I am planning a road trip in the US with some friends and plan to rent a car for the purpose. Are there any legal requirements for renting a car.
Do they require a US driver's license?
Do I have to pay for extra insurance?
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You don't need US driver's license, just your national one.
Some of the insurances are mandatory, some are optional. This article on WikiTravel gives a good overview. Details differ between different rental companies, so read the fine print on their web sites.
You usually have to be 25 or older and need a credit card.
When we tried a few years back, you were required to be over 25 (although there was one company allowing 21 or over) to drive. In addition you need a valid driver's license recognised in the US, or an international drivers' license. Finally, a credit card is required, so that they can block off the deposit/excess against your card.
Often there is insurance that is mandatory as well, but that all comes in the bill when you do eventually rent it.
You need to check with your local government and the relevant US state DMV if your national license is enough, for many countries it is.
If not, you'll need an international drivers license. Depending on your country, there's an organization issuing these. In the US its AAA.
You'll have to pay the "Supplemental liability insurance" to comply with state laws. Many Americans have their own car insurance that also covers them with the rental cars, but foreigners don't have that and many states require minimum liability insurance. Rental prices in the US don't include this. However, if you rent from your own country, your price will (probably) include all the necessary insurances, because they quote based on the standard profile for your country. So it might be cheaper to rent and prepay through a branch in your home country or a travel agent, then directly from the US rental company, when considering the additional costs of insurance (and taxes...).
If your license is in a language other than English then you should get an IDP BEFORE entering the US.
If it's in English I would not bother. I drove here for six months on an Aussie license - in my own vehicles and hire vehicles - and my Australian license was sufficient.
I have rented and now own a vehicle... I have always gone through Avis. You can drive on your license from your country as long as it is valid and it is on you. You will also need to have a credit card as they keep it on file. Insurance is automatically included when you rent the vehicle (the minimum liability cover) but you will be asked if you would like to add extra cover. You must be over 21 to rent the vehicle and if you are between the age of 21-25 you will be charged an additional fee per day (somewhere between $15 - $25 extra per day). It is super easy!! Even if you forget to pre-book you can walk into Avis and it will be sorted in 10 minutes.