Protect Your Excess

If you’re hiring a car and using the rental company’s insurance, then you are very likely to spot somewhere in the small print that the insurance carries with it something called ‘excess’. In certain situations this is something that could cost you a lot of money unless you have also taken out something called car hire excess insurance.

To begin with, it’s necessary to think a little about what excess actually is. The car hire company may have included some forms of insurance in the rental price or perhaps they will try to sell them to you separately. The insurance will probably also be described as covering two forms of risk.

The first is third-party claims. These are claims against you from other people that you have injured them or damaged their property with the rental car. The second form of insurance is called CDW which stands for Collision Damage Waiver and this covers you against costs arising from damage to the rented vehicle itself.

Whether you have paid the rental company for these forms of insurance in the rental price or separately, in reality the insurance cover story doesn’t end there. That’s because if you have an accident the rental company will insist that you make a mandatory contribution to the cost of any claims – even though you have their insurance in place.

The excess

This ‘contribution’ is called the policy excess or simply excess. It works on the basis that you will have to pay the first part of any claim up to a specified amount of money and it is this amount of money that is in fact ‘the excess’.

It operates simply and for the renter, expensively. If the excess is set at 1000 pounds (and it is typically set between 500 and 1500 pounds on car rental company policies) then in the event of an accident you could need to pay up to 1000 pounds. If the claim totals say 1500 pounds and you have 1000 pounds excess, then you will need to pay the first 1000 of that 1500 pounds claim. The rental company will often bill it directly to your credit card.

If the claim is for 750 pounds, then you will have to pay it all. This might not be quite what you were expecting when you paid the rental company for the insurance to begin with.

Getting covered

You do have two ways of dealing with this risk. You can purchase additional insurance from the car rental company that will reduce or eliminate their excess. That though is a very expensive way of purchasing such additional insurance.

A much cheaper option is to purchase car hire excess insurance through a specialist provider of rental car insurance. Operating through the Internet and open insurance market, these providers can sell you a policy that means should you be charged excess by a car rental company, you will be able to claim this back through your personal car hire excess insurance policy.

Such policies are not only far cheaper than those of the rental companies but they have the added advantage that they are sold to you the policyholder for a period that can be a number of days or even annual.

This means that they would cover any vehicle rented by you during the period with the exception of certain specialist vehicle types that are outlined in their terms and conditions. Buying your car hire excess insurance from a specialist provider could save you large amounts of money on an individual rental and if you’re renting regularly the savings could be even greater. It may be worth having a look at their products and services.

When you hire a car the type of insurance that you need falls into two categories. The first is the insurance that you need to cover other people and their property for damage that you may cause them whilst you are driving the hire car. This is known as Third Party Insurance. The second is the cover you need for damage to the car itself. This is known as a Collision Damage Waiver or CDW insurance policy.

CDW insurance can also be known as Loss Damage Waiver. When you take out a CDW policy you are in fact waiving or surrendering your responsibility for paying for the repair or replacement of the hire car.

Very few CDW policies will provide complete cover and you may find that you are still liable to pay substantial amounts in the event that the car is damaged and has to be repaired or replaced.

This is because CDW policies normally come with an excess. The excess defines an amount of money which your insurer would expect you to pay toward the cost of repairs to the hire car before the policy would come into play. So if your policy stipulated an excess of 500 pounds and the damage to the car came to 600 pounds you would have to find 500 pounds and your policy would pay the remaining 100. If the cost of the damage was 400 pounds you would have to pay for it all.

Excesses can be fairly substantial. Amounts anywhere between 500 and 1500 pounds are not uncommon.

Exclusions

There may also be exclusions on a CDW policy. These exclusions refer to areas of the car, typically the windscreen, roof, tyres and undercarriage, which the policy won’t cover if they get damaged. The repair of these items can be expensive particularly when you have no control over who carries them out or at what cost.

The good news is that you can buy additional insurance to remove or reduce the excess. This excess insurance can also be called CDW excess or Super
CDW.

If you buy collision damage waiver insurance from the car hire company, it will almost certainly come with a high excess and the top up insurance they may offer to reduce this excess will be expensive. Even then you may still be liable to pay for any damage to those ‘excluded’ items.

There are other sources of CDW insurance for hire cars. There are independent insurance providers in the market place some of whom have internet sites where you can quickly and easily get a quote for your hire car insurance needs.

Even if you have hired a car with insurance included in the price you can still buy your top up or excess insurance from a specialist provider. You may even find that the policies sold by these suppliers will also cover as standard, the items excluded by many of the policies sold by the car hire companies.

Nobody likes to spend more than they have to for CDW insurance so it may be worthwhile to check out the independent suppliers. You may be surprised at how much you could save.

If you have hired a car and taken out the appropriate insurance, you may understandably think that there is little or no possibility of ‘unexpected costs’ coming from the car rental company. Unfortunately you could be mistaken – even if you have purchased from the hire company something called Collision Damage Waiver insurance.

Collision damage waiver or CDW, is a form of insurance that covers you, the renter, against any costs arising from an accident than damages the rental car. CDW may be included in the rental price or in some countries, most notably the USA, the rental company may offer it to you as a separately chargeable option.

If the rental company have not bundled CDW into the rental price, it may be worth thinking about buying it from a specialist provider of car rental insurance. Such companies operate in the open insurance marketplace, usually on the Internet and often sell various forms of rental car insurance at far cheaper prices than the car rental companies.

What to look out for

If you have taken or purchased your collision damage waiver insurance from a car rental company, you may have to watch two aspects of their policy cover and this is where the risks of unpleasant surprises and additional costs come from.

