Protect Your Excess

Hiring a car has never been easier. Most of the major rental companies have Internet sites where you can chose the vehicle you want and arrange your car hire insurance all with just a couple of clicks of the mouse. Some of the hire companies offer all-in-one packages with insurance included and you could be forgiven for thinking that you were automatically getting the best possible deal.

What you may need to think about with deals like this is that the car hire insurance included in the offer is unlikely to provide a level of cover that many people would be happy with, particularly when driving an unfamiliar car in unfamiliar circumstances and possibly on the wrong side of the road.

So what insurance do you need when you hire a car? There are two basic elements to car hire insurance cover.

Levels of protection

The first covers damage or injury you may cause to someone else or to their property, while driving the car. This is known as Third Party cover. The amount of cover that you get ‘included in the price’ may depend on where you intend to drive the car. It may only cover the minimum level of cover required by law in that country.

For example, for rentals in the UK third party cover has by law to be unlimited. This means that in the event of a claim for damages against you there will be no upper limit on what the policy will pay out.

In other countries though, third party cover does not have to be unlimited and in places like the USA it may be practically non-existent. What this means is that in the event of a claim for damages, you would be personally liable for the portion of the damages that your policy did not cover.

The second element covers damage to the hire car itself while it is in your care. This is known as collision damage waiver, which normally comes with a theft component. It will cover the cost of repair or replacement of the vehicle with some major provisions!

Most collision damage waiver policies offered by the rental companies will carry excess. The excess is the portion of any cost for repair etc that you would have to cover personally before the policy would pay out. So if there was a repair bill for damage to the rental car of say 500 pounds and the excess was 400 pounds, then you have to find 400 pounds and the policy would cover the remaining 100.

These figures are for illustration only and you may find that excesses can be anything from 500 pounds to 1500.

Car hire excesses

A general rule of thumb for collision damage waiver policies is the cheaper they are the greater the excess and you may find that your ‘all included insurance’ deal has some hefty excesses attached.

Of course the car hire company will also offer to sell you their own additional car hire insurance products to increase your level of cover. They can offer products to decrease your third party liability or to reduce collision damage waiver excesses.

It’s here though that you may find that your great deal isn’t quite so great after all. There’s no doubt that buying this additional cover from the car hire company is convenient but equally there’s no doubt that it’s several times more expensive than the alternative.

What you may find interesting is that there are a number of independent insurance suppliers who can provide car hire insurance at prices which are much cheaper than those offered by the car rental companies. These specialist suppliers can be found on the Internet and can provide you with online quotes for all of your rental car hire insurance needs including policies aimed at covering the gaps and limitations in the rental companies policies. It you want improved cover and at a lower price, these specialist providers are well worth a look.

Car hire insurance has its own vocabulary that may at times seem intimidating and confusing. One such term that you may have seen mentioned in ‘the small print’ is Car Hire Excess Waiver. What exactly does this mean?

Car hire excess waiver is, in effect, a form of insurance that could save you a lot of money if you are unlucky enough to have an accident with a rented car.

You may perhaps think that the rented car you’re driving came with insurance included in the price or that you purchased insurance with it from the rental company. Why do you need more?

Getting the right protection

The brutal fact of life is that your rental car’s insurance provided by the rental company is probably limited in several respects. One of these is that it carries ‘excess’ – that is a financial amount you will need to pay as a mandatory contribution towards the ‘first part’ of any claims. If that sounds rather complicated, in reality it’s quite simple, if potentially expensive. The typical rental company’s insurance on a hired car will set an excess on the policy of between 500 and 1500 pounds. If you have an accident resulting in damage valued at 2000 pounds and your policy carries 1000 pounds excess, then you will have to pay the first 1000 pounds of the 2000 and the rental company’s insurance will pay the rest. If the damage amounts to say 500 pounds, then you will need to pay it all.

This may not have been quite what you had in mind when you took out the rental company’s insurance in the first place. So is there anything you can do to protect yourself against ‘excess’ risks?

