SLI - Supplementary Liability Insurance - for USA car hire - Confused...

On-the-coast

Hello,
Would appreciate some insights here.
I've driven regularly in the USA, but only as a corporate hirer (using Hertz)
i've now booked a 12 day private hire across 2 locations in the USA. first part in California, second in Colorado at the start of September.

For both reservations, this is what hertz say is not included:

• Liability Insurance Supplement  (= SLI i assume)
• Loss Damage Waiver     (= CDW i assume)
• Personal Insurance.

I'm quite happy to go buy Car Hire Excess Insurance, including CDW and SLI... but i find the policies highly confusing where it comes to SLI.  I'm not worried about CDW.

I've reviewed at least 4 policies costing between £75 and £175
so far they've all had some worrying wording around SLI.
The cheapest annual policy (£83, Bettersafe) says:

• "The level of Supplementary Liability Insurance provided. US$1,000,000
• This figure is the maximum amount covered and includes any cover provided locally, such as the state minimum liability insurance often provided in the US."

but when you click "buy" it says:

• "The Supplementary Liability Insurance (SLI) cover provided by this policy does not provide any primary liability coverage and will therefore only provide any third party cover if your car rental company or agency are already providing a level of primary liability insurance (sometimes referred to basic third party cover). 
• Do check your car rental agreement to ensure this is the case and confirm this when collecting your car. 
• Primary Insurance is available through other SLI policies offered through our comparison service. Please click below to confirm that you understand the above, or close this window if you would like to review other policies."

I believe that California is the only US state that includes no level of Primary Liability Insurance.... so therefore this style of policy would not offer sufficient cover.

I found another policy (£124, annual world wide, Insurance4CarHire)
but the SLI has this statement:

• Supplemental Liability Insurance for customers driving in USA, Canada, the Caribbean, Mexico, South and Central America only: Up to $1 million. However, in the US, you’re covered up to $250K if the state law deems this policy to provide primary liability coverage

I assume that means I'm only covered to $250k in California... and possibly also Colorado to based on the Hertz exclusions.

Am i missing something?
Even $1 million 3rd party cover in a litigious country with high medical costs seems very very low, and $250k seems close to being uninsured.
Maybe i should be asking Hertz what their Primary Liability Insurance is?  but if that's so crucial why don't they make it explicit on their rental agreements?
Are most UK citizens just taking on massive risk on their Car rentals in the USA?

DullGreyGuy

In answer to your final question... yes.

Majority of people dont do the research and dont realise that not everywhere in the world is high limit/unlimited third party insurance the norm and included as standard.

$1m is and isnt a lot... clearly the vast majority of claims settle well below this but the claims can much easier go way above it too. In one unfortunate accident someone ran over and killed a person at a family gathering; the total reserve was about $50m with the 4 grandparents who witnessed the incident each being paid $5m in compensation.

The other thing that can be an issue is punitive damages, these dont exist in the UK but do very much exist in the US and in many states its not possible to insure for them. Thankfully international insurers generally will cover punitive damages but its another thing to worry about.

On-the-coast

Thanks - I’d heard of some of those horror stories.  

I’m surprised how difficult I’m finding it to even find the sort of instance that pays for these very rare but vast sums - which is kind of the point of insurance…

DullGreyGuy

Just not enough demand for it from people... most providers of excess insurance are relatively small and just dont have the appetite to write higher limits and dealing with all the reinsurance you'd need etc to have $50m limits. 

You could argue it could be a good gig for US insurance companies but they wont have licenses to sell into the UK market etc without the costly process of setting up a branch etc. A big investment for an unproven product.

$1m sounds like a lot of money to most but many more dont even realise the need for SLI so no customer demand.

400ixl

So have you taken this hire out from the US Hertz site or the UK site?

The US site does not include it as most American drivers can utilise the cover they have from their own motor insurance policies for rentals. The UK site should usually include both covers as part of the rental.

On-the-coast

Thanks 400ixl.
I read something similar elsewhere, and it's clear that US people have additional lines of cover.
TBH it's unclear to me which site i used since i can login to exactly the same account whether i go to hertz.com or hertz.co.uk.
I am a hertz gold member (through my many corporate bookings).  I've just logged into my account via both landing pages, and the bookings are identical.  I don't remember which entry route i used when i booked a few weeks ago.  

my profile is clearly UK orientated (addresses, mobile numbers etc.) - and says "UK" as my country / region.

