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I understand that Rental Car companies are required to provide the state minimum liability insurance in all states except California.

What minimum liability do these companies provide?

Is it the minimum in the state where the rental originated or the state in which an incident may occur with the rental car.

Assuming the renter declines the Supplemental Liability policy offered by rental car companies, the renter doesn't have automobile insurance, the renter doesn't have a non-owner policy in their name:

  1. If a rental originates in Nevada, does it comply with the California financial responsibility law when driven in the state of California?

  2. Does the rental comply with the financial responsibility law in cases like this - Rental originates in New Jersey and the vehicle is driven in Vermont?

Basically when the state in which the vehicle is being driven has a higher limit than the originating state?

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The minimum liability coverage included with a US car rental is often even worse than you think. For example, here are the relevant terms from a random rental from Hertz (different terms may apply if you rent through a corporate agreement or other arrangement, and sadly there is no way to link to this information):

If renting in California:

Hertz provides no liability protection under the terms of the Rental Agreement to the renter from claims of injury by others against you resulting from an accident. Your personal/business insurance may cover your liability. Exceptions: Hertz will provide primary liability protection up to the statutory minimum limits to international customers (driver's license indicates an address outside the USA) renting in California. Please also refer to Liability Insurance Supplement (LIS) below.

If renting in Maryland, Massachusetts, Michigan, New York, South Carolina, Virginia, or West Virginia:

Upon signing the Rental Agreement, Hertz provides primary liability protection. However, such protection is generally no more than the minimum limits required by individual state law. See Financial Responsibility Limits by State.

If renting in any other state in the U.S.A.:

Hertz' liability protection is secondary to any other insurance coverage available to you. If you do not have liability insurance and/or the limits of liability of the insurance coverage available to you are not sufficient to cover claims by others against you, and Hertz, as the vehicle owner, provides liability protection due to an accident, you will indemnify Hertz for any and all payments made.

However, Hertz makes available additional liability protection, which is primary, if the optional Liability Insurance Supplement, LIS, is purchased.

This page provides the information referenced by "Financial Responsibility Limits by State." You can see the terms for Avis by going here and choosing "Automobile liability and property damage policies."

In short, you will usually (but read the fine print on your actual rental agreement carefully, as they vary) get whatever the minimum coverage is for the state you happen to be driving in. Unless you're in California, where you might get nothing. And even then, you're not always actually getting insurance, as it's not really insurance if you're obligated to pay back the rental car company if you use it, as Hertz requires in most states. That "coverage" in many states is functioning more like a loan to satisfy the rental car company's legal responsibility, but you're still paying for every penny that's paid out.

Note that most US states have comically low minimum liability limits. Even a small accident can easily exceed these limits, both in vehicle damage and in medical expenses. You could be sued for the amount exceeding the policy limits. And this minimum coverage does nothing to cover the rental car either, so you're on the hook for that too. Relying on just this minimum coverage is a comically bad idea where a moment's lapse in concentration or even circumstances outside of your control could leave you stuck with tens or hundreds of thousands of dollars in bills.

Many credit cards offer additional coverage, and it's a good idea to research the fine print to see exactly what is offered (there's often a maximum rental length rule, for example). Of course, the rental car company will offer various options, both for liability and for damage to the rental car. And if you rent frequently, some insurance companies will sell non-owned auto insurance, which is car insurance for people who don't own cars.

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    I believe it answers both questions in the affirmative, broadly, to the extent one can answer such a question generally without looking at the fine print on an individual rental agreement or the actual certificate of insurance in the glove box, excluding California for many major companies. It goes on from there to say that this probably isn't a question you want to be asking, because you will be massively underinsured even if you're covered in both a $20K and a $25K state, and because you may have to pay the rental company back if they actually pay out anything. – Zach Lipton Feb 21 '17 at 4:17
  • Great answer, could you explain "That "coverage" in many states is functioning more like a loan to satisfy the rental car company's legal responsibility, but you're still paying for every penny that's paid out." part a little bit. Is this a consequence of the clause where the renter indemnifies the rental company? – nikhil Feb 21 '17 at 15:21

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