I don't get it - if they under insure me and I drive off, albeit legally, and have an accident - I have no money so they can't sue me.. why would I want to spend over $500 taking their "extra" insurance which covers third party risks up to millions of $$.

His dad is really worried, but was asking what they actually could do to him if he drives with just the basic insurance and has an accident...comments?!

27th Aug 2008, 14:08
"Time to see a lawyer," I would say. Okay, "solicitor" then.

Andy Rylance
27th Aug 2008, 14:38
Found the details he was talking about:

Car rental includes:
Basic third party liability cover
Fire and theft insurance Please note: Unlike British insurances in which third party liability coverage is mandatory, US law only requires a bare minimum of third party coverage. In Florida, this is up to a maximum of $75,000 per accident, $25,000 personal injury plus $25,000 property damage. Although this limited third party coverage is included in your rental-only car agreement, it could well leave you financially exposed in the event of a claim against you.

27th Aug 2008, 14:51
There is a word for people with this sort of attitude, several in fact, cretin springs to mind.

Saying things like 'I have no money so I won't get sued' is naivety verging on insanity, litigation is almost a national sport alongside baseball and American footbal. Chuks is right, this guy is going to need a lawyer.

What a selfish waste of oxygen, he really shouldn't be allowed out of the house, never mind the country, until he's grown up.

$500 is hardly a lot of money, especially when he could potientally end being declared bankrupt because of charges incurred in a legal case.

Andy Rylance
27th Aug 2008, 14:55
why does US law allow drivers to run around with virtually no insurance worth anything? I am sure he won't go over there without the full insurance, but it seems strange that technically US law allows him to drive on that level of insurance..

C130 Techie
27th Aug 2008, 15:04
Everytime I have booked a rental car for the USA through a travel firm I have been told specifically that there is no need to take out additional insurance that the rental company may offer as I was fully insured within the price that I had paid.

27th Aug 2008, 15:11
Google 'car rental excess' for a cheap and easy solution to the rental companies' rip off prices for extra insurance.

27th Aug 2008, 15:22
Tad harsh there zarniwoop? This guy was a student recently, making the trip before he starts working, hence P O O R. :cool: Students will do anything to stretch their budget, and rightly so IMO.

Rylance, the following happened to a dear friend of ours, when he and my husband were finishing Uni in the States many years ago. It might help the thinking of your mate's son.

Robert wasn't only a poor student, he is also of the conviction that being Jewish he is honour bound never to spend a single needless dollar. ;)
He drove his red chevy cabrio for 4 years with the legal minimum of required insurance. Three days after getting his master's, he caused an accident which totalled the other car. There was no way his insurance covered the damage, and Robert left the country sharpish.
There was a fair bit of international legal wrangling, and IIRC correctly, he didn't travel to the Staes for a good many years after.

Better to get the insurance rather than ending up a potential prisoner in the USA I think. :)

27th Aug 2008, 15:36
I have no money so they can't sue me..

Well, no, not really. They may not be able to collect, but they certainly can sue you. Are you saying you will never, ever have any money? If a judgment is made against you it may extend for a very long time. Now given a fact that you donít live in US may limit their ability to collect, but it will also limit your ability to ever go there. The judgment may be limited to one state (there are states where OJ doesn't go) but it is a risk. $500 does not sound like a lot of money for a young kid (most companies would not even rent to someone younger than 25) coming from a place where they drive on a wrong side of the road.

why does US law allow drivers to run around with virtually no insurance worth anything?

Because Americans do not believe that the state has the right to tell them what to do and what not to do. The risks are clear. Have an accident without insurance, you are in a lot of trouble. We don't need nanny state to protect us from that...

27th Aug 2008, 15:46
Yes Juud, it probably does stand harsh, but for a good reason as I believe the tale of your good friend displays. Being poor is not a reason to be reckless, either with your own safety or that of others.

I've been a cash strapped student too and would have dearly loved to have done such a jouurney at the time, but couldn't afford to do it with the necessary cover, so delayed it till I could. Sadly this happens.

