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.