Protect Your Excess

Insurance requirements for car rentals in Europe vary from country to country, so when you’re looking to take out European car rental insurance you need to make sure that you let your insurer know of all the countries you intend to visit. Italy in particular has more stringent and expensive requirements than many other parts of Europe.

Many people arrange their car hire as part of their holiday package and will accept the insurance offered by the car hire company without giving it too much thought. Indeed many car rental companies now offer deals that include a certain level of Collision Damage Waiver or CDW cover.

What some people do not realise though is that this can be a very expensive way of insuring your rental car. It may also leave the renter liable for significant costs in the event of a claim. This is because European car rental insurance sold through the car rental companies or provided as an all-in deal may carry significant exclusions and excesses.

There are two main components of insurance for rental cars. The first, CDW, covers damage to the rental car itself. Insurance of this type frequently carries what is called ‘excess’, that is the part of any damage costs that must be paid by the renter of the vehicle. In addition, damage to some items, typically the windows, windscreen; tyres, undercarriage and roof may also be excluded from the policy.

The second category, Third Party, covers damage to someone else or to their property or vehicle. This can also carry excess and while by law in the UK, Third Party cover is unlimited; this is not the case in other parts or Europe. What this means is that there may be a shortfall in cover if the amount of liability assessed by the courts is higher than that provided by the insurance policy. This shortfall would then have to be paid by the renter of the vehicle.

While it is possible to purchase additional insurance from the car rental company to increase levels of cover and reduce excesses this can often be very expensive.

An alternative approach is to buy European car rental insurance from one of the specialist independent insurance companies easily located on the Internet or on the High Street.
The cover provided by these companies will generally include those all important easily damaged areas, cover all of the excess and provide generous Supplemental Liability Insurance to top up third party cover.

If your car rental company has provided basic insurance as part of an all-in deal, you may not be able to take advantage of all of the possible cost savings available from an independent insurer. However you are under no obligation to buy the car rental company’s top-up insurance and it is perfectly acceptable to decline this element and purchase it elsewhere.

European car rental insurance cover from an independent specialist can be bought on a daily basis for the duration of the specific car rental or can be bought on an annual basis and used for any number of car rentals within the duration of the policy.

Daily car hire excess insurance is a policy that provides cover for any excess charges. The premiums for this type of cover are calculated as an amount per day for the duration of the rental.

When you hire a car, the daily rate quoted for the rental may already include Collision Damage Waiver cover. CDW is the form of cover that protects against damage to or loss of the hire car. If CDW is not included in the rental price then the car hire company will offer it to you at a daily rate for the duration of the rental.

Most car hire insurance policies may carry significant excesses. The excess is the amount of any damage costs that have to be paid by the renter of the vehicle before any claim can be made on the insurance policy.

Excess charges can be high, typically ranging from 500 -1500 pounds. So if your hire car has suffered damage of say 600 pounds and the excess is 500 then you would have to pay all of the excess and the CDW cover would take care of the final 100. If the damage cost 400 then you would pay 400 and the CDW cover would provide nothing.

With a daily car hire excess insurance policy you can significantly reduce or remove excess charges completely.

Your car hire company may offer to sell you this type of insurance and they will normally quote you a price that would be the daily rate for this insurance. Cover of this nature provided by rental companies does tend to be very expensive.

Even with daily car hire excess insurance bought from the car hire company you will still be liable for damage to those items, windscreen, windows, tyres etc. normally excluded from the main CDW policy.

There is an alternative to the insurance cover offered by the car rental companies that can provide better levels of cover in addition to being much less expensive. There are a number of independent insurance companies who specialise in insurance for the car rental market. Many of these companies can be found on the Internet and their policies can be bought directly online.

They can offer the full range of car rental insurance and can even supply these as annual policies that you could use again and again in the course of the year. Their policies will generally include those easily damaged areas excluded by other insurers. They can also provide cover specifically tailored to the varied insurance requirements in the USA, Europe and the rest of the world.

