We're travelling around California and Nevada next month hiring a Hertz rental car. I'm curious as to whether the compulsory insurance is adequate or should be be taking out the optional insurances that the rental car agency recommends. Have spoken to a Hertz rep in Australia and he said that the sales staff, when we pick up the car will put pressure on us to take out extra insurance, as they earn a commission from the sale. Are we stupid in not taking out additional optional insurances. I'm unsure how it works in the States but in Australia compulsory insurance is adequate to cover damage to the rental car and public liability also.

Jen: There is no compulsory car rental insurance coverage that one must take in order to rent a car. All car rental insurance is optional.
My advise is to checkor callyour own auto insurance company and see what your coverage is when renting a car out of country. If your own coverage includes car rentals in the States, then you don't need to take additional insurance.
Also check your Credit card you will use to secure the car. Check to see if there is 'collision Damamge Wavier'; check to see where it applies, what type of car, and for how long of a rental. If you Credit Card provides 'CDW', plus your own Auto Insurance also covers you, then you should have more than enoough coverage.
Additional insurance is at LEAST$10/day, and may even be more.
So it could be alot more money added to the cost of the rental, depending how long you have the car.
Of course, if you are the type of person that worries and it will affect your enjoyment of the vacation, then the added cost would be worth the security it offers.

As a Canadian who does not currently own a car, I have no personal liability insurance policy as a driver -- I have been told by car rental agencies that I MUST purchase the liability insurance, that it's state law. So I do.

That is not true, I live in Manhattan, and as with many NY'ker's I don't own a car. But when I travel, I don't take CDW because I have credit card protection. In the US, they cannot makeyou take mandatory insurance.

Refresh my memory. I thought there were three different forms of insurance that the car agencies try to push. Collision damage waiver covers only damage to the rental car. Personal injury coverage covers only personal injury, but is that for all occupants in both cars, or only the occupants of the rental car? The third form (possessions coverage?) covers items stolen from the car.

So do any of these forms of insurance cover property damage to the car you hit if you were at fault? This has always confused me. Does anyone know?

Cindy, If you have your own auto insurance, you really don't need to worry about supplemental coverages from the rental company. Your own policy will cover most everything you mention, even if you are driving a rental.

If you were at fault in an accident with injuries, the people in the other car are covered under your liability insurance. The med pay portion of your policy covers your own injuries.

Your liability coverage pays the other car's damages as well. Your own damage (or rental car) is paid under your collision coverage if you live in a no-fault state, with deductible applied. I worked as an adjuster in TX, which was not a no fault state. Under those circumstances, we paid damage to the rental vehicle under your liability coverage (ergo no deductible) as you are contractually obligated to return their car in the same condition in which you took it out.

I don't know if rental cos offer coverage for items stolen from their vehicle and that's a problem with your own auto insurance too. I worked for 2 different companies and both would only cover items which belong in a car and are normally used there. Anything else stolen is covered under your homeowners insurance with deductible (which is normally quite large) applied.

Can't address the issue of what credit cards would or would not cover but can say they'll have no impact on what your own company will or will not pay.