Money Expert > Car Insurance > Do You Need Insurance for Rental Cars?
Compare car insurance policies with Money Expert now and see how much you can save.
Last updated: 06/03/2025 | Estimated Reading Time: 4 minutes
When you're renting a car, at home or abroad, there’s often a lot of paperwork to handle, along with hidden fees buried in the small print that you’ll want to avoid. Amid all this, it’s easy to overlook insurance. What cover do you need to take out on a rental? And what comes included? We'll go over everything you need to know in this guide.
When renting a car, all rental companies should provide third-party cover as standard. However, many vehicles also come with a CDW or LDW for extra protection, while breakdown cover typically needs to be purchased separately as an add-on.
Here is some more information on the types of insurance typically included with a rental car:
Third party cover, also known as supplemental liability insurance (SLI), will cover the cost of repairing any damage to another driver’s car should you be in an accident as well as compensation for injuries they may sustain.
In the UK and many other European countries, third party cover is nearly always paid for by the rental company. However, if you’re traveling in the U.S. or Canada, third-party cover may not always be included. Always check your agreement carefully before assuming you’re protected.
Usually, car rental agreements also have a damage waiver - either collision (CDW) or loss (LDW) - included, and this functions similarly to standard car insurance in that you're covered for damage to the vehicle itself, not just other people’s property. The damage waiver is usually limited to certain types of damage, however (it might not cover damage to tyres, for example), and any claims will be subject to an excess fee.
Both CDW and LDW work in a very similar way, but the key difference is that CDW only covers you for collision-related damages, while LDW covers you for both these damages as well as loss of the rental vehicle (if it was stolen, for example).
Any cover you do get with your rental agreement will usually be subject to an ‘excess’. This means you must contribute towards the cost of repairs, regardless of who is at fault. This can be as high as £2,000, so it’s crucial to understand your liability before purchasing a policy.
Car hire excess insurance, sometimes simply called car hire insurance, will cover you for that excess, as well as for any additional types of damage to the vehicle that the basic policy doesn't. This can include things like damage to tyres or windscreen. Car hire excess insurance is in some ways closer to travel insurance than to car insurance, since you can buy it to cover the period during which you've got your rental, or as an annual policy, which is beneficial if you rent cars often.
As with most types of insurance, you don’t have to get it if you don’t want to. But with a car hire excess policy, you can pay a small fee to avoid paying a larger one. Often, with the basic insurance provided, you won’t be covered for things such as broken windscreens or tyres, which can easily be damaged.
Renting a car - and the insurance that comes with it - is like any other purchase: the more research you do, the better. There are a few key tips when it comes to renting that you should bear in mind:
Whether you need long-term car hire excess insurance or a one-time policy, start researching early to find the best coverage. Familiarise yourself with local regulations when traveling abroad, and carefully review your rental terms to understand your coverage.
