Protect Your Excess

Collision Damage Waiver (sometimes abbreviated to CDW) is a form of insurance that applies to rental cars. It is often referred to in car rental company insurance documents and at times it can lead to confusion though in fact it is quite simple.

When you rent a car you will most likely have various forms of insurance included in the rental price, or purchased separately. As per normal private motoring insurance, these will cover your rental agreement and car usually for three types of mishap.

Third party liability insurance protects you against claims from third parties such as someone you have injured in an accident or someone whose property you have damaged. If renting in the UK the maximum payable under this cover is unlimited by law but in other countries the rental company may impose a financial cap on payouts. You may need to check to ensure that this level is realistic and sufficient for your needs given the high levels of damages that courts can award following an accident.

The vehicle should also be covered for theft.

Finally, the rental car should be insured against damage itself. It is this type of insurance that is called collision damage waiver.

Collision damage waiver insurance purchased ‘as standard’ from a rental company is very likely to contain a number of exclusions and limitations that you need to look out for. Firstly, it usually will exclude from cover damage to various parts of the rented car such as the roof, undercarriage, wheels, windows and tyres. These are all very easily damaged even in minor accidents and the repair costs can be high – particularly as you may have little or no say in when or through whom the vehicle is repaired.

Many basic car hire insurance policies will also have as part of their terms something that’s called the excess. The excess is a normal component of many forms of insurance and it relates to an amount of money that you will have to pay following an accident even if you have the car rental company’s insurance in place. Although it is not restricted to car insurance, the excess amount on many car rental companies’ insurance policies may be high – usually between 500 and 1500 pounds. The stated excess is an amount of money that you may have to pay as the ‘first part’ of any claim.

If you are not happy with the degree of cover offered by the car rental company’s basic collision damage waiver policy, you have two options. You can purchase additional insurance from the car renters. Often called ‘top-up’ insurance, this may reduce the excess payable on the policy and also cover those areas of the vehicle excluded from the basic cover.

Many renters find this additional insurance from the rental companies to be expensive and look to the direct insurance companies and brokers for a more affordable and better alternative.

These companies offer collision damage waiver excess policies online. They work on the basis of covering the gaps in the standard basic insurance available from the rental companies and are usually very significantly cheaper. If you have an accident and have to pay excess to the car rental company, you will be able to claim this back from your insurance policy.

The collision damage waiver excess and associated policies sold by the direct insurers can be purchased on a daily or annual basis. They will cover all vehicles rented by you during the life of the policy, providing you avoid specialised vehicles such as sports cars or those that are over 100,000 pounds in value. It may well be worth your time investigating this option, particularly if you rent cars on a regular basis.

It can be a nasty shock if you are unfortunate enough to have some form of accident when driving a rental car. Unfortunately you may get another one if you find that following the accident, the car rental company has charged you for the accident even though you purchased insurance from them. To avoid the risks of this happening, it may be worthwhile purchasing car rental excess insurance.

To explain why this is so, it is necessary to consider the nature of most car rental insurance provided by the car rental companies.

Essentially their insurance will cover you and the rented vehicle against claims from third parties, theft of the vehicle and damage to it. This sort of cover is usually called liability, theft and CDW (Collision Damage Waiver) insurance. It may come included in the rental price or you may purchase each component of it separately from the rental company.

This type of insurance purchased from the car hire company is usually ‘basic’ in that it typically comes with certain limitations and exclusions. You may find that the maximum amount payable under third party liability is capped at a maximum level that is far too low given possible court awards following an accident. It is also common to find that the rental company’s insurance will exclude certain areas of the vehicle from its cover. These are usually the wheels, tyres, roof, windows and undercarriage. These are all areas that are commonly damaged even in minor accidents and they can be expensive to put right. If they are excluded from cover, it is you as the renter who will have to pay.

Finally, the policy as a whole may carry what’s called excess. This is an amount that it stipulated as being the sum you will have to pay as the ‘first part’ of any claim. This sum is usually set between 500 – 1500 pounds. So if there is an accident that damages the vehicle to a total of 900 pounds and the policy has an excess of 600 pounds, it is you that will have to find the 600 pounds. This is where some renters find they receive an unpleasant surprise when examining their credit card bills after even a small accident with a rented vehicle.

