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.

Car hire excess insurance is something that someone renting a car may wish to consider if they are looking to avoid large and unexpected bills from the car rental company.

Why is this?

At the time you rent a car, you will probably take with it some form of insurance. This insurance may have been included in the basic rental price or you may have paid the car hire company for it separately.

Whichever is the case, it is very likely that the insurance from the car hire company will carry what is called ‘excess’. The excess is sometimes called the ‘first part’ of any claim and it is essentially an amount of money that the renter will need to pay towards the cost of any claims following an accident. It can be thought of as a form of mandatory contribution that the car hire company will expect you to make after an accident or other form of damage to the rented car.

The amount of the excess will vary by company and country. A figure of between 500-1500 pounds would be typical. This would operate on the basis that if you had an accident resulting in damage of 1,000 pounds and the policy had a 750 pound excess, then you would have to pay the 750 pounds. If the total damage came to 650 pounds, then you would have to pay it all. Normally the car rental company would charge this sum directly to your credit card.

Although having excess on a policy is normal practice in many forms of insurance, in the context of rental cars this has proven controversial in the past with some renters complaining that they were charged after rental for repairs to vehicles that were unnecessary and in some cases entirely without justification.

The car rental company may offer additional ‘top-up’ insurance that for an extra cost will allow you to reduce the amount of excess payable – but this can prove an expensive option.

Another and perhaps preferable way to protect yourself against these risks is to take out an additional form of insurance called car hire excess insurance. This can be purchased online from general insurance companies and brokers. It works on the basis that if your rental company charges you excess, you can claim this back from your insurance company and their policy.

Car hire excess insurance is usually considerably cheaper than the equivalent ‘top-up’ insurance offered by rental companies and also carries additional advantages. Firstly because it is sold to you the policyholder rather than a single hire, it can be taken out for a period of days or even a year. This means all vehicles rented by you during that period will be covered. This can be both convenient and a major cost saving.

Secondly, car hire excess insurance purchased from direct insurance companies will typically offer better cover than the basic policy of the car rental company. That’s because most car rental companies will exclude from their policy cover certain areas of the rented vehicle – usually the tyres, roof, wheels, windows and undercarriage. If you damage those areas of the rented car, most probably you will have to pay.

The good news is that car hire excess insurance from your direct insurance company will often also cover these risks and reimburse you if you need to pay the car rental company for damage to those areas. As an option, it may well be worth checking out.

If you’re on holiday and want to see the sights that go a little far beyond the usually day trips and excursions, you might be considering hiring a car for the duration of your stay. This can often work out cheaper than having to fork out for specialist tours, but costs can mount up – not only do you have to pay for the car itself, but there are often very high excess charges (even in some cases as high as a thousand pounds) fixed on your rental policy should you be involved in some kind of accident. If this does happen, you could find yourself with a hefty fee, which is a worry you don’t need when you’re trying to relax on holiday. A partial solution to this problem can be found in car hire excess insurance.

Car hire excess insurance policies consist of different ways to limit the amount you’d pay should you have an accident. These usually take the form of extra premiums you can pay for at the counter when you purchase your insurance, but are often confusing to understand, especially if you haven’t come across them before. The most common varieties are known as a collision damage waiver (or a CDW), and theft protection. These will help to cut down on the amount you’re forced to pay the hire company should the car be damaged through non-negligent driving or stolen, respectively. Generally speaking, however, this will not reduce your excess to zero – although the more you pay, the lower your excess will become. Often, insurance providers will offer ‘super’ versions of these premiums that allow you to cut out the car hire excess entirely, but you can expect this to cost significantly more than normal protection.

A good way of avoiding this fee is to pre-book your car hire before you even leave home; that way, you’re able to shop around for deals, and not rely on the prices at the car hire place you choose once you get to your destination being decent value. Additionally, this affords you the opportunity to book what’s known as annual car hire insurance. This does exactly what it says on the tin – it will cover you against problems you might have with a hire care (such as damage or theft) for a full year, and is often reasonably priced.

It might not work out cheaper if you’re only hiring a car for a day or two, but if you’re going to be keeping your rental for around two whole weeks – or if you plan on taking a second holiday within a twelve-month period that will involve hiring a car – it can often work out to be a massive saving, which means that you can save your holiday spending money for fun and frolics, rather than on car insurance.

If you are going abroad soon, and are planning to hire a car once you get there, you might want to consider acting now in order to secure yourself good value car hire excess insurance – that way, you don’t have to worry about breaking the bank if you have an accident, and can really afford to relax while you’re away.