Protect Your Excess

Selecting a rental car can be fun. Looking for the model you want and searching for the best deal or special offer can be rewarding. Looking for the best deal possible on rental car insurance doesn’t have quite the same obvious appeal but it can save you lots of money and potentially, from near financial ruin.

Once the rented car has been found and the rates checked is when it is necessary to sit back and consider the insurance position. Does the car come with all the types of insurance you need? Is the cover under each category sufficient to give you peace of mind? Are their any costs and exclusions that are perhaps not immediately obvious when looking at the headline price? Is there really any alternative to taking what the rental company are offering by way of insurance cover?

Rental car insurance may or may not come with some insurance included in the price. If it doesn’t, the rental company will offer it to you as separately purchasable elements. In such a situation, you are under no obligation to take their offerings – you can purchase your own cover from a direct insurance provider at a fraction of the cost the rental company would charge. We’ll come back to this later.

In other cases the rental company may include some or several components of insurance into the rental price. In those situations you can check with the rental company to see if they will offer a ‘rental only’ price without the cost of their insurance built in. That may also give you the possibility to purchase your own at a much lower cost though some rental companies may be unable to offer a ‘rental only’ price if the rental price is a special deal that includes mandatory insurance.

If the car rental company’s rental car insurance is included in the rental price and cannot be unpackaged from it, you may also wish to check it carefully. That’s because their basic insurance often excludes some areas of the rental vehicle from damage cover (i.e. you’ll have to pay if they’re damaged). It’s also possible that their third-party cover for damage you may do to others is capped at a maximum payout level that’s far too low given high court awards following an accident. If all that’s not enough, it is worth checking the excess on their policy. That’s the amount of money you may have to pay towards the costs of any accident – typically this will sit at somewhere between 500 and 1500 pounds.

So even if you have rental car insurance from the rental company, you may feel that it is just not enough to cover the risks.

In that case you can once again check out the direct insurance providers on the Internet. They also offer rental car insurance that exists to ‘bridge the gaps’ in the car rental company’s basic cover. If you have to pay the rental company for excess following an accident or for repairs to areas of the rented vehicle not covered by their insurance policy, your own direct policy would reimburse you. The policies and offerings of these direct insurers may be worth a look if you’re keen to save some money at the same time as getting better insurance cover in place.

When you are arranging the insurance for your rental car it may be worth thinking about taking out rental car excess insurance.

This is because with the basic car rental insurance deals available through the car rental companies you are not completely covered and may still be liable for some costs should you be unfortunate enough to be involved in an accident or suffer some damage to the rental car.

Collision damage waiver is the basic insurance providing cover for damage to the rental car. With this type of policy you will still be liable for damage to any areas of the car excluded from the policy cover. These exclusions are likely to include damage to the windscreen, tyres, roof or undercarriage. You may also have to pay excess.

The policy excess is the portion of costs of the damage that you are liable to pay even if you have insurance in place. If the actual costs are less than the excess you pay the actual costs. If they are more you pay the excess amount and the insurance policy covers the rest. So if the policy has 750 pounds excess and the claim for damage totals 1000 pounds, it is you that will need to pay the first 750 pounds of the total of 1000 pounds.

Third party is the basic insurance which covers you for injury to another person or damage to their vehicle or property. Although by law in the UK this means unlimited liability for rental cars, there can still be an excess. So there’s no upper limit for payment on the policy but there may be a lower limit.

Given that excesses can be as much as 1500 pounds you could be liable to pay a substantial amount should you be involved in an incident.

Rental car excess insurance can provide cover against these costs. It can totally remove excess responsibility or at least reduce it.

The car rental company will probably offer to sell you this type of top-up insurance when you pick up the car. They will quote the price as a daily rate and when multiplied by the number of days you are renting the car for, this can end up being a substantial amount.

You may feel that you have no choice but to accept their policy and if you are standing at their rental desk waiting for the keys to the car this may indeed be the case.

If you are prepared to think a little bit ahead, you do have a choice and you may find that it makes sound financial sense to shop around just in the same way as you may have done to find the rental car in the first place.

There are independent insurance providers who specialise in rental car excess insurance. They will have policies to cover rentals in most parts of the world and the requirements of most renters.

They will also be able to offer an annual excess policy which you would be able to use for car rental throughout the 12-month period and you may be surprised at how cost effective this could be if you plan to rent more that once in any one year. They have daily rates as well, which may also be substantially cheaper than the equivalent cover offered by the car rental companies.