Even if your rental includes basic CDW cover you can still buy daily car hire excess and other top-up insurance independently and you may be surprised at just how much cheaper it can be.

In the event of any damage, the car rental company would either claim directly to your independent insurers or they would make a charge to your credit card and you would then simply have to claim on your daily car hire excess insurance policy for reimbursement.

The car hire company, as part and parcel of the whole car rental agreement, has traditionally provided daily car hire insurance. The use of ‘daily’ here merely indicates that the insurance is charged at a daily rate for each day of the rental.

There are two main categories of daily car hire insurance although the number of terms used to describe it may make it seem that there are a lot more.

The first, known as Third Party covers injury to someone else or damage to their property or vehicle. By law in the UK, this cover is unlimited and is mandatory. This means that not only will the basic rental cost for the vehicle include this as standard but also that in the event of a claim for damages as a result of an accident; there will be no limit on the amount that the policy will fund. There could still be excess on the cover but there will be no upper limit. Elsewhere in the world, Third Party cover is likely to be limited and in some countries like the USA may be optional. This would mean that if there was a claim for damages greater then the amount (or limit) you insured for then you would be personally responsible for the shortfall. You can purchase a top-up insurance known as Supplemental Liability Insurance (SLI) to increase your third party cover.

The second category of insurance is known as Collision Damage Waiver (CDW) or sometimes Loss Damage Waiver. This provides cover for damage to, or loss of the hire car itself.

Car rental companies will either quote a rate for the car and a separate rate for their car insurance or they may quote an ‘all in’ price that includes a limited level of CDW cover.

The daily car hire insurance provided by car rental companies will almost certainly still leave you liable for the whole cost of damage to those easily damaged areas of a car typically excluded from the main CDW cover, (windscreen, tyres, windows, undercarriage and roof) and for excess charges.

The excess on this type of policy may be anywhere between 500 and 1500 pounds which means that in the event of damage to the car, for example, you have to pay the cost of the damage or the total excess amount which ever was the lesser. The insurance will only contribute to damage costs that are greater than the value of the excess.

It is possible to buy top up insurance, commonly known as Super CDW, to reduce excess charges or remove them completely.

Top-up insurance bought from the car hire company can be expensive and you may find that there are still items excluded from the cover. However it is possible to find this and other types of hire insurance from independent insurance companies.

Daily car hire insurance bought from these specialists can cost you a lot less than the same level of cover bought from the car rental company. It can even cover you for damage to the items normally excluded by other insurers.

You may find it worthwhile to shop around a little for daily car hire insurance rather than automatically taking that offered by the car hire company. The potential savings may pleasantly surprise you.

If you rent cars regularly, then annual car hire excess insurance may be something worth considering as a way of saving what could be considerable amounts of money.

When renting cars, many people find that the car rental company’s insurance has within it something described as ‘excess’. This is usually stated as a financial amount – typically between 500 - 1500 pounds or the equivalent in local currency.

This means that if you were unlucky enough to suffer an accident that subsequently involves an insurance claim, the car rental company and their insurance company would expect you to pay the excess as the ‘first part’ of any claim settlement. In number terms, if the excess is stated to be 1000 pounds and an accident results in damage to the tune of 1500 pounds, then the car rental company will charge the 1000 pounds excess to your credit card. If the damage is valued at 750 pounds, the charge to your credit card will be for the full amount of 750 pounds.

Many renters find this level of financial exposure to be disconcerting and look to cover this with additional insurance. It is usually possible to purchase additional ‘top-up’ insurance from the car rental company but this may prove very expensive compared to similar products sold by direct insurance companies – usually online.

The direct insurance companies and brokers offer annual car hire excess insurance policies that are geared up to helping renters save money in these areas – particularly those who are renting cars regularly. Their policies can be purchased on an annual or daily basis and will provide cover for the excess that exists on many car rental insurance products. If a claim arises, the policyholder may still have to pay the excess to the car rental company but can then claim this back from their own insurance policy.

