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I was going through car rental agency SIXT's ToS to understand whether they provide any liability insurance coverage if one doesn't add one of their protection options when renting a car. I read in their ToS:

SIXT does not extend any of its motor vehicle financial responsibility and SIXT does not provide any liability insurance coverage to renter, passengers, or third parties through this reservation unless SIXT is obligated to do so due to legal requirements or according to the rental agreement.

Must car rental agencies provide the state minimum liability insurance or ensure that the customer has it when renting a car in the USA?

If state-specific, I'm mostly interested in California and Washington state, but I am curious about other states too.


I have read vague statements about it:

https://www.nerdwallet.com/article/insurance/rental-car-insurance:

rental agencies typically have minimal coverage on their vehicles.

Typically means not always.

https://www.iii.org/article/rental-car-insurance:

Liability Insurance – By law, rental companies must provide the state required minimum amount of liability insurance coverage—often this does not provide enough protection. If you carry your own auto insurance and have opted for higher liability limits (which is recommended), you’ll be adequately covered. Non car-owners who are frequent renters have the option of purchasing a non-owner liability policy, which can provide the additional liability needed.

I don't know if that applies to any US state.

https://www.investopedia.com/do-i-need-rental-car-insurance-7546688:

Supplemental liability coverage is available, but the car rental may include state-required minimum liability insurance

"may" is not the same as "must.

https://www.hertz.com/rentacar/productservice/index.jsp?targetPage=USHowProtectedAreYou.jsp:

The following chart lists the Automobile Financial Responsibility Limits of the various states. Hertz is not required to provide such minimum protection in all states.

Hertz clearly says it depends on the state but it doesn't say in which states car rental agencies must provide the state minimum liability insurance.

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  • Nothing is vague about needing insurance to drive.
    – Mimedfp
    Commented Apr 29 at 3:02
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    @Mimedfp Yes, but the question is: Must car rental agencies provide the state minimum liability insurance or ensure that the customer has it when renting a car in the USA? Commented Apr 29 at 3:03
  • How could they drive a car with no insurance? The question does not make sense. Of course you need insurance.
    – Mimedfp
    Commented Apr 29 at 3:05
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    @Mimedfp A rental company can require that the driver have the needed insurance for renting or it can offer to sell them the required insurance at the time of rental.
    – Joe W
    Commented Apr 29 at 13:15
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    @Mimedfp It is more subtle: my understanding is the car rental is required to provide minimum liability coverage under state law (the chains are big enough to be self-insured). However, they can turn around and recover anything they pay out with the renter personally and/or with their insurance, in the absence of optional coverage. Thus, it protects the public, but not the renter. This is similar to when financial responsibility is provided via a bond instead of insurance.
    – user71659
    Commented Apr 29 at 16:14

1 Answer 1

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Cars are insured in the US, not drivers, but rental car companies have convinced the California legislature to let them off the hook. I imagine this carve-out was due to bad actors taking advantage of liability of the rental car companies. My recent (April 2024) California rental agreement terms and conditions contain this wall of text under the heading of FOR RENTALS ORIGINATING IN CALIFORNIA (AAD is additional authorized driver):

  1. Responsibility to Third Parties. Owner or its affiliate complies with applicable motor vehicle financial responsibility laws as an insured, self-insurer, bondholder, or cash depositor. Except to the extent required by the motor vehicle financial responsibility laws of the applicable state, province or otherwise by law, or the Contract, neither Owner or its affiliate extends any of its motor vehicle financial responsibility or provides insurance coverage to Renter, AADs, passengers or third parties through the Contract. If liability insurance or self insurance is available on any basis to Renter, AAD(s) or any other driver and such insurance or self insurance satisfies the applicable state motor vehicle financial responsibility law, then Owner or its affiliate extends none of its motor vehicle financial responsibility. However, if Renter and AAD(s) are in compliance with the terms and conditions of the Contract and if Owner or its affiliate is obligated to extend its motor vehicle financial responsibility to Renter, AAD(s) or third parties, then Owner’s or its affiliate’s obligation is limited to the applicable state minimum financial responsibility amounts. Renter and AAD’s agree that any misrepresentation, false or misleading information supplied to Owner or Owner’s Representatives and/or refusal to cooperate with Owner or Owner’s representatives during any claim, suit or proceeding may result in the declination of any such claim. Renter shall be responsible for assisting Owner in obtaining any necessary cooperation from an AAD. Unless required by law, Owner’s or its affiliate’s financial responsibility shall not extend to any claim made by a passenger while riding in or on or getting in or out of Vehicle. Financial responsibility shall not extend to liability imposed or assumed by anyone under any worker’s compensation act, plan or contract. Owner’s or affiliate’s financial responsibility does not provide coverage for nor extend to: 1. Punitive or exemplary damages (these include damages which may be imposed to punish a wrongdoer or deter others from similar conduct); 2. Fines; 3. Penalties; 4. Treble damages; or 5. Multiplied or multiple damages imposed upon any permissive operator. This punitive damage exclusion shall further apply to any claim for uninsured or underinsured motorist coverages. There is no coverage for any costs, interest, or damages attributable to punitive or exemplary damages.

You probably need a lawyer to parse that out well but what it says to me is that they might provide state minimum coverage equivalent (they may just be self-insured) liability coverage, but you are on the hook for what you did in their car beyond that. Your passengers are not covered by them either.

This can easily turn into complex litigation, for example if they give you a car with bad brakes. But in simple terms, the risk is heavily on the renter for accidents.

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    "Cars are insured in the US, not drivers," Something of an oversimplification that is possibly relevant to the answer. Most auto liability policies cover specified drivers driving specified cars. But it is also common for a auto liability policy in the U.S. to cover, in addition, specified drivers in any car rented by the specified drivers, and to cover certain classes of drivers (household members/guests) driving specified vehicles.
    – ohwilleke
    Commented Apr 30 at 19:59

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