Fortunately it is possible to protect yourself against high excess charges by purchasing additional insurance to cover these risks. The car rental company will usually offer you what they often call ‘top-up’ insurance that will allow the excess amount to be reduced and possibly the liability cover to be increased and other areas of the vehicle covered. This insurance though is usually considerably more expensive than similar products available from the general insurance market.

It is possible to purchase car rental excess insurance online from insurance companies and brokers. These policies will reimburse you for any excess payments you are forced to make to the car rental company following an accident. They can be taken out on a daily or annual basis and are often very considerably lower cost than similar insurance from the rental company.

Car rental excess insurance from the direct insurance companies also usually offer other benefits and cover types. Some policies may offer enhanced liability cover (sometimes called supplemental liability insurance or SLI) that will increase the maximum payable. They also typically will cover areas of the rented vehicle frequently excluded by the rental company.

As their car rental excess insurance policies are sold to you rather than a given rental agreement, they can be used for multiple vehicles hired during the lifetime of the policy. This can offer significant flexibility and cost advantages, although you may have to avoid renting sports cars, specialist vehicles or those that are over 100,000 pounds in value as they will be excluded from cover. This option may be worth checking in detail if you’d like better cover at reasonable prices.

When hiring a car for business or pleasure, it’s highly likely that you would like to be as free as possible from worries relating to it. Key to making that happen is having good, solid car rental insurance in place and knowing that it is providing you with the minimum level of cover you feel necessary.

In most countries of the world, your rental car is likely to come with some car rental insurance included in the basic price. In a few countries, most notably the USA, it is possible that the car will come with little or no insurance already included. In such locations, it will be necessary to purchase the insurance separately as an optional ‘add on’.

Whether the insurance is included in the price or has been purchased separately from the rental company, you may find it advisable to check that it covers you for the three main areas of risk. The first of these is for injury or damage caused by you to third parties – this is often called liability or third party liability insurance. The second is for loss of the rented vehicle, most typically caused through fire of theft. The third and final area is for damage to the rented vehicle itself – this is usually called CDW Insurance standing for ‘Collision Damage Waiver’.

You need to be clear that if you are driving a rental car without insurance in one of these categories or if the insurance is inadequate, then you as the renter have the legal liability and would need to pay all the costs following a theft or accident.

Even if the car rental company have provided or sold car rental insurance cover for all these areas, it is likely to be basic insurance and there may still be risks for you.

Much third party liability cover is financially capped at a certain level of maximum payout (although this cover must by law be unlimited in the UK). This level may prove totally inadequate given the large sums that can be awarded by courts following an accident.

The basic CDW provided by the rental company is also likely to exclude damage to certain areas of the vehicle, usually including the tyres, wheels, undercarriage, windows and sometimes roof. These are all areas easily and expensively damaged even in minor accidents.

Finally, the rental company’s car rental insurance is also likely to carry excess of between 500-1500 pounds sterling. The excess is that amount of any claim that you will be expected to contribute following an accident.

These gaps in cover can understandably generate unease in renters. If you wish to reduce or eliminate your risks here, you can purchase ‘top-up’ insurance from the car rental company that will, for example reduce the excess payable or possibly increase the amount of liability cover. Unfortunately these ‘top-ups’ are typically expensive to purchase from that source.

A cheaper option is usually to purchase additional car rental insurance online from a specialist insurance company or broker. These companies offer daily or annual policies that can increase the level of liability cover. They can also provide what’s called excess insurance that means if you do need to pay excess to the rental company following an accident, you will be able to claim this back from your insurance. As a bonus, many of these policies will also cover you for damage to those areas of the car that the rental company may exclude from their cover.

As car rental insurance purchased from an insurance company is sold to you the policyholder rather than a specific rental car, it will cover all vehicles rented by you during the life of the policy – with some specialist exceptions such as performance sports vehicles or those with a value greater than 100,000 pounds. This could be very cost-effective, particularly for those renting regularly.

Having car hire insurance is essential for peace of mind and, in many countries, compliance with the law.

The car hire insurance that comes included in the rental cost will vary. In some countries such as the USA, it may come with none and all insurance will need to be purchased as an optional extra. In others the rental may come with one or more basic forms of insurance that the car rental company will offer to ‘top-up’ so as to provide more adequate cover – this at additional cost.

