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.