Different types of car rental insurance: pros and cons

Renting a vehicle means freedom of movement, comfort and the ability to travel at your own pace without depending on public transport and unnecessary taxi costs. However, unforeseen situations may arise on the road: damage, theft, accidents. That is why insurance when renting a car is an important aspect that cannot be neglected.

Insurance policies are different and cover various damages depending on the circumstances. In this article, we will look at the main types of insurance when renting a vehicle, their benefits and possible drawbacks.

Types of insurance policies

The main difference between all policies is the amount of the franchise and the list of risks covered. The franchise is a fixed amount that the renter must pay in the event of damage or theft of the car. For example, if the franchise is 500 euro and the damage is 1500, then the insurance company will only cover 1000, and the renter must pay the rest. The higher the franchise, the cheaper the insurance, and vice versa.

Let’s look at the most common types of insurance:

• LDW — loss insurance in case of theft;
• TLP — third party liability insurance;
• SLI — financial protection from third party liability in case of an accident;
• PAI — personal accident insurance.

LDW insurance

LDW, or Loss Damage Waiver, is insurance against theft or damage to the car. LDW is already included in the rental price and applies to all persons authorised to drive the vehicle under the rental agreement.

Renters often confuse LDW with Collision Damage Waiver (CDW), but the main difference is the amount of damage coverage. If your car is stolen or vandalised at night, LDW will cover these types of damage. CDW, on the other hand, only covers collisions or damage to your vehicle in an accident.

In most countries, LDW and CDW come together. However, in the US and Canada, they are often purchased separately. The cost of LDW can vary depending on the type of vehicle, length of rental, and the rental company’s policies.

Advantages of LDW

• Covers major damage to the vehicle.
• Allows you to avoid significant financial losses.
• Has an affordable price.

Disadvantages of LDW

• Does not cover damage due to careless driving.
• Applies only to the authorised driver.
• Does not cover damage to another vehicle or injuries resulting from an accident.

TLP insurance

TLP (Third Liability Protection), or TPL (Third Party Liability), is a form of insurance that protects the renter against third-party damage caused to a third party. Third parties include other vehicles, drivers, pedestrians, and sometimes other passengers in your car.

Third party liability may cover expenses such as hospital care, lost wages, or auto body repairs.

Advantages of TLP

• Simplifies the process of replacing a vehicle lost in an accident.
• Protects against unreasonable claims.
• Allows you to be at peace while traveling.

Disadvantages of TLP

• Does not cover damage to your vehicle in the event of theft.
• May be cancelled if driven off-road.
• Maximum compensation varies by country and car rental company.

SLI insurance

SLI, or Supplemental Liability Insurance, is an insurance that protects the renter and any authorised additional drivers from financial liability to third parties. It covers damage to other people or their property as a result of an accident with the rental car.

SLI is optional and applies only to customers in the United States and Canada. SLI coverage limits are equal to the difference between the maximum combined SLI limit of $500,000 in all states and the liability protection limits provided in the lease agreement.

SLI differs from LDW and TLP solely in the financial obligations you may have to others in the event of an accident that is your fault.

Advantages of SLI

• Can duplicate coverage already provided by another policy. SLI will cover your expenses in the event of a higher claim, increasing your third party liability coverage to more comfortable limits.
• Allows you to save huge amounts of money in the future.
• Covers legal costs.

Disadvantages of SLI

• Laws in a particular region may prohibit or change the additional services offered.
• Daily insurance fee.
• Does not cover damage to the rental vehicle or theft of items.

SLI may be included in standard car rental agreements or may be purchased separately. You will likely still be responsible for additional costs in the event of a claim, and some parts of the car may not be covered by the policy at all.

PAI insurance

PAI, or Personal Accident Insurance, is a personal accident insurance that provides the driver with additional coverage in the event that they are involved in a serious or even fatal accident. Without PAI, the driver is at great risk of loss.

The cost of accident insurance varies by country and rental company. Some travel insurance plans already include PAI, so check your contract before paying extra.

Advantages of PAI

• Financial protection of the driver from medical expenses.
• Reduction of financial risks in unforeseen situations.
• Compensation regardless of who is at fault in the accident.

Disadvantages of PAI

• Applies only to drivers included in the rental agreement.
• Does not cover cases caused by suicide, murder, or other illegal scenarios.
• Does not cover damage to the vehicle or injury to third parties.

Which insurance to choose?

You may need to purchase insurance if you want to avoid paying a deductible or higher insurance rates in case of car damage. Additional insurance may also be required if you do not have your own policy or credit card coverage.

Before you sign up for a rental, be sure to check what risks your chosen insurance policy covers and what the deductible amount is. This will help you avoid unexpected expenses and choose the best protection option.

Do not buy insurance from dubious or newly registered companies just because of the low price. Contact trusted insurers with a good reputation and positive feedback on payments, and then choose the most profitable option from them.

In some cases, buying insurance from a car rental company may be optional. For example, if you are traveling in the United States or Canada and your personal insurance policy already provides sufficient coverage. Also, additional insurance is not needed if your credit card includes rental car insurance.

Conclusion

The choice of insurance when renting a vehicle depends on your needs and the level of protection you want to receive. Wayrent offers various insurance coverage options, including basic and extended packages. To choose the best insurance and find out all the details, we recommend that you clarify the conditions with the manager before arranging the rental.