Want to know what are the types of car rental insurance and what each of these letters mean? Here’s an overview of what you need to know about insurance before renting a car!
Whether you’re thinking about renting a car for work or for a family trip, one thing’s for sure: car rental insurance is something you have to think about.
The problem is that it’s easy to get confused with so many letters that don’t seem to mean anything at first glance. LDW, CDW, EP, LP, SLI, what’s all that?
Doubt no more. Here’s an overview of what you absolutely need to know to make an informed decision!
What are the types of car rental insurance?
There are basically four types of car rental insurance: the ones that protect the rental car, third party insurances, personal insurances and roadside assistance. Here’s a list:
- CDW – Collision Damage Waiver
- LDW – Loss Damage Waiver
- CDI – Collision Damage Insurance
- EP – Extended Protection
- LP – Liability Protection
- SLI – Supplemental Liability Insurance
- TPL – Third Party Liability
- ALI – Additional Liability Insurance
- PAI – Personal Accident Insurance
- PEC – Personal Effects Coverage
- Roadside assistance
- RSP – Roadside Plus
The reason why there are so many is that rental companies have different names for almost the same insurance. They can also vary depending on the country where you’re renting your car, so that’s also something to pay attention to.
What is Collision Damage Waiver (CDW)?
Collision Damage Waiver (CDW), Loss Damage Waiver (LDW) and Collision Damage Insurance (CDI) cover damages made to the car, like theft and scratches that can happen because of road accidents. They may cover different things depending on the car rental company.
In case anything happens to the car, it’s usually the renter’s responsibility to pay for the repair work. The amount depends on the kind of the damage waiver, the car rental company, car category and more, so keep an eye on your rental agreement as this information will definitely be detailed there!
In some cases, Collision Damage Waiver and Loss Damage Waiver can cover the full cost of the repair work, which means that even if an accident happens, you won’t have to pay any extras. That’s definitely a plus when traveling abroad, where the costs may be really high.
It isn’t really common to rent a car without any of these insurances, but it is possible. In that case, the entire cost of repairing any damage to the car will be the responsibility of the renter.
What is Supplemental Liability Insurance?
The Supplemental Liability Insurance is a Third Party Insurance. There are many names to third party insurances as rental companies may refer to them in different ways. Here are some examples:
- EP – Extended Protection
- LP – Liability Protection
- SLI – Supplemental Liability Insurance
- TPL – Third Party Liability
- ALI – Additional Liability Insurance
All insurances listed above cover personal and material damage caused to other people’s cars, property and even medical expenses. They may have different limits depending on the rental company, so keep and eye on that!
As it is the case of Collision Damage Waiver and Loss Damage Waiver, third party insurance is also optional.
What is Personal Accident Insurance (PAI)?
Personal Accident Insurance covers the renter and passengers in case of accidental death or need of medical care and ambulance. It’s similar to a travel insurance, but it protects the passengers during the rental period.
What is Personal Effects Coverage (PEC)?
Personal Effects Coverage covers the damage or loss in any valuables and personal items you leave inside the car when in transit or in a building (except when the car is parked in your house). Here, “personal” means the renter, the renter’s immediate family members and anyone who’s traveling with the renter.
What about Roadside assistance and Roadside Plus?
Technically, Roadside Assistance and RSP are not insurance, but an extra help if any of the following happens during your rental period:
- Loss or damage of car keys
- Keys locked inside the car
- Flat tire
- Rental car not starting
- Car out of fuel
If any of them happen, someone will help you out by replacing the flat tire, for example.
The Personal Accident Insurance, Personal Effects Coverage and Roadside Assistance are all optional.
Do you need car rental insurance?
Many times people are a little bit hesitant to buy insurance, maybe because they don’t want to spend any money on them or for not really understanding the pros and cons of car rental insurance.
Car rental insurance is truly something we never wish to use, but it does ease our minds when renting a car, driving abroad and even parking on the street. When considering whether or not to hire insurance, always consider where you’re going to be driving the car and in which circumstances.
When in doubt, we always recommend buying insurance. Just to be sure, you know? 
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