This young man has his entire life ahead of him, as do many people who he will be sharing the road, scrimping on things like good insurance just doesn't make sense.

Apologies for being preachy and ranty, but the 'I want it now and damn the consequences' attitude that seems so prevelant these days really winds me up.

Loose rivets
27th Aug 2008, 16:36
You will no doubt be surprised to learn that millions of US citizens drive with minimal insurance.

I went to one of the best. State Farm. Okay, one of the best before New Orleans. I got a quote for a run-of-the-mill Caddy. That's not too bad thinks I...until I read the small print. 6 Months. And $45,000 per claim. Sheesh...what a rip-off, but I was legal.

We moved house car and personal liability over to the Hartford. One year and a tad more cover. But really, it is virtually useless in a really bad accident. They just do not have a half-way house. I can get the $M umbrella, but nowt in between.

Further to the above, I have to buy 'Uninsured motorist' cover. Believe me, there are thousands of those about.

If I go to a rental company, I'm covered and need not buy any of their added cover. If I drive into a line of lawyers, they can't have my house, it's 'Homestead'. So they have to search for a second home or other assets.

My niebour has a veritable car show. He does not buy cover other than the basic package...what we call Comprehensive. 'They don't normally sue for more than the insurers cover for'.

Warning!!! Comprehensive does NOT mean what it does in the UK. Comprehensive insurance JUST ISN'T.

27th Aug 2008, 16:58
If you pay for the rental car by credit card - you may well find that the credit card company will pick up the additional insurance risk anyway.

They don't "pay" for it from the rental company - they just assume the risk themselves and pay for damage if there's a claim.

Check the small print in that small white booklet they sent you with your card. Oh! Dammit - you can't! You threw that booklet away, didn't you!

I'm also tempted to say that if driving your own car uninsured was not an offence, you very likely wouldn't insure it anyway. You are a good driver, aren't you (in your own opinion) - you have no intention of crashing into anything. I would wager that you only insure your car because you would be convicted of the offence if you were found not to have any.

Same deal with the TV licence. It doesn't improve reception and if you could avoid getting one - you would (or do!).

Jimmy Macintosh
27th Aug 2008, 17:01
A colleague of mine lived in the US for many years. He is a Brit, but a green card holder. His job was coming to an end and he was relocating back to the UK (his daughter stayed in the US).
As he was leaving work on his last day he was backing out of his parking space and waited for a car to pass behind him. The car stopped and flashed so he continued to backout. He hit a car from the oppostie side who went through the exact same thing, basically both cars hit their drivers side rear quarter at about 2-3mph. They inspected the damage had a chat and decided that there was nothing to worry about and get on their way.
Two years later he went back to the states to visit his daughter, was held up at immigration and deported. It seems the other person found out they were leaving the country and decided to sue him. No-one could find him and he now has a black mark against his name that he has been trying to clear. Of course from the UK which is a little trickier to pull off.

He should just see whether his home insurance will cover him, I did a two week stint in the US back in 2001, called up my insurance and for a small premium change I was covered completely in the States.

27th Aug 2008, 17:04
Son's just come out of university. Has he checked the minor details about not being able to hire under 25 or paying a sodding fortune in extra charges? Make sure he shops around for someone he can rent off to start with.

Loose rivets
27th Aug 2008, 18:01
He should just see whether his home insurance will cover him, I did a two week stint in the US back in 2001, called up my insurance and for a small premium change I was covered completely in the States.

Please tell us more!!!!!!

Norwich Union was kind enough to issue a letter to State Farm for me. Saved me being a newbee for two years, since I hadn't owned a car in the States for several years. However, any attempt to get US cover from this side of the Atlantic met with a total blank.

