Renting Car While Traveling Abroad? Here’s What Your Personal Liability Insurance Covers In Case Of An Accident

Many Indians dream of a foreign road trip like that in the popular Bollywood film Zindagi Na Milegi Doobara - watching beautiful landscapes with your friends and going to your favourite places in a rented car. Planning such adventures will come with a fair share of thrills, and for many, renting a car offers the flexibility of exploring new places at their own pace. However, there is one critical thing travellers should consider: What happens if you are involved in an accident while driving a rented vehicle?

Having travel insurance is crucial in such cases, wherein a personal liability cover can save you from any unexpected financial burdens and legal troubles.

Let’s first understand what personal liability insurance is and why it is important.

When you rent a car overseas, personal liability insurance comes in handy as a safety net in case your vehicle causes injury or damage to a third party. Says Priya Deshmukh, Head of Health Product, Operations and Services at ICICI Lombard, “This coverage ensures that travellers are protected from any significant out-of-pocket expenses if an accident leads to third-party claims.”

Here are some key damages that personal liability insurance covers;

1) Accidental Death or Bodily Injury: In a situation where the accident involving your rented vehicles causes injury or even the unfortunate death of a third party, personal liability insurance would cover reasonable medical expenses incurred by the affected individuals.

2) Accidental Damage to Property: Sometimes, accidents don’t just involve people but could also lead to some property damage. If your rented vehicle accidentally damages another person’s property, this insurance will cover the cost of repairs or replacements up to the sum insured.

3) Any Damages To Your ‘Temporary Holiday Accommodation’: In a rare but possible situation, if your rental car causes any damage to your temporary accommodation, this insurance will take care of the repair costs. For example, your rented vehicle hits a wall or damages a parking structure during the trip.

4) Legal Defense Costs: Beyond covering direct damages, personal liability insurance also includes the cost of legal defence for any third-party claims that arise from the accident. However, this is subject to the insurance provider’s approval.

Other than personal liability cover, Indian travellers renting a vehicle abroad can also opt for some other converge options which can shield them from financial distress and risks associated with accidents or ‘thefts’;

1. Car Rental Cover: This coverage ensures that if the rented vehicle is stolen, damaged, or involved in a collision, the primary insurance amount the traveller is liable for under the rental agreement is covered.

2. Car Rental Cover for Deductibles: When renting a car, many agreements specify a deductible, which is the amount you must pay before the rental agency’s insurance kicks in. This cover reimburses the insured for that deductible in case of theft, damage, or collision. It also covers towing fees and roadside assistance costs if the vehicle becomes undrivable due to an accident.

Many car rental agencies also offer a Collision Damage Waiver (CDW) and Theft Protection as additional add-ons for security. While CDW limits your financial responsibility for damage to the rental vehicle, the Theft Protection typically covers costs related to stolen vehicles. The Theft cover is usually termed as loss of personal belongings. This is not a default cover in the majority of plans - it can be purchased as an add-on in certain policies. A police complaint must be filed and a copy of the complaint has to be submitted to opt for claims.

“This setup allows travellers to rent vehicles confidently, knowing they have coverage in place for potential mishaps without bearing high out-of-pocket expenses,” Deshmukh states.

Before you buy a travel plan with any of such added covers, make sure to check for any key exclusions in your policy to prevent unexpected surprises while making a claim.