Protect Your Excess

There are two main components of car rental insurance cover. The first covers loss or damage to the rental car itself (damage liability waiver) and the second covers damage caused by the rental car to someone else or their property or car (third party)

Damage liability waiver can also sometimes be known as collision damage waiver or loss damage waiver. It is like insurance but on a technicality - it’s not really!

Generally, when you rent a car the rental company holds you responsible for any damage, loss, theft etc to the car. If you then buy damage liability waiver from the car rental company you ‘waive’ your responsibility for the damage and pass it back to them or to the company that supplies the waiver. It’s how any damage to the car will be paid for. So it acts like an insurance policy and for most people the fact that it isn’t doesn’t really make any difference.

Damage liability waiver will generally come with exclusions and excess which are costs that you would be responsible for within the terms of the cover. The exclusions are normally the tyres, windscreen, roof and undercarriage and without additional insurance damage to these areas would have to be paid for by you.

The excess is also known as the deductible and is that part of any costs not covered by the policy that you have to pay. As an example if there were an excess of 750 pounds and damage to the car of 500 pounds then you would pay 500. If the damage amounted to 1000 pounds then you would pay 750 pounds and the insurance company would pay 250 pounds.

You can buy additional insurance to remove or at least reduce the excess. The car rental company will almost certainly offer to sell you an excess insurance policy to cover any excess charges on the damage liability waiver.

You will find that this is a very expensive way of obtaining this type of cover and you may think it useful to shop around some of the independent insurance providers, many of whom have outlets on the Internet.

These independent insurance companies specialise in this type of insurance and you may find that they can offer prices which are considerably cheaper than those available from the car rental companies.

Their damage liability waiver policies may even be able to include cover for those exclusions in the rental company’s cover so you can have complete peace of mind when motoring.

They not only offer cost advantages but also increased flexibility. As they sell their policies to a policyholder for a period of days or a year, it will cover all rental vehicles driven during the lifetime of the policy. This may be very cost-advantageous and could also save a lot of time at the car collection desk for those people that rent regularly. It’s certainly worth a quick look at their sites to discover more. You could end up with better cover at a considerably lower price.

For those of us that fail to qualify as being ‘rich’, searching for the best deals possible is a normal occurrence. If you are hiring a car, you may have searched diligently for the best hire rates for the vehicle itself but you may not realise that searching around on the same basis for daily car hire insurance could also save you a lot of money.

It works this way. If you are hiring a car, in many countries the basic rental price may include some components of insurance. This in turn may include one or more components covering various aspects of risk. There will normally be something called third-party liability that will cover any claims for injury or damage you have caused a third party. In addition, there is a form of cover called CDW (collision damage waiver) that covers the rental vehicle itself against damage.

In some countries such as the USA, the rental car may come with no insurance included in the rental price and the rental company will offer everything by way of the above insurances to you as extras.

In either case, it is usually advisable to check the insurance carefully. That’s because the insurance sold (or included it the price) by car rental companies is often limited in its cover and expensive.

You may find that the daily car hire insurance offered by the car rental company does not, for example, offer sufficient third-party liability cover given the large awards the courts can make following an accident. The CDW insurance may exclude from its cover several commonly and expensively damaged areas of the rented vehicle. It’s also very likely that the insurance will carry excess – the excess is a financial amount that the car rental company will expect you to contribute towards the cost of an accident. The excess is often set between 500 and 1500 pounds or sometimes even higher.

For all these reasons, you may find it a good idea to shop around a little.

The good news is that there are direct insurance providers that offer their policies through the Internet and at considerably lower prices than the car rental companies. Contrary to popular myth, you are not obliged to take the rental company’s insurance and can replace this or supplement it with direct insurance purchased elsewhere. Many of the direct insurance providers offer daily car hire insurance policies that are not only considerably cheaper but also offer better cover. Most will not carry excess and will cover those areas of the vehicle typically excluded by the car hire companies.

Even if the basic car rental price has some insurance included with it, you can use the insurance of the direct providers to provide additional cover. As an example, you can use it to insure you against things such as excess charges. If you have an accident and the car rental company charge you excess, you can claim this back through your direct insurance provider’s policy. Similarly, if you have to pay the rental company for damage to an area of the rented vehicle normally excluded by their ‘in the price’ insurance, your direct policy would reimburse you.
In a nutshell, if you’re looking for daily car hire insurance, it may be advisable to look around. You could find yourself a bargain!

When hiring a car, you will need some form of insurance. That insurance may be included (in part) in the rental fee or you may have purchased it from the car rental company as a series of separate items. Whichever is the case, this insurance may not protect you from the full costs of an accident in the rented vehicle. You may also need something called Daily Car Hire Excess Insurance.

That’s because the car rental company’s insurance policy will almost certainly come with what is called ‘Excess’. The excess is an amount of money that the car rental company will expect you to pay towards the costs of any claim – even if you have their insurance in place. They may refer to this as the ‘first-part’ of any insurance claim and the amounts can be significant. Depending upon the country you’re renting in and the rental company concerned, the excess can be set anywhere between 500 and 1500 pounds or perhaps even a little higher.

The way it operates is simple if financially painful! If there is a 1000 pounds excess on the car hire company’s policy and you have an accident that results in a 1500 pounds claim, then the rental company will debit your credit card with 1000 pounds as the ‘first part’ of that claim. If the damage happened to result in a claim for only 400 pounds, then you would have to pay it all.

It’s worth remembering that excess charges following an accident with a rented vehicle can prove controversial. You may have little or no control over who assess any damage, who repairs it and at what cost.