The answer is ‘yes’. Car hire excess waiver is a facility or form of insurance that the rental company may offer you. This will, for an additional cost, allow you to remove or reduce (i.e. ‘waive’) the excess from the policy. The bad news is that insurance like this sold by the rental companies is often several times more expensive than equivalent or even superior insurance sold on the open insurance market by specialist providers of rental car insurance.

Annual or daily cover

These companies also offer car hire excess insurance that means if the rental company charge you excess following an accident, you will be able to claim this back from your own insurance. These policies also have the significant attraction of being sold to you as a policyholder for a period of days (or annually) rather than just for an individual car rental. This means you can use them to protect you against excess charges from car rental companies throughout the period of your policy and for any cars rented (with the exception of certain specialist vehicles such as sports cars).

Purchasing car hire excess waiver insurance from a specialist provider of hire car insurance could save you a lot of money initially and even more money should you be unlucky enough to have an accident in a hire car. You can find these specialist companies on the Internet and it may be worth checking them out.

If you have hired a car, whether the insurance was included in the price or sold to you separately by the car hire company, you probably would like to think you are fully covered. In fact, you are unlikely to be so because of something called car hire excess.

It works like this. Should you have an accident in the hired car, your first thoughts will be of the possibility of injury to you, your passengers or any third parties involved. You may hand the car back confident that the car hire company and their insurance will deal with the financial side of events. Then some weeks or months later you will see a charge to your credit card from the car hire company and it could be anywhere between 500 and 1500 pounds. What’s going on?

The insurance offered by car rental companies usually contains something called ‘excess’ in insurance speak. This is an involuntary contribution towards the cost of any claims that you will be expected to make even if you have their insurance in place. The amount is typically set between 500 and 1500 pounds.

If you have an accident resulting in a claim of say 2000 pounds for damage to the rented car, you will need to pay the excess and the car hire company’s insurance policy will pay the difference. So if the excess is set at 1000 pounds in the case of a 2000 pound claim, you would pay 1000 pounds and the insurance company the second 1000 pounds. If the claim was for say 500 pounds then you would have to pay it all.

It’s worth keeping in mind that even if you have a minor bump, you may have little or no control over who assesses the damage or repairs it and at what cost. There may be a significant risk of finding yourself hit with hefty bills in such a situation if you only have the rental company’s basic insurance.

If you’re unhappy with this position, you have two options.

The first is to pay the car hire company additional sums to increase your level of insurance protection by reducing or eliminating the car hire excess on the policy. They will be happy to do so but be warned – their costs for doing so may be high. The second option is to take out a car excess insurance policy with a specialist provider of rental car insurance. Operating over the Internet, these providers will insure you against car hire company excess charges. Following an accident, if the rental company charges you excess, then you will be able to claim reimbursement of the sums involved from your own policy.

The costs of this type of car hire excess insurance will be far lower than similar insurance offered by the rental companies. The specialist providers have a range of products that can be used to supplement or replace the insurance sold by the car rental companies. If you investigate this further you will see just how this could save you significant amounts of cash.

Hiring a car is rarely a low-cost activity, even allowing for deals and special offers etc. The good news is that you could be able to save very significant amounts of money if you are prepared to take a little time and ‘shop-around’ for your car hire cover insurance. How does this work?

Car rental companies want to sell you insurance! In certain countries such as the USA, the car rental price may include little if any insurance and the rental company will try and sell it to you separately.

In others countries the rental price may include some elements of insurance. Although apparently attractive as a deal, in practice this insurance may be limited. It is very likely to exclude damage caused to several areas of the rented vehicle such as the roof, tyres, wheels, undercarriage and windows. It is also likely to carry a large excess of between 500 and 1500 pounds – the ‘excess’ is an amount the rental company may debit to your credit card as your mandatory contribution towards the cost of any accident even if you have their insurance. You may also find that their insurance covering injury to third parties is set at a maximum payout level that is way below the level of a court award following an accident.

