By-Car Hire Guides: Hire Car Insurance

When you hire a car, you'll need to take out insurance to cover you against any accidents or incidents that may occur during your rental agreement period. If you don't take out insurance, you may find yourself with a very large and unwanted bill if anything should happen. If you aren't sure which level of cover will best suit your needs, ask one of the car hire company's representatives. Remember that the hire car is your responsibility whilst you have it, so it's better to have too much cover than not enough.

Check to see if you are covered for using a hire car on any other insurance policy or agreement that you may have, such as your personal car insurance, home insurance, auto breakdown service membership or credit card. If you are, check that the cover is sufficient and that it includes your destination and choice of hire car. If you are covered already, you won't need to pay out again for the same cover from the hire car company, but remember that your travel insurance won't include cover for you when you're hiring a car.

Each car hire company has different insurance policies (and these will also vary according to your destination), so it's a good idea to look into these in advance so that you know exactly how much cover to take up when asked.

Insurance can be a bit confusing, so here is a guide to the types that are available through most car hire companies:

• LDW stands for Loss Damage Waiver. This provides cover for damage to or theft of the hire car (this cover may be provided by your credit card too). LDW is the same as CDW and PDW, which stand for Collision Damage Waiver and Physical Damage Waiver.
• PAI stands for Personal Accident Insurance. This will pay out in the event of injury or death.
• TPI stands for Third Party Insurance. This will cover you against claims made by other people involved in an accident, such as drivers, passengers or others.
• ALI stands for Additional Liability Insurance. This provides additional protection.
• LIS stands for Liability Insurance Supplement (also known as SLI, or Supplemental Liability Insurance). This will also give you extra cover for any accidents and incidents that may occur.
• PEC stands for Personal Effects Coverage. This covers belongings left in the hire car. It's wise not to keep personal effects in the car in the first place, and if you do they should be stored out of sight in the boot.

Check to see what the excess will be on any claims you make. You may wish to take out excess insurance to cover this when you hire a car, so that you won't have to pay a penny if you need to make a claim.

If you take a lot of car hire trips, consider taking out an annual insurance policy if it is available. Then you won't have to worry about it each time you go away.

Be aware that all hire car insurance policies will have some exclusions (things that aren't covered). Always ask what these are in advance.