Annual car hire excess insurance may also provide additional cover. For example, many car rental policies will cover the renter for damage caused to the rental vehicle but exclude from this commonly damaged areas such as the wheels, roof, tyres and windows. Many annual car hire excess insurance policies will include cover for these items and reimburse you if you have to pay for damage to them.

It is also the case that the third party liability insurance that comes in the basic rental car insurance is often limited in terms of the maximum amount covered. The coverage may not be sufficient considering the very large awards that can be handed out by the courts. Many of the direct insurers will offer products and policies that can significantly increase the cover, and peace of mind, in this important area.

One of the major advantages of annual car hire excess insurance is that it is sold to you the policyholder for a specified period. As such, while the policy is in force and providing the basic conditions are met, it will cover all vehicles rented by the policyholder, with the exception of specialised vehicles such as sports cars or those that are of exceptionally high value – usually over 100,000 pounds. This could be both very convenient and economical and it may be worth investigating further.

It is not unusual to hear comments from people who rent cars to the effect that although the basic car rental price is reasonable, they are sometimes shocked at the cost of the car hire company’s insurance. There is a way these costs can be reduced – through something called annual car hire insurance.

The role of annual car hire insurance and the amounts it could save you will vary depending upon your circumstances, the car rental company you may use, and what country or countries you plan to hire vehicles in.

To explain why, it is necessary to think about the basics of car rental insurance.

In some cases the rental company may include some basic insurance in the rental price but in others they will not and the renter may need to purchase it from the company as an optional extra. The nature of the cover provided by the rental company’s insurance would depend partly on the rental company’s commercial position and partly on the laws of the country they are operating in.

Whichever is the case, you may find that this basic insurance does not offer you the full protection you require for several reasons.

It is not unusual to find that the third party insurance that comes as standard will have a maximum level of payout specified that may be too low for comfort given the risks of large court awards following an accident. The insurance may also include something called CDW (Collision Damage Waiver) that covers damage to the rental car but this frequently excludes damage caused to areas such as the wheels, tyres, undercarriage, roof and windows – all very expensive to repair or replace if damaged.

Finally, the rental company’s insurance will almost certainly carry excess. That is a financial amount that you as the renter will be expected to pay as a contribution towards any accident costs. The amount here will vary but typically it will be in the range 500 to 1500 pounds.

As a result of these exclusions and limitations, the sums payable by you following an accident could be significant. It is possible to purchase additional or ‘top-up’ insurance from the car rental company. This could have the effect of reducing the excess, increasing the amount of liability cover and possibly covering those areas of the vehicle normally excluded from CDW. Unfortunately though this insurance when purchased from the rental company will be expensive and considerably more than similar insurance purchased in the open insurance marketplace.

The alternative is to purchase annual car hire insurance online from a general insurance company or broker. This insurance can be purchased on an annual basis or in fact daily, and it covers the above risks. It can provide supplemental liability insurance (SLI) that will protect you against third party awards. Similarly, following an accident if you are forced to pay the excess to the rental company then you will be able to get this reimbursed to you by your insurance policy. These policies also will typically cover those areas of the rented car that are excluded from cover by the car rental company.

One of the major advantages of annual car hire insurance purchased from a direct insurance company is that during the lifetime of the policy, it insures the policyholder for all cars rented. This gives additional flexibility and the opportunity for cost savings. This would exclude the rental of exotic cars such as sports models or those of very high value – usually in excess of 100,000 pounds. As an option for saving money, it is well worth exploring.

It is a common misconception that all insurance for car hire is included in the basic rental price paid to the rental company. Sadly this is not the case and following an accident you could experience some unpleasant financial surprises unless you check carefully what insurance is in place and how far it covers you.

In many countries, particularly the UK and Europe, rented cars usually come with various forms of insurance cover included in the price. This is often a basic insurance and it may or may not be adequate for your particular needs. In other countries, with the USA being a good example, little if any insurance may be included in the basic price and it is all offered for sale by the rental company as an optional item.