Jimmy Macintosh
27th Aug 2008, 18:34
If I could remember who they were I would. (When I say home insurance I mean the car insurance of his home country)

But my memory fails me, it was a third party cover, so covered legal fees and damage to the others. Nothing for "your" car. It was also only for two weeks

27th Aug 2008, 18:43
While the rules are generally similar, each state has their own laws regarding hired cars and insurance. The credit card insurance coverage is true for Visa Platinum and AMEX blue & platinum, just be sure to report any claims in a timely manner and verify coverage with your card issuer.

Travel agents can also provide rental insurance at a discount.

27th Aug 2008, 20:26
The credit card rules also include my (admittedly American) standard bank account credit and, indeed, debit cards.

Basic VISA and Mastercards - all excess insurance cover is assumed by credit card provided you pay for the rental with that card.

My Amex used to cover, as said above by vapilot - but I don't have one any more.

"Enterprise", by the way, rent to under 25's - over 21.

27th Aug 2008, 20:50
I always attach a 'CD' sticker when out of the country, Works wonders. Do a Google....

27th Aug 2008, 21:48
Can't Drive

27th Aug 2008, 23:51
The American Express gold card has a program I am enrolled in whereby every time I rent a car using the card, I am charged an additional $24.99 for insurance for the duration of the rental. It covers everything. Not a dime out of pocket.

The program is not advertised, except in oblique references in their lesser-coverage descriptions, which say to "ask for higher coverage" or something like that. When you ask, it is revealed.

I could use my own personal car insurance which covers rentals. I don't because when you make a claim, they may raise your rates or cancel your policy. And, I think my chances of having an accident are greater with an unfamiliar rental car.

28th Aug 2008, 00:52
As mentioned, in the USA insurance is not necessarily country-wide and rental cars are often only covered within the State of hire.

"I don't have any money, so what are they going to do to me?" - Well in one state I know, if he was sued and lost, he would probably be in a jail where he would be dressed in pink, live in a tent, be attached to a chain and as a young lad in his twenties, after about five years, would have a lot more very close friends!

28th Aug 2008, 01:34
This may not be the response you're looking for, but it's people who take on the, "catch me if you can" attitude that ruins it for all of us.

I would hope that said parents have coverage that would apply to transportation travels or that the responsible alternative is applied. I've known two people who got the raw end of the deal because of personal injury that another driver caused and there wasn't any insurance to pick up where the victim's coverage stopped paying. In one instance, this man, the provider of his family, has permanent brain injury. Family lost their house to pay for medical bills.

Someone who is either a young driver or driving in a foreign location/country should do the right thing by everyone and find out how to protect everyone. In the whole scheme of things, it's worth the small price to pay.

Stepping down from soap box now..... :)

28th Aug 2008, 01:37
Quite often we have letters here from some smartass layman who gives his view of the law, concludes he is in the right, and there is an end to it.

I was young too, once. I knew of an industry that was suffering immense losses. How could this have happened to these clever people? Go find out; come back and tell us.

A tiger team was established from other clever people, designers, cost estimators, production engineers, tooling designers, schedulers, economists, accountants, contract administrators, the beauty and chivalry of a corporation including, Yes!!!, me. Go to the leper colony and work it all out. Then come back.

Well! Were we busy little bees? Oh Yes, we were! One chap was so busy and worried he found a way out; he committed suicide. We others were too busy, I fear, to notice much ("The eyes of the corporation are on you"). I was deep in contracts, change orders, contract modifications, reports, etc.

The great minds from afar arrived for the first fruits of our labours, Davaar was No 1 to bat. I had rehearsed my speech, and a telling spech it was.

It began: "The contracts say ... ".

"Hold it right there!" said the Corporate VP and General Counsel, "I don't give a sh*t what the contracts say".

"Oh!", was my smashing and unrehearsed repartee, for this was a new perspective. New to me but not to him.

Truth is, it really does not, au fond, matter a sh*t what the contracts say. Mostly, that is.

