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When you hire a car, you need to take out insurance to cover you against any accidents or incidents that may occur during your rental agreement period. First find out if you are covered for using a hired 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 type of car hired (if so, you don't need to contract another insurance with the car rental company). Please note that your travel insurance won't include cover for you when you're hiring a car.
Each car rental company has different insurance policies that will vary according to your destination, but are mainly the following:
CDW (Collision Damage Waiver) or LDW (Loss Damage Waiver) : these policies offer different levels of protection against damage, theft and losses to your car, but some parts of a car may not be covered. All rental cars must have some level of CDW/LDW cover. In some countries, basic CDW/LDW cover is included in your car rental agreement, while in others (e.g. the USA and Canada) it has to be purchased separately.
LIS (Liability Insurance Supplement): gives you extra cover for any accidents and incidents that may occur.
PEC (Personal Effects Coverage): covers belongings left in the hired car. Don't keep personal effects in the car, but if you have to, they should be stored out of sight in the boot.
PAI (Personal Accident Insurance): this will pay out in the event of injury or death.
ALI (Additional Liability Insurance): This provides additional protection.
Super CDW and Super TP: these insurances completely waive or reduce the excess in case of damage to the rental car or theft of it.
Damage control or check-in: it's the check done to the vehicle once it's returned.