‘Top up’ cover

The rental company’s solution to this situation will be to try and sell you additional ‘top-up’ insurance to increase the car hire cover and reduce some of the above limitations.

The reality of life is that a car rental company’s insurance will usually be several times more expensive than similar or even better insurance purchased in the open insurance market. You can find specialist car insurance providers on the Internet offering far better deals. Their policies are different to those of a car rental company because they will cover you the policyholder for a period of days or even annually. During this period the policy will cover any vehicle you rent with the exception of a few specialist types such as sports or very high value cars (over 100k US dollars).

Their policies often come entirely without excess and may not exclude any area of the rental car from damage, so you are getting better cover as well as a lower price.

Excesses

The specialist providers have numerous policies for car hire cover to fit most circumstances. You can use them to supplement the policies of the car hire company or in some cases to replace them altogether. This insurance can even cover you against the car rental company charging you excess if their vehicle comes with insurance included in the price.

It is always possible to ask a car hire company for a ‘hire only’ price and use your own cheaper and better insurance. Apart from in the case of certain ‘special all-in’ deals, they may be willing to accept your full or partial privately purchased insurance. It could save you a lot of money on car hire cover so it is worth checking out these insurance providers and asking the question of the rental company.

If you hire cars regularly, whether for business, pleasure or both, then annual car hire insurance could be a way of saving yourself a lot of money.

The economics of this are simple. When you hire a car, it may or may not come with various forms of insurance included in the hire price. Whether it does or not will depend upon the hire company and the country you’re renting in.

There are two main types of such insurance. The first of these is called third party and covers you against damage you may to do someone else (or someone else’s property) while driving the rented car. The second form of insurance is called CDW (for collision damage waiver) and this covers you against damage to the rented vehicle itself. You need to be very clear about legal realities of life here – if you do not have insurance on the rental car and suffer an accident resulting in damage or injury then it is you who will have to pay from your own finances.

If the rental company have included one or both of the above insurance types in the cover, you are likely to find that it is limited in several important ways.

It is likely that the policy will contain a large excess of between 500 and 1500 pounds. That is the amount you may have to contribute to the cost of an accident even if you have the rental company’s insurance in place. The CDW policy is also very likely to exclude damage to several areas of the rented car such as the wheels, tyres, roof, undercarriage and glass/windows.

Saving money

Many renters are slightly disturbed by these limitations and purchase additional ‘top-up’ insurance from the car rental company. This can reduce or eliminate the excess and perhaps extend cover to areas of the vehicle normally excluded from the car rental company’s policy.

So how can annual car hire insurance save you money?

It is a fact that the insurance sold by car rental companies is usually several times more expensive than rental car policies sold by specialist insurance providers in the open insurance market over the Internet. You can find policies that will cover you for a period of days (good for individual car hires) or through annual car hire insurance, that can cover you for any cars rented in the period, with the exception of certain specialist vehicle types.

It works simply. If you have a claim on a car rental policy and are forced to pay excess or similar, you can claim this back through your direct policy. Alternatively, you may be able to replace some or all of the car rental companies insurance with your own cover – if there were an accident your insurers would deal with the rental company directly.

Car insurance is a very profitable line of business for the car rental companies and they are understandably not happy to lose it. In fact, you are under no obligation to purchase ancillary ‘top-up’ insurance from them and you can use your own. In countries where the rental price does not include all insurance, you are free to use your own cheaper insurance. Even if the rental price includes insurances, you may be able to ask for a ‘rental only’ price from the car hire company and again substitute your own cheaper and very possibly better cover policy.

So, annual car hire insurance may be worth investigating further, particularly for regular rentals. It may even offer large savings for occasional renters if the cover is taken on daily basis.

Probably the most common form of insurance for car rentals is daily car hire insurance. The insurance costs are quoted as a daily rate, which is then multiplied by the number of days of the rental.

