Have you ever heard of third party insurance? Check out how the third party insurance works and what it covers when you rent a car.
Let’s say you’re ready to rent a car. In the middle of the booking process you read the words “Third Party Insurance”, but don’t know what it really means or what it covers. You think to yourself do I even need this?
To answer this question, let’s first take a look at what is third party liability insurance as this will help you understand how it applies to car rental.
Basically, a third party insurance protects you in case of any damage done to someone else’s property — that’s the third party, of course. A real life example would be if you’re doing some work in your house and accidently damage your neighbor’s car with a brick. A third party liability insurance would cover that.
So… How does that work when it comes to car rental?
What is a third party rental car insurance?
A third party insurance in car rental can cover damage caused to anyone or anything apart from you and the rental car itself. In the event of an accident, for example, it can cover damage done to the other car involved, the passengers inside it, or to other people’s property.
Also, you should know there are many different names for the third party insurance, such as:
- EP – Extended Protection
- LP – Liability Protection
- SLI – Supplemental Liability Insurance
- TPL – Third Party Liability
- ALI – Additional Liability Insurance
Different rental companies in different parts of the world may refer to it in a particular way and maybe have slightly different coverages, but they all protect the third party involved in the incident.
What does the third party liability cover?
Here’s a list of things third party insurance can cover:
- The cost of repairing any damage done to third party property (e.g.: a fence)
- The cost of repairing any damage done to the other car involved in the accident
- The cost of third party injury (e.g.: medical bills and costs in general)
- The cost of legal fees
Please note that, as we’ve mentioned above, these insurances may have different names and cover third parties to different extents.
What doesn’t the third party liability cover?
- Damage done to the rental car
- Damage or loss in valuables inside the rental car
- Renter or renter’s passagers injury
- Car theft
Basically, the third party insurance won’t cover anything related to the rental car itself. There are different insurances for that, such as Collision Damage Waiver (CDW), Loss Damage Waiver (LDW) and Collision Damage Insurance (CDI) — which can be bought separately.
Should I get Third Party insurance?
As with any insurance, we never expect to use it until we have to. When it comes to car rental, there’s really no way of telling if you’re going to need it or not — even if you’re planning to drive through places you’re familiar with, you may encounter unexpected situations.
As a general rule, we always recommend buying insurance as it eases the mind when driving a rental car, whether that is around your own city, country or abroad.
What you can do, though, is check the coverage of your existing insurances. Sometimes your regular car insurance may cover third party damage for rental cars as well, which means buying extra insurance from the rental company isn’t necessary.
Also know that, in most countries, the third party liability coverage is required by the law. However, in the US, the minimum coverage can be pretty low, which means that if you cause more damage than it covers, you’ll have to pay it yourself. That’s why some rental companies offer supplemental liability insurance with higher coverage.
Here’s are some rental companies and the amount covered by their supplemental liability insurance:
- Alamo’s Extended Protection (EP): $1 million
- Dollar’s Liability Insurance Supplement (LIS): $1 million
- Enterprise’s Supplemental Liability Protection (SLP): $1 million
- National’s Supplemental Liability Insurance (SLI): $1 million