Understandably, the excess and the financial risks it constitutes, may make many renters uneasy. There is though a way of protecting yourself against this – daily car hire excess insurance.

Through the rental company, you may be able to purchase additional insurance that will reduce or perhaps eliminate the excess altogether. They may call this ‘excess insurance’, ‘SUPER-CDW’ or more commonly ‘top-up insurance’. Whatever it’s called, it’s likely to be expensive and far more so that the same insurance purchased elsewhere.

If you look through the Internet, you’ll find direct insurance providers who also offer various forms of car rental insurance including daily car hire excess insurance. Their policies are usually very significantly cheaper than the same products sold by the car rental companies. It also works simply – you purchase the insurance for a specified number of days (they also offer policies on an annual basis) and the insurance company would then reimburse you for any excess payments the car rental company may charge you.

These companies offer daily car hire excess insurance policies that are not only cheaper but which also offer other advantages. As they are sold to a policyholder for a period of time, they will cover any vehicle rented during that period (subject to terms and conditions). This could offer major flexibility benefits. It may well be worth making the effort to check out these companies and their products in a little more detail.

Rental car insurance coverage can be expensive. Even if the basic insurance included with many rentals these days seems quite reasonable, by the time you add on all of the extra insurance you may need to give you a level of cover you feel happy with the costs may have rocketed.

These extra insurances typically cover two areas. The excess, which is the amount you would be liable for in the event of a claim and the exclusions, which are areas of the car normally excluded from the car rental company’s basic insurance cover so that if they are damaged it is you who has to pay for repair.

Often when you rent a car you may leave the final insurance details until you pick up the keys. At that stage if the insurance the car rental company offers you seems expensive, you may have little choice other that to take it if you don’t want to drive away underinsured and potentially liable to pay significant costs. This is what the car rental companies rely on and why they can charge the prices that they do.

If though you’ve taken the time and effort to book your rental car in advance why not do the same with the rental car insurance coverage? That way you have the opportunity to shop round to see what else is available and at what price.

Even if you have opted for a car rental deal which includes for example collision damage waiver insurance (the insurance that covers damage to the rented vehicle) you are perfectly at liberty to purchase top-up and excess insurance elsewhere to increase the amount and type of cover available to you.

Some independent insurance providers specialise in rental car insurance coverage and can either provide you with all of your rental car insurance needs or just those elements left uncovered by the rental car company policy.

You may also find that since the excess policies of the independent providers can also cover any damage to the tyres, roof, undercarriage and windscreen of the car, you are significantly reducing your risks of incurring additional costs.

As well as providing cover on a daily rate basis, these independent specialists can also provide annual excess insurance for car rentals. This type of policy allows you to rent a car on several occasions throughout a given 12-month period. The annual policy is not tied to any rental agreement but covers you, the policyholder as a named driver of the rental car. These policies can be very competitively priced and can offer significant savings if you know in advance that you are going to rent a car on more than one occasion in the year.

Obviously, as with any type of insurance, there may be times when the particular circumstances of your rental may not be compatible with this type of policy. For example longer-term rentals of more than a month may not be covered. Nor typically would rentals for sports cars, vintage cars, or high value luxury vehicles of more than 100000 dollars.

With a little forward planning you should be able to save yourself quite a lot of money on the cost of your rental car insurance coverage.

If you are unlucky enough to have a ‘bump’ in that rented car, you need to be prepared to start writing some very large cheques – unless of course you have taken out collision damage waiver insurance (sometimes called CDW).

Car rental insurance is quite easy to understand in its most important aspect – if you do not have all required forms of insurance and have an accident, then you and only you will be paying up. That’s why it is important to understand what insurance if any comes included in the basic rental price and those areas where it may be advisable to pay for some more.

Collision damage waiver insurance covers you against any damage to the rental car following an accident. The other major form of rental car insurance is third-party liability, which would cover you in the rented car should you injure someone or damage their property.

These forms of insurance may be included in the car rental price (as would commonly be the case in many European countries) or the rental company may offer them as optional extras (e.g. in the USA).

The collision damage waiver insurance sold, or included, by the rental companies is likely to be limited in several respects. You will probably find that it excludes from cover several easily damaged areas of the rented vehicle such as wheels, tyres, roof, undercarriage and windows. If these are damaged, you’ll have to pay for them. The policy also probably carries what’s called excess. This is an amount of money that you may have to pay as the first part of any claim – and it is usually set somewhere between 500 and 1500 pounds depending upon the individual rental company and country of operation. So if there is an accident resulting in 1500 pound’s worth of damage and there is 1000 pounds excess on the policy, then expect to see an additional 1000 pounds charged to your credit card by the rental company.

These limitations may give rise to the odd sleepless night! Fortunately there is an answer.

You can purchase ‘top-up’ insurance from the rental company. This may cover some of the normally excluded areas of the vehicle and it also may offer a reduction in the policy’s excess or perhaps reduce it altogether. Unfortunately such top-ups can be very expensive if purchased from the rental company.

If you’re looking for a better deal on collision damage waiver insurance, you may wish to check out the direct insurance providers that sell over the Internet. Their products are typically far cheaper than those of the rental companies. They offer a range of insurance for hire car policies including, as an example, one that will reimburse you should you have to pay the rental company excess or ‘uncovered areas’ costs following an accident. So even if some basic insurance is included in the rental price, you can purchase your ‘top-ups’ from the direct providers. It may be worth taking a few minutes to check out these options and companies on the Internet – you could save yourself a lot of money.