For many rentals today, car hire insurance is bought from the car hire company. For each of the components of the insurance, Collision Damage Waiver, Third Party, CDW Excess and so on, the basic rate is multiplied by the number of days of the rental and totalled up to give a total cost for the car insurance.

Buying daily car hire insurance like this happens every time you rent a car and accept or purchase your car insurance from the rental company because the insurance relates to the rental and not to you.

You can also buy daily car hire insurance from one of the independent insurance providers who specialise in the car hire insurance market and this differs from the insurance bought from car hire companies in a number of ways. The first is that the insurance belongs to you as the policyholder. So while you may have bought it to drive one rental car only, you could typically use the same policy for another rental provided you did not exceed the daily duration of the policy.

Comprehensive protection

There are, however, other benefits of this type of insurance not the least being that it is normally much cheaper than the equivalent level of cover purchased from the car hire company. You may also find that the policies offered by the rental companies quite often exclude several areas of the rented car from their damage protection cover – typically the wheels, tyres, roof, undercarriage and windows. Any damage to those areas and the rental company will charge your credit card with the repair costs even if you have their insurance.

By contrast, the specialist providers of insurance will normally include cover for these areas in their policies.

Some car rental companies can offer what seem to be really good rental deals if you take one of their insurance included options. The basic insurance offered in these cases may not be very comprehensive though and you may feel that you would like to buy some additional excess or top-up insurance. Even in these cases you can still benefit from the cheaper insurance on offer from the specialists as you can buy your top-up and excess insurance from them and not from the car hire company.

Terms and conditions

To give a specific example, if you have an accident in the rental car and sustain damage to an area not covered by the rental company’s policy, then the car hire company may charge the cost of the repair to your credit card. You would then simply have to claim on your personal daily car hire insurance policy for reimbursement.

As with all types of insurance there are terms and conditions attached to daily car hire insurance policies sold by the specialist providers. This type of policy will not usually cover rentals of very high value, sports or vintage cars You may also find that your policy will not cover you if you want to rent a car within 150 miles of you own address.

A final point is that the independent specialists also offer annual insurance policies. These may be more convenient than daily car hire insurance if you know in advance that you are going to rent a car on more than one occasion in the course of a year.

Car rental excess insurance is something that you may chose to ignore completely – particularly if you happen to like large and unpleasant financial shocks.

Such shocks are a very real possibility when hiring a car. That’s because the insurance provided by the hire company will, in all likelihood, contain a critical limitation. Buried somewhere in the small print will probably be a clause to the effect that the policy contains ‘excess’ and the excess is usually stated to be a financial amount between 500 and 1500 pounds.

What you may be liable for

What does this mean in practice? Quite simply, if you have an accident that results in a claim then you will have to make a mandatory contribution to the cost – in other words the ‘excess amount’ that is sometimes also called the ‘first part’ of any claim. So if the policy excess is defined in the hire agreement to be 750 pounds and you have an accident resulting in 500 pounds’ worth of damage to the rented car, you should expect to see a charge to your credit card of the 500 pounds because it is below the policy’s stated excess. Should the damage be assessed at 1500 pounds, you will get a charge to your credit card for the full 750 pounds excess.

This is not a theoretical risk but a reality. Accidents happen and the renter may have little or no say over who assesses the damage or repairs it. So you may think you have paid for insurance on the rented car but after an accident you could find yourself anywhere between 500 and 1500 pounds worse off than you anticipated.

You can take steps to eliminate this risk. The first of these is to pay the car rental company for more insurance that will eliminate or reduce the excess on their main policy. They may call this car rental excess insurance or more commonly ‘top-up’ insurance. This insurance though is usually several times more expensive than the alternative.

There are specialist providers of car rental insurance policies that operate over the Internet in the open insurance marketplace. It’s very simple – if you have an accident you may still have to pay the rental company their ‘excess’ but you can claim this back from your own policy. The specialist’s car rental excess insurance is likely to be significantly cheaper than that of the rental company and you may find the cover is rather better.