As long as you don’t want to rent a sports, vintage or very high value car (check the terms and conditions for specifics) they should be able to meet your rental car excess insurance needs.

Super CDW is a rather odd sounding term used to describe a form of additional insurance that relates to rented cars.

When you hire a car, you’ll probably see mention of CDW. This stands for Collision Damage Waiver (and is confusingly also sometimes called loss damage waiver). CDW is a form of insurance that covers damage arising to the rented vehicle while in your care. It is sometimes included in the basic rental price by the car rental company or it may not be in which case they will usually endeavour to sell it to you as an advisable optional extra.

It’s worth keeping in mind that if you are driving a rented car and have declined CDW, then any accident damage would need to be paid for by you. The costs could be up to the replacement cost of the vehicle itself so some form of this insurance is always a very good idea.

The position with CDW and Super CDW can become a little confusing. This has its origins in the way basic CDW is sold or included in the price by the car rental companies.

The rental company’s basic CDW policy is very likely to be limited in terms of the protection it provides in two important ways. Firstly it will almost certainly contain excess. The excess is stated as a financial amount, usually between 500 and 1500 pounds that the rental company will expect you as the renter to contribute as the ‘first part’ of the costs of any accidents. In other words, if you have 750 pounds excess and a claim for damage to 1500 pounds cost, the rental company will debit the first 750 pounds of that 1500 pounds to your credit card. If the claim were for 400 pounds, you would have to pay it all.

Secondly, you will probably find that the basic CDW excludes damage to several specified areas of the car such as wheel, tyres, roof, undercarriage and windows. So even with CDW insurance in place, you could still be facing large repair costs following an accident.

As many renters find the risks here to be unacceptable, the car rental companies may offer additional ‘top-up’ insurance to cover these risks. The excess could be eliminated totally and cover extended to normally excluded areas of the vehicle. They may or may not call this Super CDW.

Unfortunately the car rental company’s insurance and their top-up insurance can prove very expensive when compared to that purchasable from the direct insurance providers over the Internet. In fact you are under no obligation to purchase car rental insurance from the rental company and you can purchase Super CDW insurance from the direct providers.

These policies purchased directly can offer you real peace of mind. Even if you have taken the car rental company’s basic insurance, you can use your directly purchased Super CDW to cover you for the risks of excess charges or payments for repairs to areas of the rented car that the rental company have excluded from cover. The rental company may still debit your credit card for these costs but you could claim reimbursement of them from your direct insurance company.

The Super CDW purchased directly like this is usually several times cheaper than that sold by the rental companies. It also is purchasable for a period of days or even a year. That means that during the life of a policy it would cover you for any rental car you drove (subject to terms and conditions). That could save you a lot of money indeed – particularly if you rent regularly. It may be worth finding out more!

Loss damage waiver is a term used to describe a form of insurance that applies to rental cars. It may sometimes also be referred to as CDW (Collision Damage Waiver).

At the time a car is rented, the renter will usually want to be sure that he or she will be covered by insurance against the two main categories of risk. These two categories are damage or injury caused to other people and damage caused to the rented car itself. Insurance to cover the first of these is usually called third-party liability while the second is called loss damage waiver.

The latter may be included in the rental price or the car rental company may offer it for sale separately. In either situation, the car rental insurance sold by rental companies is usually very significantly more expensive that similar insurance purchased elsewhere. Not only that, it is often also the case that this type of insurance is, when provided by the car rental company, limited in terms of its cover.

The loss damage waiver insurance sold by rental companies will probably contain a number of exclusions relating to damage incurred to specific areas of the rented car. These usually include the undercarriage, wheels, tyres, roof and windows. These are all areas easily damaged and if not covered by the loss damage waiver, the renters could find themselves needing to pay out some hefty sums.

It’s also the case that the car rental company’s policy will also carry excess. Excess is an insurance term used to describe an amount of money that the renter may have to pay towards the cost of an insurance claim. It’s often set between 500 and 1500 pounds. In the case of a claim for 1500 pounds and a policy that has 1000 pounds excess, it is the renter that would have to pay the first 1000 pounds of the 1500 pounds claim.

When viewed together the risks constituted by the rental company’s exclusions and excess on their standard loss damage waiver policies can make renters uneasy. If that’s the case, they can do one of two things.

It may be possible to pay the car rental company extra for what is sometimes called ‘top-up’ insurance – this can though prove to be very expensive compared to the second route.

It is also possible to purchase this type of cover from direct insurance providers over the Internet. Their policies will cover things such as excess payments or damage to ‘excluded’ areas of the car. The renter may still have to pay these to the rental company but their direct insurance would reimburse them.