Whatever the normal practice and policy of the car rental company you are using, and the country you plan to rent in, it is likely that the basic insurance supplied or sold by the rental company will have limitations that you may wish to think about.

Firstly, it may have third-party liability insurance that offers you cover against claims from other people whose person or property you have damaged. Unfortunately in many countries this insurance is very limited and may be restricted to a maximum payout level that could be wholly inadequate given the sometimes very high sums that a court may award the inured third party.

Secondly the insurance for car hire often called CDW (Collision Damage Waiver) is intended to provide you with cover against damage caused to the rented car itself. Commonly though, the basic car rental company’s CDW will exclude damage to areas such as the car’s wheels, tyres, undercarriage, windows and roof. If these are not covered, then you will have to pay for any damage to them.

Finally, the basic insurance for car hire provided by a car rental company will almost certainly carry excess of between 500 and 1500 pounds. The excess is a financial amount that the car rental company will expect you to pay as a contribution following an accident. If there is stated excess of 500 pounds and the vehicle is damaged to 1000 pounds in value, then you will have to pay 500 pounds of that. If the damage totals 350 pounds then you will have to pay the whole amount.

If you are unhappy with the insurance limitations and exclusions in your rental agreement, you essentially two options, excluding of course ‘do nothing’!

You can purchase additional insurance to cover these areas from the car hire company. They may offer these to you but you should be aware that these policies are usually very expensive compared to similar policies purchased elsewhere.

Alternatively you can purchase various forms of insurance for car hire from direct insurance companies online. These policies will cover you against the risks outlined above. They can be used to increase the amount of liability cover available to you (this is often called Supplemental Liability Insurance or SLI). They can also cover your excess risks and will reimburse you for any excess payments that you have to make to the rental company following an accident.

These types of insurance for car hire policies are not only cost-effective but also very flexible. That is because they are sold as a policy to you the policyholder. As you can purchase them on a daily or annual basis, they will cover all vehicles rented by you during that period although there will be some exclusions that cover very valuable (over 100,000 pounds) cars and specialist models such as sports cars. All in all, it may be advisable to check this option out.

When renting a car, most people wish to be sure adequate insurance is in place. SLI stands for Supplemental Liability Insurance. It is one component of the insurance available for rental cars and it exists to increase the insurance cover available to deal with third party claims.

To understand why SLI may be useful, it is necessary to consider the three main categories of car rental insurance cover as they are usually described.

These are usually described in relation to the risks they protect the renter against. Third party liability insurance is there to cover claims arising from a third party who the car renter has injured in an accident or who has had their property damaged by the rented vehicle. Theft, as the name implies, insures the rented vehicle against being stolen. CDW (Collision Damage Waiver) provides insurance against damage caused to the rented car.

All these elements of rental car insurance are important. In some countries a basic form of all these insurances may be included in the basic rental car price or in others (notably the USA) they may not be and the car rental company will endeavour to sell them to the renter separately as optional extras. Whether they were included in the rental price or purchased separately from the rental company, there is a strong possibility that they will offer only limited cover.

In the case of the basic third-party liability insurance that is taken from car rental companies, this will often be capped at a maximum payout level (although this does not apply in the UK where this insurance must be unlimited by law). If the third party liability insurance is capped at an unrealistically low level, this may constitute a massive financial risk for the renter.

That’s because if a third party is badly injured in an accident, a court may make very large damage awards against the renter. To put this into clear context – if the liability insurance of the basic car rental company’s policy is capped at 100,000 US dollars but a court awards sums significantly higher than this in damages, then the renter will be left needing to find the difference.

The position with regard to the financial risks for the renter here are complex and will vary depending upon what hire company is being used and what country the rental is taking place in. Even so, it is clear that the costs here could potentially be ruinous if the insurance limits are set too low.

This is where SLI operates. SLI is a form of insurance that can be taken out to increase the maximum amounts payable under third party liability cover in the sad event of an accident. It can be purchased from the car rental company as an additional option but this can prove to be very expensive when compared to other routes.