Superior cover

The cover may be superior because unlike the rental companies, the specialists are selling a policy to you as a policyholder rather than a given car hire agreement. Their policies can be purchased by the day or even annually. During the life of the policy they will cover any vehicle rented by you (though not some specialist types and those of a very high value – check the policy for full details) and this can offer huge cost and flexibility advantages, particularly for those renting regularly.

Car rental excess insurance purchased from a specialist supplier can’t stop you having an accident but it could stop your situation being made even worse by the rental company’s large and unexpected charges to your credit cards. It may be worth making further enquiries for the sake of your peace of mind!

CDW stands for ‘Collision Damage Waiver’ and is a form of insurance that relates to rented cars.

If you are renting a car, you’ll probably find that the rental company will include in the price, or offer for separate purchase, CDW insurance. If you take it, you will be covered for some forms of accidents or damage to the rented car while it is out on rental to you.

The obvious implication here is that if you are using a hired car and do not have collision damage waiver in place, then you will have to pay for any and all damage sustained by the vehicle. It’s worth remembering that however careful a driver you are, the rental car could be damaged while in a car park or even stolen. All the repair costs up to potential full replacement of the vehicle, will make their way towards your credit card unless you have some form of insurance in place.

So, most renters tend to readily purchase collision damage waiver as a sensible precaution. This though will not offer you the full protection you may have hoped for.

Policy limitations

The insurance sold by a car rental company is likely to come with several significant limitations. It is quite likely that their basic collision damage waiver insurance will exclude several areas of the car from cover – notably the wheels, tyres, roof, windows and undercarriage. If any of them are damaged, you’ll have to pay. The policy will probably also carry excess of between 500 and 1500 pounds. The excess is the amount of money you would need to contribute towards the cost of a claim.

All in all, if you have an accident and only the basic CDW cover, you will probably find yourself on the receiving end of some hefty bills that may be charged directly to your credit card.

If you’d like to avoid this, you can purchase ‘top-up’ insurance from the rental company. They may also call this ‘Super CDW’ and it could reduce or eliminate the excess and possibly include cover to those areas of the vehicle usually excluded. You may find it interesting to know however that you can purchase similar or even better forms of such insurance on the Internet from specialist providers of rental car insurance.

Specialist providers

These companies can offer various forms of car rental policies to cover many risks. In some rental situations you may be able to substitute entire components of the rental company’s insurance for your own privately purchased and much cheaper policy. In others, you may be able to purchase ‘top-up’ insurance separately from the rental car. In that sort of situation you may, for example, still have to pay excess to the rental company following an accident but you could claim that back from your own policy.

The CDW cover offered by the specialist providers is sold to you as a policyholder and not just for a specific car rental. The policies can have a duration of several days or even a year. Subject to the terms and conditions of the policy, it will cover you for any vehicle rented during the lifetime of the policy. If you’re serious about protecting your interests as far as possible and saving money, then this is an option you may wish to research further.

When driving a rented car, most people want the reassurance of knowing that they are well protected by insurance. One form of rental car insurance is called CDW (Collision Damage Waiver) and it offers protection against the costs of any damage caused to the rented vehicle. Unfortunately the CDW sold or offered by car rental companies does not, in itself, offer full protection from such costs. To ensure you are fully covered will mean taking out CDW excess insurance.

That may sound slightly confusing and to some extent it is! The problem arises because of the nature of the basic CDW insurance sold (or included in the rental price) by the car hire companies.

This insurance will almost always come with what’s called ‘excess’. The excess is an amount of money that the rental company’s insurance will expect you to pay towards the cost of any claims – even if you have their CDW insurance in place. This amount is usually set between 500 and 1500 pounds and may even be higher in some cases.

How it works

To illustrate how the excess works, let’s take the case of a policy that carries 750 pounds excess. If you have an accident that results in a 1000 pounds claim, then the rental company will charge your credit card with 750 pounds excess which they may call ‘the first part’ of the claim. They would recover the remaining 250 pounds from their insurance company. If the damage cost ‘only’ 500 pounds – then you would pay it all.