Sometimes it matters a very great deal. There are people who will lend you a pot of money on a handshake. They trust you. You have a lovely honest face. No paper. Nah! You may invest the money as you will. You keep the revenue, report it for taxation or not. That is up to you. You pay no interest, and you keep all of the profits. No audit required. You mean there is no contract? Oh Yes, there is a contract all right, just not written down

The consideration of the contract is that when the lender's man turns up at your door and says:
"Hi! Faust! You remember that money? The boss wants it back!",
then you give him the money, there and then. All of it.

"Hold on!", you say, "I have to cash in the securities where I have the money invested, take three days to clear the system, maybe a week at the outside. Okay? Are you free for dinner? We could shoot the breeze"

"No", says the lender's man, "You did not hear me. You give me the money when I ask for it".

"Well, that's just not possible", you smile knowingly.

"If you like having legs you will give me the money when I ask for it",
he says, even more knowingly, but without the smile.
"If you do not like the terms do not borrow the money. I shall go away and trouble you no further"

When someone here plans to enter a deal that he may not be able to fulfil, or may not intend to fulfil, because "They will not sue me", he should remember that there worse fates than being sued, and some contracts may be enforced, or breach penalised, in the most imaginative ways.

But there we are. As one here reminds me from time to time, I am just a pseud, so probably I know not whereof I write.

28th Aug 2008, 02:52
And then we have not even mentioned the pressure sales pitch at the Rental Office. Last time I was there I very nearly bought twenty three new insurances, including one on my Uncle who has been dead for twenty years or more and the cat we never actually had.

The insurances at the rental office are usually something like the service agreements on electrical goods, read them carefully as they can be over priced and not actually do the job.

First, go and get a decent Visa or Mastercard (ie gold or whatever) with its own rental insurance. You may well pay extra, and check the terms as some have limited rental periods. If that works, even at a cost (ours cost and extra $145 a year but saves us far more,) then you are fixed but bear in mind they often act as insurers of last resort. In other words, if you claim you will have to jump through a few hoops to show you do not have other insurance. (This is good insurance because it usually covers three months of insurance for purchases. had a computer stolen on Rome Termini and eventually replaced as new with MCard, but we had to whistle for the tickets.)

Next try travel insurance from like of AA etc. Sometimes covers hiring.

Third. Check your own car insurers. Ours has all sorts of hire cover. (Nice thing here about getting loaners when your car is in dock One signature for returning the car and you can just drive away with same coverage as your own.)

If you are going for more than, say four weeks, an alternative would be to buy a car locally and sell it when you leave. Big old cars are available at a truly astonishing price and you can then insure as an owner for six months and claim the rebate after. I used to have an employee who bought the biggest junker he could find. Ran it till it broke or he bent it etc. Over five years he came out so far ahead of my motoring cost it wasn`t even funny.

Andy Rylance
28th Aug 2008, 17:10
Thank you so much for the replies - we certainly didn't know about the credit cards covering extra insurance on rental vehicles in the USA.

Now after more asking it appears that the extra insurance is mandatory under the terms and conditions of the fly drive holiday. So in effect they are not selling you the holiday at the price it is (when do they?!), but the terms and conditions say that if you do not have extra insurance then you have to have it on their terms, so there is now no way you can leave the car rental place without having this extra insurance sorted in some way.

But to screw the car hire firm I will advise the credit card route - if anyone has specifics for a UK card that covers this (I don't mean just a credit card, but a particular one..) that would be very helpful... so far thanks for all the responses!


28th Aug 2008, 18:28
Which state lines is he expecting to cross? You might ask him to make a list and then compare it with the list of those that he will be (legally) able to :8

Gertrude the Wombat
28th Aug 2008, 20:52
Alternatively ...

... and this may sound a bit weird, particularly to any Americans reading ...

... there is the option of not hiring a car. Most Americans don't know this, and don't believe you when you tell them, but it is possible to get around the place by public transport.

(My wife never hires cars on her business trips to the USA. Her hosts are utterly confused - "but how did you get here from the airport?" She explains which buses and trains (and, where appropriate, taxis) she used. They look horrified, claim not to have known that any such things existed, and say "but surely you don't want to get on a train or a bus, aren't they full of poor people and black people?")