When you drive a rented car, you are at risk. Accidents can happen to anyone so having insurance is usually a sound idea. It’s therefore important to ensure that you understand your car hire cover insurance and are confident that it meets your needs.
If you’re renting a car, you may need to think about three categories of ‘risk’. The first is “who signs the big cheque if I injure someone with the car or damage their property?” The second is “who will pay if this car gets stolen?” and then finally “who has to pay if this rented car gets damaged?”
The answer to all three questions is simple if you do not have insurance to cover these risks – you will!
Most car rental companies in most countries will include some components of basic insurance in their rental price, although this is not always the case. In some countries, notably the USA, a more common approach is for renters to buy individual components of insurance separately.
If the insurance is included in the rental price or sold by the car rental separately, it should normally be seen as covering the above three risks. Protecting yourself against claims from third parties is called third party liability insurance. Theft will be called theft insurance and damage will normally be called CDW (Collision Damage Waiver) insurance.
It is important then to understand whether these types of insurance on your rental car actually provide the cover you need. Although in the UK third party insurance cover must by law be unlimited, in some other locations it may be set to a maximum payout level that is unrealistically low given the size of some court awards. The CDW may also exclude damage sustained to several areas of the vehicle amongst the most easily damaged in an accident including the wheels, tyres, undercarriage, windows and roof.
Finally, you will need to consider the excess. The ‘excess’ is a financial amount that the car rental company will stipulate that you’ll need to contribute towards to the cost of a claim as the ‘first part’. This amount is usually between 500 and 1500 pounds.
If you’ve reviewed your insurance and decided that you still feel too exposed by these gaps and limitations, you can purchase ‘top-up’ car hire cover insurance from the rental company. This may reduce the excess and increase CDW cover to other areas of the vehicle – but you should be aware that this insurance is usually considerably more expensive than car hire cover purchased from other sources.
It may be worthwhile checking out the direct insurance companies that sell car hire cover over the Internet. These policies are not only significantly cheaper than the rental companies’ insurance but they offer increased flexibility.
As an example, if you purchase car hire cover from a direct insurance company it would allow you to claim back any excess payments or damage costs to areas of the vehicle excluded by the rental company’s policy. It is also possible to purchase from them additional third party cover, usually called SLI for supplemental liability insurance. These policies are sold to you as a policyholder and for a period of time. During the life of the policy it would cover you for any vehicle rented, subject to certain conditions. Altogether, this may prove a very attractive package. It may be worth investigating further.
Tags: Car Hire Cover