The excess is rarely popular and many renters look for ways of covering this via additional insurance. This is where the idea of CDW Excess Insurance comes in.

There are specialist suppliers of rental car insurance that operate on the Internet and in the open insurance marketplace. One of the many products they offer is CDW excess insurance and it works on the basis that if you have to pay the rental company excess following an accident then you will be able to claim this back from your policy.

The car rental company will probably also be very keen to sell you such insurance that they will probably call ‘top-up’ or ‘Super CDW’ cover. In reality, their prices for this insurance will probably be several times higher than the specialist providers – and you are under no obligation at all to purchase your rental insurance from the hire company.

What is covered

It’s worth keeping in mind also that the rental company’s CDW insurance usually excludes from its cover a number of areas of the vehicle such as wheels, tyres, roof, undercarriage and windows. The policies of the specialist suppliers may well include these in your ancillary cover. Their policies can also be taken out for a year or for a number of days meaning they will cover any vehicle you hire during the period (with some exceptions such as sports or very high value cars etc).

You may or may not think that purchasing CDW excess insurance from a specialist provider makes sense. It will depend upon your circumstances and views of risk etc. It may though prove sensible to compare their policies and offerings to those of the hire company. You may be amazed at how much money you could save at the same time as improving your cover.

If you’re renting a car, you’ll want to know that you have the car rental insurance that’s right for you. In this context, ‘right’ probably means that you’ll be looking for the best possible insurance cover at the lowest possible price. Getting it wrong might mean that you’re not only paying too much for your insurance, but also that it may not provide you with the protection you expect.

In terms of protection, you will probably want to know that you are covered against the two main categories of risk. The first of these covers injuries you may cause to a third party or any damage to their property – this is called third party liability insurance. The second category relates to any damage caused to the rental car while it is in your care – that is called Collision Damage Waiver or CDW for short.

If you have purchased these two forms of car rental insurance cover from your rental company, you may feel that you have the cover you need. Sadly, this may not quite be the case as you could find out following an accident.

How much excess?

If you are renting a car for use outside of the UK, many policies sold by the rental companies will have their third party liability payout maximum capped at a level that may be far beneath the amounts that courts could award following an accident. (In the UK third party liability by law has to be unlimited). You may also find that the CDW insurance excludes from its protection several areas of the vehicle that can be easily damaged and expensive to repair – this often includes the wheels, tyres, windows, roof and undercarriage. It’s also likely that the rental company’s policy will carry excess of between 500 and 1500 pounds, and that’s the amount you may have to contribute towards the cost of any claims.

You therefore have a choice. You can live with these shortcomings and hope you don’t have an accident or you can insure against them.

This is where you may need to start thinking about price. You can take out additional insurance with the car rental company that can increase the third party liability cover and reduce the excess etc. The rental companies often call this ‘top-up’ insurance. This is a real option but it is a very expensive way of dealing with the shortcomings of the rental company’s insurance cover.

Affordable protection is available

Car rental insurance of various types can also be purchased through the Internet from specialist providers of car rental insurance. Their prices will usually be several times cheaper than those of the car rental companies and may very well offer better cover.

You can use their policies in various ways. If your car rental company does not include insurance in their rental price you can purchase your own from one of the specialists and save yourself a lot of money. If the rental company has included basic forms of CDW and third party in the price, you can purchase just your top-up insurance from the specialist and still save money.

Car rental insurance purchased from a specialist provider offers many advantages over the policies and cover sold by the car hire companies and this is not just price related. As an example, because they are sold to you rather than an individual rental agreement, they can be taken out for a period of time. During that period they will cover any vehicle you hire (check the policy for details of certain specialist vehicle exclusions) which can save you not only money but also administration and hassle at the car collection desk. It may be worth having a look at their web sites to see what they’re offering.