The car hire insurance that most renters will consider necessary usually covers three areas. Firstly they will want to know that they are protected against the claims of anyone (or anyone’s property) injured or damaged in an accident. The second area of cover will be that of loss of the rented vehicle, where the loss could arise through theft or fire. Finally, most renters will want to know that the rented vehicle is covered for any damage that may arise while they are driving it (this type of insurance cover for rented cars is often called CDW – Collision Damage Waiver).

It is important to note that anyone driving a rented car without the above forms of car hire insurance will be personally legally responsible for any costs incurred.

The basic forms of car hire insurance than come included in the rental price are often limited in several respects. The third party cover many be limited to a maximum payout amount that could be unrealistically low given the court awards that can be made following an injury. The CDW insurance typically will exclude damage to certain areas of the vehicle such as the tyres, wheels, roof, windows and undercarriage.

Finally, most car rental companies will offer insurance that carries ‘excess’ – this is an amount of money that the renter will be expected to pay towards the costs of any claims on insurance. The amounts vary but figures for the excess of around 500-1500 pounds are typical. This could be a substantial amount to pay following even a minor accident.

Many renters do accept the ‘top-up’ car hire insurance offered by the car rental company. This can increase the amount of liability cover available, reduce the excess on the policy and perhaps cover some of the usually excluded areas of the rented vehicle. This type of insurance though, can prove to be very expensive and there is a much cheaper alternative.

It is possible to purchase various forms of car hire insurance online through specialist insurance companies and brokers. They will typically offer insurance that will increase the amount of third party cover available (often called Supplemental Liability Insurance or SLI) and excess insurance. In the case of the latter, this insurance policy can be purchased to provide cover on a daily or an annual basis. It would reimburse the policyholder for any excess payment they have had to make to the car rental company.

Car hire insurance purchased from a direct insurance company is sold to an individual and during the life of the policy it will cover all vehicles rented, with some exceptions of specialist models such as sports cars of those vehicle of more than 100,000 pounds in value. This could be an ideal option for those seeking the tranquillity of good insurance cover coupled with a reduced price.

Car hire excess insurance is something that someone renting a car may wish to consider if they are looking to avoid large and unexpected bills from the car rental company.

Why is this?

At the time you rent a car, you will probably take with it some form of insurance. This insurance may have been included in the basic rental price or you may have paid the car hire company for it separately.

Whichever is the case, it is very likely that the insurance from the car hire company will carry what is called ‘excess’. The excess is sometimes called the ‘first part’ of any claim and it is essentially an amount of money that the renter will need to pay towards the cost of any claims following an accident. It can be thought of as a form of mandatory contribution that the car hire company will expect you to make after an accident or other form of damage to the rented car.

The amount of the excess will vary by company and country. A figure of between 500-1500 pounds would be typical. This would operate on the basis that if you had an accident resulting in damage of 1,000 pounds and the policy had a 750 pound excess, then you would have to pay the 750 pounds. If the total damage came to 650 pounds, then you would have to pay it all. Normally the car rental company would charge this sum directly to your credit card.

Although having excess on a policy is normal practice in many forms of insurance, in the context of rental cars this has proven controversial in the past with some renters complaining that they were charged after rental for repairs to vehicles that were unnecessary and in some cases entirely without justification.

The car rental company may offer additional ‘top-up’ insurance that for an extra cost will allow you to reduce the amount of excess payable – but this can prove an expensive option.

Another and perhaps preferable way to protect yourself against these risks is to take out an additional form of insurance called car hire excess insurance. This can be purchased online from general insurance companies and brokers. It works on the basis that if your rental company charges you excess, you can claim this back from your insurance company and their policy.

Car hire excess insurance is usually considerably cheaper than the equivalent ‘top-up’ insurance offered by rental companies and also carries additional advantages. Firstly because it is sold to you the policyholder rather than a single hire, it can be taken out for a period of days or even a year. This means all vehicles rented by you during that period will be covered. This can be both convenient and a major cost saving.

Secondly, car hire excess insurance purchased from direct insurance companies will typically offer better cover than the basic policy of the car rental company. That’s because most car rental companies will exclude from their policy cover certain areas of the rented vehicle – usually the tyres, roof, wheels, windows and undercarriage. If you damage those areas of the rented car, most probably you will have to pay.

The good news is that car hire excess insurance from your direct insurance company will often also cover these risks and reimburse you if you need to pay the car rental company for damage to those areas. As an option, it may well be worth checking out.