I also used a corporate discount code (valid for private bookings), which may have clouded the issue. it will be ironic if that corporate discount ends up costing me a lot in insurance...
i think only hertz can answer whether i have US primary liability insurance, so I'll try and contact them (I've raised a case through their website). Not holding out much hope though.

On-the-coast

For anyone interested in the conclusion of my research on this subject.
I chatted with the hertz rep online about my two reservations and they confirmed that I had no primary liablity insurance....
Also that Hertz's at the counter Liabilty Insurance Supplement (LIS)

"is an optional supplement which combines features of Primary Liability Protection (based on state limits, see below) with an excess liability policy to provide protection up to a combined single limit of $1 million per accident for third party bodily injury and/or property damage claims. (On rentals in California & Florida the maximum combines the single limit is $2 million for liability protection only). LIS also includes up to $1 million of Uninsured/Underinsured Motorist Protection"

So... if what I've been told is correct about no liability insurance (which matches what is on my reservation emails), then the cheapest way to get the maximum cover i can find is:

• buy the cheapest possible hire car excess policy from the usual suspects here (£70-£85)... which is good for CDW/LDW, and much cheaper than at the counter
• and purchase the Hertz SLI (LIS) at about $175 dollars for the 10 days of rental (£150)
• about £235 total (including $1m - 2m of SLI)

• buy the more expensive hire car excess policy here (£124... and accept that fact that i probably only have $250k of liablity cover)
• about £124 total (including $0.25m - 1m of SLI)

either way I'm uninsured for the multi-million "black swan events" - which make me think that spending £124 is the sensible middle course....
i welcome input from the crowd - anyone disagree with my reasoning (if you do please point me at a source that i can buy unlimited SLI/LIS from...)

As an aside, the company i work for, like many large multinationals, self insures for all events which includes car hire.  It's possible that i trigger this exclusion when i used the corporate discount code...  The downside to this is that when we do get involved in 3rd party related losses, we are a big target for legal firms who know that our pockets are billions deep... (which is in my opinion one of the problems of unlimited liability insurance)

DullGreyGuy

On-the-coast said:

As an aside, the company i work for, like many large multinationals, self insures for all events which includes car hire.  It's possible that i trigger this exclusion when i used the corporate discount code...  The downside to this is that when we do get involved in 3rd party related losses, we are a big target for legal firms who know that our pockets are billions deep... (which is in my opinion one of the problems of unlimited liability insurance)

Its not the norm for corporates to "self insure" either in the technical meaning of the phrase or in the more layman's term which is really that they dont insure. This would be particularly true in markets with compulsory insurance where not insuring and retaining the risk often isnt a possibility.

Did once come across the Motor/Auto policy for one of the global car hire companies and even they don't self insure (in either sense). That was a ground up policy for third party risks however there is a side agreement that the hire car company reimburses the insurer for the first $Xm of all claims each year which means for $0-$Xm they're only charged a claims handling fee and only for $Xm and above are they charged a true insurance premium. 

On-the-coast

I guess we're not a normal company then (or more likely the instructions have been so simplified at the point of delivery that i've used the wrong terms).   I'm sure we conform to all legal requirements, but at one time we also owned a giant (world top10 in terms of assets and exposure) banking and insurance division - so we probably had the in-house expertise.  I could give a few examples, but that would be unwise (as it's not hard to guess who i work for), and I'd be giving a laymans (mis)interpretation of a complex subject.

DullGreyGuy

If you own an insurance company then you could be truly self insuring it.

There are companies that aren't insurers that do "rent" a captive insurer, they have to pay it arms length premiums but obviously any profits are paid back, but it also gives them access to the reinsurance market. This tends to be used for non-compulsory lines of business though.

If you are a large corporation there is little point simply having ground up insurance for certain classes... it isnt a question for Hertz on if they have to pay any third party claims from car crashes, its a question of if it will be £50m or £60m this year. If you simply insured it ground up you'd be paying a profit margin, IPT and risk margin on that £50m that you know you will have to pay. The hire car company I dealt with managed it by having a side agreement to refund the first £Xm of all losses and thus premiums weren't charged and profit margin on claims handling is much lower. Another company could set up an insurance company and insure it and then reinsure for over £Xm as another route but then you have the overheads of running an insurance company and possibly more than one depending on what countries you operate in.