Rental car insurance is different from regular car insurance. In most countries, each rental car requires a standard package of three types of protection to drive, but they work differently. Find out what to know about rental car insurance.
Almost all over the world, rental cars require three standard types of protection to drive: damage protection (commonly called Collision Damage Waiver or CDW), Theft Protection, and third party protection (Third Party Liability).
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1) Collision Damage Relief
The standard damage protection of a car (commonly known as Collision Damage Release or CDW) covers you if the car’s body breaks. Like most protection types, Collision Damage Relief always has the excess, which is the cost you have to pay to repair a damaged car body. The amount of excess depends on renting, the rental company you are using, and the type of car, but it is usually around 500 / 600 dollars and 3,000 / 3,500 dollars.
Collision Damage Relief only protects the car body. So if there is damage to windows, steering wheel, or interior parts, for example, you will have to pay the total repair and administrative costs (unless you have purchased additional coverage).
2) Theft Protection
Theft Protection (sometimes called TP) covers you if your car is stolen or someone tries to steal it. Thief Protection almost always has an excess, which is the portion of the bill you have to pay when the car is stolen or damaged in an attempted theft.
The excess amount depends on where you rented, the rental company you use, and the type of car, but it is usually around $ 500 / $ 600 and $ 3,000 / $ 3,500.
You may find ‘Damage Waiver’ or LDW. It is a combination of Collision Damage Waiver and Theft Protection.
3) Liability of Third Parties
Third-Party Liability (sometimes called TPL) will pay if you injure someone or damage something with your rental car. This protection does not protect the car itself. Generally, there is a limit to the amount paid by Third Party Liability.
There is no excess for this type of policy.
What types of insurance is automatically included?
If you are from Europe or most other regions, damage, theft, and third party protection are included in the price when you book the car. Collision Damage Relief and Theft Protection has its excess. The excess is the first part of the payment for repairs or other expenses. This is slightly different for drivers from the US or Canada. Many drivers have credit cards that include automatic protection for rental cars. So they can choose between the standard plan, which doesn’t protect against damage or theft, or the all-inclusive package, both of which are included. (The standard package still includes Third Party Liability.)
Please note that all coverage types are linked to the rental agreement that the driver signed when picking up the car. If the driver violates the rental agreement’s terms, he will have to pay the full cost of all repairs or replace the car if it is stolen.
Optional insurance that can be purchased by tenants
You can choose to purchase extra insurance to cover excess (meaning you don’t have to pay anything for repairs) and cover the rest of the rental car. This isn’t legally required, so it’s up to the tenant whether they want to buy extra insurance or not.
There are generally three ways to add extra insurance to a rental:
Add to insurance when you book a car online
Many rental car sites sell their types of coverage. They are all different, but most likely all protect parts of the car other than the body (windows, tires, engine, etc.) and reduce excesses.
If you buy this kind of coverage, you usually have to pay for repairs to the rental company first, then claim the money from the insurance provider you purchased.
Purchase independent online rental car insurance
You can buy insurance from different insurance companies. There are several online options specifically designed for rental cars. Usually, this is referred to as ‘excess protection insurance’. If you buy this kind of coverage, you usually have to pay for repairs to the rental company first, then claim the money from the insurance provider you purchased.
Purchase protection when you pick up a rental car
Rental companies also offer additional protection at their counters. The price, name, and type of insurance vary from company to company and where you rented. This insurance will most likely cover parts of the car other than the body (windows, tires, engines, etc.) and reduce excesses (the amount you will have to pay in case of a problem). The ‘No excesses’ policy removes excesses completely, so you don’t have to pay anything for everything protected.