The loss damage waiver insurance purchased from a direct provider has another major advantage apart from lower cost. It can be purchased on a daily or annual basis meaning that it would cover any rented vehicle during the lifetime of the policy, although this may exclude certain specialist vehicle types as outlined in the terms and conditions. So, if you don’t enjoy paying more than is necessary, this could be an option well worth investigating further.

When driving that rental car on a business or private trip, you probably don’t want to be worrying constantly about insurance or what would happen if you had a bump in it. For peace of mind you’ll want to be sure that you have in place the right insurance for rental cars.

Insurance for rental cars isn’t always easy to understand. The terminology can change between rental companies and countries, as in fact can the commercial and risk basis of the policies. That means that it is possible to drive a rented car with insufficient insurance or with insurance that you have paid far too much more. How could this happen?

To begin with, some rental companies in some countries may offer little if any insurance included in the rental price (e.g. the USA). All insurance is purchased separately as optional extras.

In other countries some forms of insurance will be bundled into the rental price. These usually cover the renter against damage caused to the rented vehicle (CDW insurance) or injury/damage caused to third parties (third party liability). Although this may sound ideal, in fact the insurance included in the price by car rental companies is usually very expensive when compared to the same insurance purchased from a direct insurance provider on the Internet.

You can purchase these types of insurance for rental cars from the direct providers and save yourself a lot of money. If the car rental company offer the insurance as optional extras you can decline it and show them that you already have direct insurance cover. If they have it included in the price, some rental companies may agree to offer a revised and lower rental only price without insurance and you can use yours.

Even if the rental price includes insurance that cannot be ‘unbundled’ by the rental company, you may still need to pause for thought. That’s because the car rental company’s basic insurance may come with certain important limitations. Normally these would include things such as some areas of the rented vehicle being excluded from cover, unrealistically low maximum payout levels being set on third-party insurance and large excesses on the policy. The excess is that amount of contribution the car rental company will expect you to make as the ‘first part’ of any claim – it is often between 500 and 1500 pounds.

Many renters are unhappy with these sorts of risks and there are two possible routes to reduce them. The first is to purchase additional ‘top-up’ insurance from the car rental company. This is likely to be far more expensive than the second option which is to purchase comparable cover from the direct insurance providers.

Their policies in those circumstances would reimburse you for any excess or repair costs you had been forced to pay to the rental company. They also have added advantages. As insurance for rental cars purchased from the direct providers is offered for a daily or annual period, it would cover any cars rented by you during that period, subject to terms and conditions. This could offer not only financial savings but also increased flexibility.

Make no mistake – insurance for hire cars is critically important. It may be expensive but if you have an accident in a hire car and you don’t have sufficient insurance, the costs to you could be quite literally ruinous.

There are two main types of insurance that apply here. The first of these is called third party liability. It basically means that you have insurance to cover any claims you may receive if you have injured a third party or damaged their property. In the UK this insurance comes with hire cars and by law it must be unlimited to cope with any court awards however large they may be. Some caution is required in other countries though, because the car rental company may cap the maximum payout level at an unrealistically low amount. Remember that if a court awards an amount higher than the liability cap, it will be you who will have to pay the difference.

The second form of insurance for hire cars is called CDW (Collision Damage Waiver). This gives protection against damage caused to the rented vehicle while you’re responsible for it. This cover usually includes theft protection. Once again, if you do not have this in place and the car is damaged, it will be you who pays.

Car rental companies may include one or both types of this insurance in the rental price or they may invite you to purchase them separately.

Whichever is the case in a given rental, this insurance is likely to be very much more expensive if taken from the car rental company than if purchased from a direct insurance provider through the Internet.

You are under no legal or commercial obligation to take the car rental company’s insurance. In many cases you can decline it and use your own insurance that you have purchased separately, thereby saving yourself a lot of money. If the car rental company have included insurance in a ‘special deal’ price where it cannot be unbundled from the rental cost, you may still need to consider alternative sources of insurance.

The need for this arises from the fact that the insurance for hire cars that the rental companies include ‘in the deal’ may be limited in terms of its cover. It will very likely carry excess (an amount up to 1500 pounds that you would have to pay towards the costs of any accident) and exclude damage to several areas of the vehicle that are typically easily and expensively damaged even in minor accidents.

