Trying to get your head around car hire insurance isn’t the easiest thing, when terms such as CDW excess insurance and supplemental liability insurance pop up. So what does CDW and SLI insurance mean, do you need them and how do you benefit by having them?
Understanding car insurance
Car rental insurance typically provides you with protection for driving a rental car. The policy typically provides protection for:
- damage to the rental car;
- theft of the vehicle;
- third party liability insurance;
- driving legally on the road while on holiday.
The rental car insurance is going to have a certain amount of excess attached to it. This is a sum of money, that in the event of damage to the rental car, you are asked to pay. This sum of money may vary, depending on the type of vehicle and country you are driving in, among other things. The excess is typically taken from the credit card that you gave when you hired the vehicle.
You might want to read the checklist on the Government website to find information about rental car insurance along with all aspects of renting a vehicle.
Understanding CDW insurance
Two terms typically heard in relation to rental car insurance are CDW and LDW insurance; in short they are referring to collision damage waiver of the rental vehicle and/or loss of the rental vehicle.
In simple terms:
- CDW (collision damage waiver) offers protection for the excess in the event of the rental car being damaged or involved in a collision;
- LWD (loss damage waiver) offers protection if the rental vehicle is stolen or lost.
CDW may be offered in a basic form with the insurance that is taken out to protect the rental vehicle or you may buy it separately. Taking the policy with the rental company can typically be an expensive way of purchasing protection.
A standalone car hire excess insurance provider on the other hand typically offers more comprehensive insurance for competitive premiums.
Bear in mind also that if basic CDW insurance is included in the insurance from the rental company it may exclude some things, such as:
- damage to the undercarriage of the rental vehicle;
- windscreen and windows of the vehicle;
- the roof of the rental car;
- the tyres of the vehicle.
If any of the excluded parts of the vehicle are damaged then typically the insurance provider asks you to pay the excess.
A CDW excess insurance policy from a standalone provider may typically cover these parts of the rental car, meaning you are not stuck paying the excess.
Understanding SLI insurance
Supplemental liability insurance, also known as SLI, provides protection for third party liability. In short this means that if you were to be involved in an accident that caused damage to a property, or bodily injury to a third party, you are generally protected up to a certain amount.
When considering third party liability insurance bear in mind that:
- limits offered in basic third party liability insurance may be low in some countries, which may leave you underinsured;
- you may take out SLI insurance to top up the limit;
- even if insurance is included in the basic cover offered by the car rental company, you still have to pay out the excess.
If you were driving a rental vehicle in the USA, Caribbean or Canada for example you may benefit from taking out SLI insurance to top up the maximum limit to ensure that you would not be left exposed in the event of a claim. This is due to the fact that any SLI insurance included in the basic rental car insurance may be too low. It may be worthwhile taking out SLI insurance with a standalone provider even when driving in Europe. Remember:
- there are typically some parts of the vehicle not protected in the basic policy offered by the rental company;
- you are typically liable to pay the excess, even if SLI cover is included in the standard rental car company policy.
SLI insurance may be taken out with a standalone provider, as can CDW excess insurance. Often this is the most suitable option, as they offer competitively priced insurance along with comprehensive cover.
You may think that the basic insurance included in the rental vehicle agreement is going to provide you with adequate protection. However, in the majority of cases you only find out too late that it doesn’t.
With the amount of vehicles on the roads increasing all the time, so might the chance of becoming involved in an accident on the roads. Imagine if you were to be involved in an accident that was your fault and a third party claimed against you for injury. In the worst case you may be left looking at having to find many thousands of pounds in compensation.
SLI insurance along with CDW excess insurance may help you out of what otherwise may be a deep financial hole if the worst case scenario occurred when driving the rental vehicle on holiday.