Protect Your Excess

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.

Nobody enjoys the form filling and debates that arise at the car rental desk when collecting that rented car. It doesn’t seem to matter how much information you’ve provided beforehand, there are always issues on insurance and explanations why you need more. There is a way to avoid this – it’s called annual car hire insurance.

The reason this area can become a subject discussion when attempting to collect the hire car is that the car rental company will understand that their basic insurance included ‘in the price’ is limited. They will be checking to make sure that you also understand this fact, and probably will try to sell you additional insurance to plug these ‘gaps’ in the basic cover.

These ‘gaps’ arise because of the nature of the basic car insurance offered by the car rental companies. Whether their insurance is included in the rental price or purchased from them separately as optional extras as is the case in some countries, it is likely to contain a number of exclusions and limitations.

Third party liability insurance is there to cover claims against you from third parties that you have injured them or damaged their property with the rented car. Although in the UK by law the cover here must be unlimited, in many other countries the rental company may stipulate a ‘maximum payable’ sum that is too low when considered in terms of very high court awards often made after an accident.

The car hire insurance should also provide what’s called CDW (collision damage waiver) cover. This will cover you for any damage that may happen to the car while you’re in charge of it. Unfortunately the car rental policy will probably exclude damage caused to several areas of the vehicle including tyres, wheels, roof, undercarriage and windows – all areas very easily damaged even in trivial accidents.

Finally, the car rental company’s policy will almost certainly carry ‘excess’. That is the amount of financial contribution you’ll be expected to contribute towards the cost of any claims. This amount is often set between 500 and 1500 pounds.

When you arrive at the rental desk, the car hire company will be looking to ensure you understand these limitations and probably offering you ‘top-up’ insurance that will reduce the excess or cover additional areas of the vehicle etc. Although this may sound a good idea, in reality the car rental insurance sold by car rental companies is much more expensive than similar or better products purchased elsewhere.

That’s where annual car hire insurance comes in. There are direct insurance companies operating over the Internet that offer a range of car hire insurance products that are invariably very much cheaper than the rental companies. These policies will, for example, reimburse you should you need to pay the car rental company excess or for damage to ‘excluded’ areas of the vehicle.

One of the major advantages of the direct insurers’ policies is that they can be purchased for annual cover. If you are planning to hire cars regularly during a period then an annual car hire insurance policy from a direct insurer could save you a lot of money and avoid the necessity of needing to have the same debate every time at the collection desk!

It is not unusual to hear comments from people who rent cars to the effect that although the basic car rental price is reasonable, they are sometimes shocked at the cost of the car hire company’s insurance. There is a way these costs can be reduced – through something called annual car hire insurance.

The role of annual car hire insurance and the amounts it could save you will vary depending upon your circumstances, the car rental company you may use, and what country or countries you plan to hire vehicles in.

To explain why, it is necessary to think about the basics of car rental insurance.

In some cases the rental company may include some basic insurance in the rental price but in others they will not and the renter may need to purchase it from the company as an optional extra. The nature of the cover provided by the rental company’s insurance would depend partly on the rental company’s commercial position and partly on the laws of the country they are operating in.

Whichever is the case, you may find that this basic insurance does not offer you the full protection you require for several reasons.

It is not unusual to find that the third party insurance that comes as standard will have a maximum level of payout specified that may be too low for comfort given the risks of large court awards following an accident. The insurance may also include something called CDW (Collision Damage Waiver) that covers damage to the rental car but this frequently excludes damage caused to areas such as the wheels, tyres, undercarriage, roof and windows – all very expensive to repair or replace if damaged.

Finally, the rental company’s insurance will almost certainly carry excess. That is a financial amount that you as the renter will be expected to pay as a contribution towards any accident costs. The amount here will vary but typically it will be in the range 500 to 1500 pounds.

As a result of these exclusions and limitations, the sums payable by you following an accident could be significant. It is possible to purchase additional or ‘top-up’ insurance from the car rental company. This could have the effect of reducing the excess, increasing the amount of liability cover and possibly covering those areas of the vehicle normally excluded from CDW. Unfortunately though this insurance when purchased from the rental company will be expensive and considerably more than similar insurance purchased in the open insurance marketplace.

The alternative is to purchase annual car hire insurance online from a general insurance company or broker. This insurance can be purchased on an annual basis or in fact daily, and it covers the above risks. It can provide supplemental liability insurance (SLI) that will protect you against third party awards. Similarly, following an accident if you are forced to pay the excess to the rental company then you will be able to get this reimbursed to you by your insurance policy. These policies also will typically cover those areas of the rented car that are excluded from cover by the car rental company.

One of the major advantages of annual car hire insurance purchased from a direct insurance company is that during the lifetime of the policy, it insures the policyholder for all cars rented. This gives additional flexibility and the opportunity for cost savings. This would exclude the rental of exotic cars such as sports models or those of very high value – usually in excess of 100,000 pounds. As an option for saving money, it is well worth exploring.

Just what is annual car hire insurance? Hiring a car is often the best way to see the sights when you’re on holiday. Whether you want to go exploring, find it difficult to see all the sights using public transport, or merely want to avoiding running up a massive expenditure on cab fares, hiring a car is often a great excuse to really get to know wherever it is you’re choosing to vacation.

However, that’s not to say it’s always simple; the last thing you want when you’re just about to start your holiday is to spend time at a hire centre counter trying to work out which form of insurance is best for you. Despite this, many people find the huge variety in cover plans extremely complicated, often leading them to spend money unnecessarily on cover that they don’t really need, when they might be better off with an annual car hire insurance package instead.

Car rental insurance works in a similar way to any car insurance: it’s a way of making sure that you don’t end up being entirely responsible for the repair bill, which could end up costing you an absolute fortune otherwise. However, the excess attached to rental policies is normally far higher than you’d expect to find on a standard car insurance policy such as the one you have on your vehicle back home.

An excess is the amount of money you’re expected to pay before the insurance starts paying – say you have an excess of £100, you’d pay the first £100 of any repair costs, and the insurance company would pay the remainder. For car rental insurance purposes, the excess is usually much higher (often up to a thousand pounds), which means that any damage to the car could end up costing you a lot of money, as your standard package might not be adequate to keep you covered.

Annual car hire insurance is often a good way of making sure you have a sufficient level of protection before you set off on holiday. It’s usually purchased online, and as such assumes you know you’re going to be renting a car before you get to your destination, but will allow you to cut down your excess to a much more manageable level.

Annual car hire insurance means that you can book yourself a CDW (collision damage waiver) insurance policy that will apply to any cars you rent for a year; while this can work out more expensive than getting day-by-day cover over the internet, it can save you an absolute fortune if you plan on renting more than one car abroad in any twelvemonth period. Additionally, it’s important to note that it’s generally massively cheaper than trying to get the same cover over the counter once you reach your destination, and so a little foresight could go a long way.

Whether you choose to get annual car hire insurance or a day by day package, it can be a great way to make sure you don’t end up paying a massive excess charge should you be involved in an accident, which can help to put your mind at rest and really allow you to enjoy your holiday.