Learn About Additional Liability Insurance (ALI)
If you’re going out of town on a business or personal trip, you’ll likely need to rent a car while you’re there. With many credit cards, if you book your rental car using your card, you will be insured in the event of an accident. If your card doesn’t offer this coverage, the rental car company will offer you additional insurance. But does this insurance cover every situation you’ll be in?
Unfortunately, no. But there is additional insurance you can purchase: Additional Liability Insurance, otherwise known as ALI, is an optional insurance for rental cars that protects all authorized drivers if they injure someone or damage someone else’s property. This is an important coverage for drivers who do not own a car and or do not own a car insurance policy. If you are an insured driver, you are most likely covered automatically by your car insurance. Check with your own auto insurance policy to determine whether additional excess coverage is already provided.
Examples: While vacationing in Arizona, John becomes distracted and pulls out in front of an oncoming car while driving his rental car. Several people are injured in the other car and extensive damage is done to their vehicle. The additional liability insurance John purchased through the car rental company will cover the injured party's medical bills and damage to their vehicle.
Purchasing Additional Liability Insurance
Should you purchase ALI? It depends. Of course, there is no point in having double coverage. If your car insurance covers your rental car, then you are all set. Other places to check for coverage include your credit card and even your cell phone.
It is debatable whether you need a higher limit of liability coverage on a rental car than you have on your personal car. On one hand, you drive your personal auto way more often, putting you at a higher risk of an accident. On the other hand, a rental car may drive differently than what you are used to and you may be in an area you are not familiar with, making an accident a greater possibility.
If you are thinking of increasing your liability coverage for a rental car, consider making the change on your personal policy instead. Since your liability typically extends to a rental, changing the coverage will ultimately affect the coverage extended. The state minimum liability coverage is never recommended. Preferred liability limits are 100,000/300,000. Up to $100,000 pays out per person and up to $300,000 per accident is allowed to pay out with these limits. Higher limits are available and recommended depending on your assets.
Also consider purchasing a Collision Damage Waiver, which is the most valuable coverage provided to a person renting a car.