car hire

Car Hire Insurance Jargon Explained

When hiring a car, it can be easy to get confused by all the specialised language and abbreviations, which can become frustrating. In order to help you understand what the main terminology means, we got the help of Car Finance Specialist Tony from Smile Car Finance to breakdown the meaning of all the confusing jargon you’ll encounter when financing a car.

CDW – Otherwise known as Collision Damage Waiver. The majority of drivers assume that this type of insurance covers everything, but be careful! CDW excludes damage to windows, tyres, undercarriage and the roof.

LDW – Commonly known as Loss Damage Waiver, this is essentially the same as Collision Damage Waiver but excludes theft protection, thus meaning that if your vehicle was stolen, this type of insurance would not cover it and you could be charged.

SCDW – This is Super Collision Damage Waiver and provides you with excess cover to remove or reduce your liability for any damages the vehicle incurs.

TP – The most well-known and familiar type of insurance – Theft Protection. As the name suggests, this type of insurance covers you if you become the victim of car theft, although depending on the circumstances, an excess cost may apply.

PAI – Personal Accident Insurance will cover you for any injury that you or your passengers encounter in the car, although, this may be included with your travel insurance.

ALI – This is an optional type of insurance that protects authorised drivers if they cause harm to someone or their property and is otherwise known as Additional Liability Insurance.

PEP OR PEC – Personal Effects Protection insures the personal belongings of the renter and the passengers who are travelling with the renter.

SLI OR EP – Extended Protection covers the renter’s liability to third parties that are involved in a car accident in the rental car to the specified maximum value of each occurrence.

CWP – Cancellation Waiver Protection means that, should you choose to cancel your booking prior to the collection date, you will not be charged.

IDP – Otherwise known as International Driving Protection, this means that you are able to drive a private motor vehicle abroad, so long as you hold a valid UK driving licence.

LI – This allows protection against any claims that are made by a third party to suggest that they were injured while you were driving the rental car.


Before hiring a car, make sure that you become familiar with these abbreviations so that you don’t end up signing up for unnecessary insurance or miss out on important cover.