There are direct insurance companies that also offer SLI, usually also over the Internet. These companies will provide an SLI policy that will increase the cover available often up to a maximum level of 1 million US dollars. As they are sold on a daily or annual basis, they will also cover the renter for all vehicles rented during the period, with the exception of some categories of car such as sports or those that have a very high value such as prestige marques of over 100,000 pounds in value.

Investigating the SLI policies sold by the direct insurers may give the renter confidence and peace of mind at an affordable price.

There can be large differences in insurance practice between car hire companies and between countries. One area where this may be particularly true is Collision Damage Waiver Insurance or as it is sometimes known, CDW Insurance.

In some countries such as the UK as well as many in Europe, the rented car will have some forms of insurance included in the price. Third party liability covers the driver against injury or damage they cause to other people and their property. As the name suggests, theft insurance protects against criminal removal of the rented vehicle.

Collision damage waiver insurance insures the renter of the vehicle against the costs of repairs to the rented car should it suffer damage in an accident.

In some countries such as the USA, these insurance policies may not be included in the basic rental cost and the renter needs to make their own provisions for insurance. In these cases the car rental company will usually offer their insurance policies to cover the above circumstances.

The insurance sold by car rental companies is usually expensive by the standards of the general insurance market and also may have some fairly significant limitations. In the UK, third party car hire insurance is unlimited in terms of financial cover. In many other countries third party liability cover will be limited to a financial amount that may be totally inadequate given the risks of large court awards following an accident.

The collision damage waiver insurance sold by the rental company may also have shortcomings that may concern some renters. Typically it will not cover the entire rented vehicle, as it will probably exclude the wheels, tyres, roof, windows and undercarriage. These can be expensive to repair if damaged.

Additionally, the policy most probably will carry excess. This is a term used to describe an amount of money that that the car rental company will expect the renter to contribute towards the costs of an accident even if insurance is in place. The excess range is usually between 500 and 1500 pounds.

As a result of these limitations, many renters purchase additional insurance to reduce or eliminate the excess, increase the amount of liability insurance available and to improve the cover of the collision damage waiver insurance to include areas of the vehicle otherwise excluded.

There are usually two options for doing so. The first is to purchase additional ‘top-up’ insurance from the car rental company. This is possible but it may also prove to be a very expensive option as this insurance is also available at a much lower cost from the general insurance companies or brokers.

These companies offer collision damage waiver insurance online, where it can be taken out on a daily or annual basis. It is not only cheaper but also more flexible. That is because it is sold to the policyholder for a period of time and during that period, it will cover any vehicle rented not just a single rental agreement (not including certain specialist vehicles such as sports or expensive vehicles over 100,000 pounds in value).

The collision damage waiver insurance purchased directly from an insurance company will reimburse the renter for any excess they are forced to pay the rental company and it will usually cover the costs of damage to excluded areas of the vehicle. It may be worthwhile considering it further.

Collision Damage Waiver Insurance (usually shortened to CDW Insurance) protects you when hiring a car against the financial costs of damage to the rented vehicle.

It usually forms part of a trio of insurances that most renters wish to know is in place.

The first offers third party liability insurance where a third party says you have damaged them or their property with the rented vehicle. The second covers the vehicle against loss through theft. The third is CDW insurance and that protects you against the costs of damage to the rented vehicle.

Although the principles of CDW insurance are simple, there are some complexities that you may wish to consider when hiring a car.

In many countries the basic rental price will include some form of third party insurance and theft insurance. It may also include a basic form of CDW insurance. Unfortunately the position is not standardised by country or rental company, so what insurance is or is not included ‘in the rental price’ can vary. In most European countries the above will be the case whereas in the USA the basic rental price may include no insurance at all. In the final analysis, you will need to carefully check with the rental company to see what insurance is included in the basic deal.

If CDW insurance is not included in the rental price, the rental company will very probably try hard to sell it to you as an optional extra. Whether the rental company’s CDW insurance is included in the base price or purchased separately, it would be sensible for you to check the level of cover provided and any exclusions.