It is highly likely that their insurance will not cover all areas of the rented vehicle and may exclude the wheels, tyres, windows, undercarriage and roof. The second potential issue relates to the subject of policy excess. The car rental company’s policy will almost certainly carry excess to the value of 500 to 1500 pounds. That is the amount the rental company could bill you following an accident as your ‘obligatory contribution’ towards the cost of any accidents even if you have their insurance in place.

So even if you have only a minor accident AND you have the rental company’s collision damage waiver cover in place, you could still find yourself with a large and unexpected charge to your credit card for repairs. This does happen and when it does, the amounts can be high – so be warned!

You can pay the car rental company for additional insurance that may reduce or remove the excess and possibly cover the often-excluded areas of the vehicle.

Buying it independently

The good news is that if you have purchased your CDW from a specialist provider then there may be no areas of the vehicle excluded from their policy and another large bonus is that their policy may also not carry excess. This could work out far cheaper than paying for additional ‘top-up’ insurance through the rental company.

One final point relating to the collision damage waiver products sold by the specialist insurance providers is that they are sold for a period of time (a daily or annual basis) rather than a specific car rental. What this means is that the policyholder can use their insurance to cover any vehicle they rent during the lifetime of the policy, with the exception of some specialist vehicles such as sports cars or those over 100,000 US dollars in value. It may be worth finding out more through one of these web sites if you’re interested in saving yourself a lot of money.

When you hire a car you need two types of insurance. One is Third Party which covers you for any damage or injury you may cause to someone else when driving the hire car. The second is Collision Damage Waiver Insurance (CDW) and this covers you for any damage to the hire car itself while it is in your care.

An important thing to remember with collision damage waiver insurance is that even if you have paid out and bought cover from the car hire company, you still may not be completely covered. In fact you could still be liable to pay out considerable sums of money in the event that you have an accident and damage the hire car.

This is because as with many types of insurance buying the basic insurance does not mean that you are fully covered. Insurance often comes with excesses and collision damage waiver insurance is no exception.

Excess

What this means for your rental is that if you are unlucky enough to have an accident in the hire car your collision damage waiver insurance may only cover part of the costs and you would be responsible for the remainder. How much the remainder would be depends obviously on the amount of damage but also on the size of the excess.

As an example, your collision damage waiver policy has an excess of 500 pounds and you unfortunately cause damage to the car that the insurers say will cost 750 pounds to repair. In this case, the insurance company will charge the whole of the excess amount to your credit card and they will contribute only 250 pounds. It may be worth pointing out here that excesses can be as much as 1500 pounds.

Another area where you can find yourself liable for costs is if you cause damage to the parts of the car normally excluded from insurance policies. These parts are the windscreen, tyres, roof and undercarriage; easy to damage and expensive to fix, particularly if you have no say in who does it or at what cost.

You can of course extend the cover of your collision damage waiver policy by buying additional insurance to remove or at least reduce the excess and possibly even include those exclusions.

What you may find though is that if you take the additional insurance offered by the car hire company you will end up paying a lot of money for the additional peace of mind of knowing that you are adequately insured.

An alternative to the car hire company insurance is to have a look at the policies offered by independent insurance providers on the Internet.

You may find that the car hire insurance offered by the specialist insurers will be significantly cheaper than the equivalent insurance offered by the car hire company.

Even if you rental deal includes a basic form of collision damage waiver insurance you can still buy any additional policies elsewhere and benefit from significantly lower prices. Many specialist policies may even include those ‘exclusions’ such as the tyres, windscreen etc as standard.

It’s very easy to just take the insurance offered to you by the car rental company. Whether they’ve included it in the price or try to sell it to you separately, it is tempting just to pay up. That would be a pity though, because you can save yourself a lot of money by looking at alternative sources for your car hire insurance and specifically things such as daily car hire excess insurance.

These opportunities for savings arise because of the nature of rental car insurance. The car rental company’s insurance policies will almost certainly come with something called excess. That is an amount of money you may have to contribute towards the cost of any claims after an accident and it is usually set between 500 and 1500 pounds.

It works like this – you may have paid for insurance but the policy may contain excess of (e.g.) 1000 pounds. You subsequently have an accident that results in damage of 1500 pounds to the car. The rental company’s insurance will pay for 500 pounds of that 1500 and you will receive an additional charge to your credit card of 1000 pounds for ‘excess’. If the claim totalled, say 750 pounds, you would have to pay it all.

If, like many, you don’t like the sound of that very much, then the car rental company will work very hard to try and persuade you to purchase what they may call top-up insurance. This means that, for additional sums of money, they will agree to reduce or remove the excess altogether. At that stage it’s easy just to say ‘yes’ simply for peace of mind and convenience. In fact the rental companies hope you’ll do just that because their insurance is often several times more expensive than the same insurance purchased elsewhere.

The good news is that you have an alternative. There are specialist providers of rental car insurance operating on the Internet. They offer a range of products and policies aimed at rental cars including daily car hire excess insurance. This operates on the basis that if you have an accident and the rental company charge excess to your credit card, you will be able to claim this back from your daily car hire excess insurance policy. This method of cover may be far cheaper than the equivalent offered by the rental company.

As the name suggests, the specialist providers can sell this insurance on a daily or annual basis. What this means is that for the life of the policy you would be covered for any vehicle rented, though you may need to check the conditions as some specialist vehicle types may be excluded. The costs and time savings here could be significant as no longer would you need to engage in debates and form-filling at the car collection desk every time you rent.

The specialist companies operating in the open insurance marketplace also offer many other insurance products that can complement or in some cases entirely replace the insurance offerings of the rental companies. So whether you’re looking for daily car hire excess insurance or for cheaper (and often better) alternatives to the other types of insurance offered by the car hire companies, the specialist providers may be worth checking out.