What is Third Party insurance in car rental?

Have you ever heard of Third-Party insurance? Check out how it works and what it covers when you rent a car.

Let’s say you’re ready to rent a car, and in the middle of the booking process you read the words “Third-Party insurance”. But what exactly does it cover, and is it worth adding on?

To answer this question and understand how Third-Party Liability insurance works for car rentals, let’s break down what it means in general.

Third-Party insurance acts as a safety net if you accidentally harm someone else’s property. In other words, it protects the third-party. For instance, imagine you’re renovating your kitchen and accidentally drop a brick that damages your neighbor’s car. Third-Party Liability insurance would come in handy in this situation.

What does Third-Party insurance mean for a rental car?

When it comes to car rentals, Third-Party insurances cover damage caused to anyone or anything apart from you and the rental car itself. In the event of an accident, for example, it can cover damage done to the other car involved, the passengers inside it, or to other people’s property.

Also, you should know there are many different names for the Third-Party insurance, such as:

• EP – Extended Protection
• LP – Liability Protection
• SLI – Supplemental Liability Insurance
• TPL – Third-Party Liability
• ALI – Additional Liability Insurance
  

Different rental companies in different parts of the world may refer to it in a particular way and maybe have slightly different coverages, but they all protect the third-party involved in the incident.

Read more about the different types of car rental insurances.

What does the Third-Party Liability cover?

Here’s a list of things the Third-Party Insurance can cover:

• The cost of repairing any damage done to third-party property (e.g.: a fence);
• The cost of repairing any damage done to the other car involved in the accident;
• The cost of third-party injuries (e.g.: medical bills and costs in general);
• The cost of legal fees.
  

Be advised that, as previously mentioned, the nomenclature for these insurances may differ. Additionally, the degree to which third-parties are covered can also vary.

What doesn’t the Third Party Liability cover?

• Damage done to the rental car;
• Damage or loss in valuables inside the rental car;
• Injuries to the renter or renter’s passengers;
• Car theft.
  

Basically, this insurance won’t cover anything related to the rental car itself. There are different insurances for that, such as Collision Damage Waiver (CDW), Loss Damage Waiver (LDW) and Collision Damage Insurance (CDI), which can be bought separately.

Should I get Third-Party insurance?

As with any insurance, we never expect to use it until we have to. When it comes to car rentals, there’s really no way of knowing if you’ll need additional coverage. Unexpected situations like sudden weather changes or traffic jams can increase the risk of an accident.

As a general rule, we recommend considering insurance for rental cars , whether you’re driving around your own city, country or abroad. It provides peace of mind while you’re behind the wheel.

However,  you should first check the coverage of your existing insurances, such as the one provided by your credit card. Sometimes your regular car insurance may cover third-party damage for rental cars as well, making extra insurance from the rental company unnecessary.

Also be aware that, in most countries, Third-Party  Liability coverage is required by law. However, in the US, the minimum coverage can be quite low. This means that if you cause more damage than it covers, you’ll be responsible for the remaining costs. That’s why some rental companies offer supplemental liability insurance with higher coverage limits.

Do I need extra insurance when renting a car, besides the TPL?

Besides the Third-Party Liability, extra insurance is not mandatory when renting a car. The TPL is usually the minimum required by law and is often included in the base rental rate.

However, it is strongly recommended to consider additional insurance for several reasons:

• Limited Coverage: TPL only covers damages and injuries to others, not the rental car itself or yourself and your passengers.
• Financial Responsibility: Accidents can be expensive. If you cause damage exceeding the TPL limit, you’ll be responsible for the remaining costs.
• Peace of Mind: Extra insurance provides a safety net in case of unexpected events, giving you peace of mind while driving.
  

Ultimately, the decision depends on your individual circumstances and risk tolerance.

What is the best Third-Party insurance for rental cars?

Here are some rental companies and the amount covered by their supplemental liability insurance:

• Alamo’s Extended Protection (EP): $1 million 
• Enterprise’s Supplemental Liability Protection (SLP): $1 million 
• National’s Supplemental Liability Insurance (SLI): $1 million
  

Third-Party Liability insurance is a crucial aspect of car rental agreements, providing protection and peace of mind for both rental companies and renters in the event of accidents involving third-parties. Understanding the coverage and options available is essential for making informed decisions when renting a vehicle.

Still have any doubts about the TPL insurance for rental cars? Leave a comment below!