Two things usually to examine carefully are the excess and damage area exclusions.

The excess is stated as a financial amount that you will need to contribute towards the cost of any repairs etc following an accident. The excess is usually between 500 and 1500 pounds and it is the amount that the rental company could charge to your credit card following an accident.

The exclusions usually relate to parts of the rented car that the rental company’s basic CDW will not cover and these typically include roofs, wheels, tyres, undercarriage areas and windows. If these areas are damaged in an accident, the repair costs will be charged to your credit card.

If the excess and exclusions make you feel uneasy and financially exposed, you do have two ways of dealing with them. The first option is to buy ‘top-up’ insurance that the rental company will probably offer you. This can reduce the excess payable on the basic policy and it may also cover those areas of the vehicle normally excluded. The downside here is that this additional insurance typically is expensive if purchased from the rental company and it will certainly be considerably more expensive that the same cover purchased from the general insurance marketplace.

The alternative is to purchase online CDW Insurance from a direct insurer or broker. The policies offered by these companies will reimburse you for any excess payments you need to make to the car rental company and they will usually also include cover for those areas of the rented car that the rental company may exclude.

CDW Insurance purchased from these sources is typically significantly cheaper than that offered by the rental companies. It is sold on a daily or annual basis and will cover you for any vehicles rented during the life of the policy providing these are not highly specialised (e.g. sports vehicles) or very high value cars (usually 100,000 pounds and above).

CDW stands for ‘Collision Damage Waiver’ and it is a form of car rental insurance.

When renting a car, in many countries the rental price will include some forms of insurance. In others, with the USA being the best example, the vehicle may come with little or no insurance included in the basic rental price and the car hire company will offer it as an optional extra.

Car rental insurance is similar to private motoring insurance in that most people will want to know that the vehicle is covered against the three classic forms of risk – theft, third party liability and damage to the rented vehicle itself. Third party liability covers the potential costs arising from an accident that injured another person or their property and theft insurance covers the illegal taking of the vehicle.

Damage to the rented vehicle itself is covered by the insurance known as CDW. It is important for any renter to understand that if the vehicle is not covered by CDW, third party liability or theft then they are legally and financially responsible for all costs in these categories.

It is because of these financial risks that most people will look to purchase insurance that protects them. If it is not already included in the rental price, a basic form of CDW can be purchased from the car rental company. In reality, this basic CDW insurance will contain certain limitations.

It is likely that the basic CDW obtained from a car rental company will exclude several areas of the rented vehicle from its cover. Typically this would include wheels, tyres, general undercarriage, roofs and windows. It is very easy to damage these parts of a car even in a minor accident and the repair costs can be high.

Basic CDW will also usually carry excess. The excess is a financial amount that the rental company’s insurance will insist that the renter pays as the ‘first part’ of any claim. The excess is usually outlined clearly in the insurance documents and the amounts can be high – typically between 500 and 1500 pounds. It works simply – if there is 600 pounds excess and there is damage to the vehicle that costs 1000 pounds, then renter will have 600 pounds extra charged to their credit card. If the damage costs 350 pounds then the renter will need to pay it all.

Purchasing additional ‘top-up’ insurance from the rental company can reduce the excess on a basic CDW policy. Although this may also offer cover for excluded parts of the vehicle, in general such ‘top-up’ insurance is considerably more expensive than similar cover purchased directly online from a specialist insurance company or broker.

These companies sell daily or annual CDW cover policies. They are usually very significantly cheaper than those offered by the rental companies. The policies work by reimbursing the policyholder for any extra amounts they may have had to pay to the rental company for excess or damage to excluded areas of the rented vehicle.

As the direct insurance companies sell their policies to a policyholder rather than a single hire car arrangement, they will cover all vehicles rented during the period although some specialist vehicle categories such as sports cars or high value vehicles over 100,000 pounds in value may be excluded. They offer various CDW products that are tailored to the renter’s needs by country or region. The flexibility and cost savings could be large and it is worth considering further for those that are looking to save money and reduce risks.