Car Rental Insurance Information:

When you are on vacation, the last thing you want to do is spend time reading the fine print of your rental car agreement. But making sure you have proper insurance coverage against unexpected occurrences such as vehicle and pedestrian accidents or theft could make the difference between peace of mind and a costly headache down the road.

Many consumers believe that car rental companies will assume full responsibility for the cars they rent. In most states, car rental companies are not obligated to take responsibility for the actions of their rental drivers. But in 16 states - Arizona, California, Connecticut, Delaware, Florida, Idaho, Iowa, Maine, Michigan, Minnesota, Nevada, New York, Oklahoma, Pennsylvania, Rhode Island, and Wisconsin, plus the District of Columbia - car rental companies can be held responsible for the negligent actions of rental car drivers.

What does this obligation of responsibility (in legal terms known as vicarious liability) mean to consumers? It means, if a rental car driver in one of the places mentioned above drives recklessly and injures another driver or pedestrian and does not have adequate insurance coverage, the injured person can hold the rental car company responsible. This ability to hold the company responsible is especially important given that uninsured and under-insured drivers rent cars every day.

The U.S. Congress is considering legislation, sought by the rental car industry, that would do away with the rental car company's liability. So, if you were involved in an accident with a car renter with no insurance, you might never be able to hold anyone accountable.

Since most states do not mandate the liability of car rental agencies or demand that they require renters to have insurance, it is important for drivers to know the limits of their own insurance policies before renting a car. The issue of whether to buy a collision damage waiver is especially confusing.