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31 August 2026 · SunnVio

Rental Car Insurance: Which Coverage Do You Actually Need?

When renting a car, you're often offered a range of insurance options at the counter, and it's not always clear what you already have and what you actually need. This article breaks down the key coverages so you can make an informed choice without paying twice.

What's included by default in the rental price?

Almost every rental car comes with basic insurance included, usually consisting of third-party liability insurance (TP) and collision damage insurance with a deductible (CDW, Collision Damage Waiver). This basic coverage protects you against the main risks, but often leaves a significant deductible that you'll have to pay yourself in case of damage. Always check the exact terms when booking, as this varies by rental company and by country.

CDW and the role of the deductible

CDW covers damage to the rental car itself, but almost always with a deductible that can run up to a few hundred or even a thousand euros. This amount is often pre-authorized and blocked on your credit card when you pick up the car. If you want to reduce this risk, you can purchase additional insurance from the rental company that lowers the deductible or reduces it to zero, or you can opt for a separate policy through a specialized insurer.

TP: liability for damage to third parties

Third-party (TP) insurance covers damage you cause to other vehicles, people, or property with the rental car. This is a legally required coverage and is included as standard with virtually every rental car. Pay attention to the maximum insured amount: in some countries this is lower than you might expect, making additional liability coverage a wise choice, especially when renting outside the EU.

Theft insurance (TP or TW)

In addition to collision damage, a car can also be stolen or damaged in an attempted break-in. Theft insurance (sometimes called TW or Theft Waiver) covers this risk, but here too a deductible usually applies. In areas with a higher risk of car theft, or if you leave the car unattended somewhere, it's wise to check whether this coverage is included or needs to be arranged separately.

Passenger insurance and personal accident coverage

Many rental companies also offer passenger insurance, which covers medical costs and death benefits for the driver and passengers in the event of an accident. If you already have travel insurance that covers accidents abroad, this extra policy is often unnecessary. So check in advance what your travel or health insurance already covers before adding this at the counter.

Separate insurance through a third-party provider

An alternative to the insurance offered by the rental company itself is a standalone deductible insurance policy that you arrange online in advance through a specialized provider. These policies are often cheaper than the options offered at the counter and reimburse the deductible you paid after damage occurs. It is important to read the terms carefully, as not every type of damage or every country is automatically covered.

How to choose the right combination

The best choice depends on your destination, the type of car, and your own risk tolerance. When booking, always compare what's included by default, what the deductible is, and whether additional insurance through the rental company or a third party works out cheaper. By figuring this out in advance, you avoid unpleasant surprises at the counter and know exactly where you stand during your vacation.