What Is Additional Liability Insurance?

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DEFINITION

Additional liability insurance (ALI) is an optional coverage you can purchase from a car-rental desk, peer-to-peer ride-sharing programs, and moving rental companies. This insurance offers additional financial protection for you and other authorized drivers against claims if you injure a person or damage their property while driving the rental car. 

Definition and Examples of Additional Liability Insurance

Additional liability insurance offers a form of optional, primary coverage for damages you cause to others while behind the wheel of your rented car. This insurance typically has a higher limit (maximum amount paid to the injured or damaged property) beyond any car rental insurance policy included by the rental agency or potentially your auto policy.

Most major rental car companies offer this insurance for auto rentals. Supplemental liability coverage can also be suggested as an option by moving-truck rental companies or peer-to-peer ride-sharing companies for hourly or daily trips. With peer-to-peer ride-share apps or platforms, this insurance may be included with the service. ALI policies for different sectors can vary based on which state you’re in.

  • Alternate name: Supplemental liability coverage, liability insurance supplement, or liability protection
  • Acronym: ALI, SLP, or LIS

For example, let’s say you sign up for the liability insurance supplement when you rent a car through Hertz and injure another driver in an accident. If the other driver’s medical costs total $100,000, your rental LIS may pay those costs and you won’t need to report the claim to your own insurance company.

However, your auto policy may not cover box truck or moving rentals. You may need to obtain supplemental insurance just in case you injure someone while operating a moving van.

How Additional Liability Insurance Works

To use additional liability or supplemental insurance, you must sign up for the coverage when first renting the car for an additional per-day charge. It is an optional coverage, and you can decline supplemental liability if you wish. 

The coverage helps protect your personal auto insurance policy and your financial assets from claims if you’re at fault in an accident and the claim is lower than your ALI coverage amount.

Insurance coverage amount and type can vary based on state. For example, coverage may be for up to $300,000, $1 million, or $2 million. This coverage may be more than your personal auto policy or duplicate your own auto or umbrella policy.

Coverage and coverage amounts may or may not include damages caused by uninsured and underinsured motorists, depending upon the state you rent in and the rental agency. If a state requires the rental agency to provide uninsured motorist/underinsured motorist coverage, the standard liability policy will likely include uninsured/underinsured coverage.

If you’re involved in an accident, follow your rental agency’s instructions for reporting an accident. If a claim has been filed against you, you may be asked to send written notice to the insurer. 

What Does Additional Liability Insurance Cover?

Additional liability insurance or supplemental liability insurance will likely cover the following up to the policy’s limits: 

  • Claims by other drivers regarding injury or death you’ve caused while driving the rental vehicle
  • Claims for property damage you’ve caused in your rental vehicle
  • Damage from uninsured or underinsured motorists, depending on state and company

Claims for injury, death, and damage are usually covered only if occurring in the U.S. or Canada if the car was rented in the U.S.

What’s Not Covered by Additional Liability Insurance?

Additional liability won’t cover everything. Costs that ALI likely won’t cover include:

  • Bodily damage to you, family members, or other household members 
  • Property damage to your rental vehicle
  • Fines or other fees
  • Damage sustained in Mexico
  • Property damage or bodily injury that occurs due to car use that’s prohibited, such as driving under the influence of alcohol or drugs
  • Business use of a rental vehicle

Decide Whether You Need Additional Rental Car Coverage

Before you accept supplemental liability insurance, call your insurance company and the rental or ride-sharing agency to find out what’s covered, what isn’t, and how rental car coverage works in your specific situation. Additional liability insurance could make sense if you: 

  • Have an existing auto policy, but limits are low or don’t cover your rental
  • Have assets such as a home or savings you need to protect against claims
  • Already have claims on your auto history that are keeping your insurance rates high
  • Don’t want a new possible claim on your auto record
  • Want to participate in a car-sharing program and your insurance doesn’t cover such programs or rentals

Supplemental liability insurance might not be a good fit if you:

  • Already carry high-limit personal auto or umbrella policies that cover your car rental
  • Aren’t concerned about an expensive claim damaging your assets or auto insurance rates
  • Find out that the rental includes a high-liability coverage amount
  • Rent cars so frequently that increased limits on your policy might make more financial sense, even if a claim occurs

Frequently Asked Questions (FAQs) 

Does your car insurance cover rental cars?

You can ask your insurer whether your auto coverage or umbrella insurance extends to liability coverage for rental cars. Ask about the limits and how your insurance works if you injure someone else or their property in an accident while driving a rental car. However, even if you have coverage, remember that any damages you cause to others will be a claim against your insurance and may impact your rates.

What if you don’t have personal auto insurance?

If you’re renting a car without auto insurance, 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 offer car rental coverage, but in most cases, this coverage is often limited to damages to the rental car by collision or theft.The credit card company doesn’t offer coverage for injuries you cause to others or their property. 

How much does supplemental liability insurance cost?

According to one car rental company, supplemental liability protection can range between $8 and $17 per day, depending on location. Another company states the charge is around $15 per day.

Should I get additional liability insurance when traveling?

Whether you need to purchase additional or supplemental liability insurance depends on the nations you’re renting and traveling in. For example, those renting in the U.S. but hoping to cross the border into Mexico must ask about a Mexican insurance policy; this policy is required to enter Mexico and includes liability coverage for claims.

Key Takeaways

  • Additional or supplemental liability insurance is an optional coverage that helps protect you against large injury or property damage claims that occur when you’re driving a rental, ride-share, or moving vehicle.
  • ALI insurance can cover up to $1 million or more in injury or property damage claims against you in a rental vehicle.
  • SLI or ALI typically acts as a primary form of insurance for any claims before your personal auto policy steps in to cover claims.
  • ALI insurance doesn’t usually cover injury to you, family members, or rental car damage.
  • Read additional liability coverage terms, agreements, and exclusions carefully, as policies can vary depending on providers and states.

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