You can purchase additional insurance for hire cars to cover these gaps and financial exposures from the car rental company but this is likely to again be very expensive. The same type of cover can be purchased from the direct providers at significantly lower cost. Should you be charged excess by the car rental company following an accident or for repairs to a part of the vehicle ‘excluded’ by their policy, you can them claim this back from your direct insurance. It could potentially save you a lot of money.

Renting a car these days is easy. With most of the larger companies and many of the smaller ones you can do it over the phone or on the Internet. It’s only when it comes to organising the insurance for car rental that some people can have a problem deciding what it all means and what they do and don’t need.

You will probably need two main categories of cover for car rentals. The first is third party cover which insures you against damage you may cause to someone else or his or her vehicle or property. The second type is collision damage waiver which covers damage to, or the loss or theft of, the rental vehicle.

With both of these types of insurance, if provided by the car rental company, you may find that the cover is not complete and that you would still be liable for some costs. This is because of the excesses and exclusions typically found on both types of insurance for car rental policies.

An excess on the policy is an amount which can be anything between 500 and 1500 pounds, which you would have to pay in the event of damage to the car. So with damage to the car costing say 1000 pounds and an excess of 1250 pounds, you would have to pay for all of the damage. If the damage cost 1500 pounds you would have to pay 1250 and the insurance cover would pick up the remaining 250 pounds. Even though third party by law in the UK has to provide unlimited liability there may still be an excess for that type of cover as well.

As another example, you may also find that damage to certain areas of the rented vehicle is excluded from cover. This could prove expensive following an accident.

It’s also worth remembering that there will be different rental conditions depending upon the country you are renting in and the rental company you are using. Not all countries have unlimited third party liability for example. In many the standard third-party liability insurance is severely limited in terms of maximum payout levels so you may want to make sure that you have additional top-up cover to ensure that you are not landed with astronomical costs should you cause damage or injury to a third party.

You can of course buy additional insurance to cover all of the potential costs of the excesses and other exclusions contained within the car rental company’s standard insurance. The car rental company may well offer such additional cover but this will be expensive and you may well find that you can get it cheaper if you shop around a bit. You almost certainly will have compared the prices of a number of companies for the rental car itself so why not do the same thing for the insurance for car rental?

There are a number of direct insurance providers in the market who specialise in this type of insurance and you may find that you can get a better level of cover for a significantly cheaper cost.

They can offer standard daily rentals or annual policies which can be used for a number of rentals over the 12-month period. Many of their policies will also cover those areas of the car typically excluded from standard collision damage waiver policies.

If the need arises the car rental company will charge any costs to your credit card. All you then need to do is to claim on your direct policy for reimbursement.

The specialist insurance providers may exclude specialist vehicle types such as sports, vintage, or very high value cars but for the majority of renters they should be able to provide significant savings on insurance for car rental.

It’s normally fairly easy to find a good hire car and at a good deal price. Finding insurance for car hire at the best possible price may require a little more thought.

The reason for that is because many people renting cars just take the insurance offers that are put down in front of them by the rental company. That’s a pity because these types of insurance for car hire are usually expensive and may have gaps in cover. In fact, the renter is generally not obliged to take the car rental company’s insurance and can use their own.

To explain – when hiring a car many people see that the rental price includes some forms of basic insurance. Usually these are insurances to cover damage the renter may do to other people or their property (third party liability) or damage to the rented vehicle itself (CDW for ‘collision damage waiver’).

In some countries, the rental price may not include these forms of insurance and the rental company will offer them for sale separately.

When renting a car in a country where insurance is not included, the renter can usually purchase their own forms of CDW and Third Party liability and decline the car rental company’s offers. Such insurance is sold via direct insurance providers often through the Internet. Their prices are usually very significantly cheaper than the prices offered by the car rental companies.

In situations where the insurance is ‘bundled’ into the rental price, it may be possible to ask the rental company for a price that excludes their insurance. In some cases this may not be possible but even there, the renter may still have the option to save money.

That’s because even when the car rental company has bundled the insurance into the rental price, it is often the case that this basic insurance is too limited for many renters’ needs. It may be that the rental company’s policy carries large excess (the amount of contribution the renter would have to pay towards the cost of an accident) and excludes damage to certain areas of the rented vehicle. The risks of incurring high costs following an accident may surprise some renters who thought they had insurance included ‘in the price’!

In such situations, many renters look to take out additional insurance to cover these risks. Once again the car rental company will offer what they may call ‘super CDW’ or ‘Top-up’ insurance but these cover types will be far higher than the same purchased from a direct insurance provider.

It is also possible to purchase from the direct providers, various forms of insurance for car hire that are aimed at providing this additional cover to bridge the gaps in the car rental company’s cover. Their insurance in this case would mean that if for example you accepted the rental company’s insurance but subsequently had to pay excess to them, you would be able to claim this back from your direct provider’s top-up policy.

Having a look at the direct insurance providers could save you a lot of money when purchasing that insurance for car hire. It may be worth a little effort to see what they’re offering.

Most insurance for car rentals comes with excess but it is possible to remove or at least reduce it by buying additional excess waiver insurance.

Excesses can be a substantial size. Amounts of between 500 and 1500 pounds are not uncommon. So you would potentially need to find significant amounts of money if you were involved in an accident while driving your rental car and had to contribute to the repair costs.

It may be worth noting that while by law in the UK third party cover is unlimited, which means that there is no upper limit on the amount that the insurance will pay out if you injure someone else or damage their property, there can still be an excess on third party cover.

Car rental companies will always offer you the chance to buy excess waiver insurance to reduce the excesses that may exist on their basic collision damage waiver and third party policy cover.

You may find that if you accept the prices offered by the car rental company, the overall cost of your rental increases dramatically. They typically quote you a daily rate which can sound ok, but when multiplied by the number of days of your rental, the costs can really start to mount up.

You may still even be left with some excess to pay and it is very unlikely that the excess insurance offered by the car rental company would include damage to those areas of the car normally excluded from most collision damage waiver cover - the windscreen, roof, tyres or undercarriage.

There is though an alternative to buying your excess waiver insurance from the car rental company. There are specialist insurance providers who offer this type of cover and you may find that their prices are much lower than those of the car rental company. Their excess cover may also include as standard those ‘exclusions’ in other policies.

They can offer you all the excess cover you need for rentals at home or abroad although they don’t cover vintage, sports or very high value vehicles.

These specialist providers can offer cover on a daily rate basis for the duration of your rental or they can also sell you an annual policy.

An annual policy can be used again and again in the course of a single year. It is not tied in to any car rental agreement but belongs to you the policyholder. So if you know that you are going to need to rent a car on more that one occasion in the coming 12 months then it may be worthwhile looking at what these companies can offer.

In fact even if you don’t have plans to rent more than once it may still be more economical to buy insurance from the specialist.

With this type of policy the car rental company would charge the costs of any damage to the car to your credit card. You would then simply have to claim on your excess waiver insurance policy for full reimbursement.

Europe is a large and diverse continent. Although much of Europe now forms part of the European Union, the position with respect to European car rental insurance may vary by the country of rental and the company being used.

In general, many (though not all) cars rented in Europe will come with some degree of insurance included in the rental price. This differs from the position in some countries such as the USA, where the rental price may include little or none.

The European car rental insurance that is included in the rental price will vary and it should be thought about carefully.

To begin with, in the UK rental cars must have included by law, unlimited third-party liability insurance. This means that anyone who suffers injury or damage to their property because of the rental car will be able to claim and a court could potentially make unlimited awards. In other countries the third-party cover may be capped at a maximum payout level that’s far too low given the size of potential court awards.

Another aspect of European car rental insurance is CDW (collision damage waiver). This is what provides cover for damage caused to the rented car itself. In general, the CDW cover provided by a car rental company will exclude damage caused to several easily damaged areas of the vehicle – usually including the wheels, tyres, undercarriage, roof and windows.

It is also likely to be the case that the car rental company’s policy will carry something called ‘excess’. The excess is a stated financial amount that the renter will have to pay towards the cost of an accident even if they have the rental company’s insurance in place. It works simply. If the excess is set at 750 pounds (and typically it will be between 500 and 1500 pounds) and there is an accident resulting in 1000 pounds worth of damage, then the renter will have to pay the first 750 pounds of that 1000. If the damage is only 500 pounds, the renter will need to pay it all.

For all these reasons, many people taking out European car rental insurance consider supplementary insurance to increase their cover. There are two options for this. The first involves purchasing additional ‘top-up’ insurance from the car rental company. This can reduce the excess and increase cover to normally excluded areas of the car, but it also is typically far higher in cost than comparable insurance sourced elsewhere.

It is also possible to purchase European car rental insurance from direct insurance providers on the Internet. Their prices are typically far cheaper than those of the car rental companies and may offer superior cover. They work on the basis that even if you have CDW included in your car rental price but are subsequently charged the excess or for damage to excluded areas of the rented vehicle, then the direct insurance policy would then reimburse you. They have a range of insurance products for rental cars that will meet most needs and their prices are attractive. It may be sensible to have a look at their offerings.