Protect Your Excess

Car hire insurance has its own vocabulary that may at times seem intimidating and confusing. One such term that you may have seen mentioned in ‘the small print’ is Car Hire Excess Waiver. What exactly does this mean?

Car hire excess waiver is, in effect, a form of insurance that could save you a lot of money if you are unlucky enough to have an accident with a rented car.

You may perhaps think that the rented car you’re driving came with insurance included in the price or that you purchased insurance with it from the rental company. Why do you need more?

Getting the right protection

The brutal fact of life is that your rental car’s insurance provided by the rental company is probably limited in several respects. One of these is that it carries ‘excess’ – that is a financial amount you will need to pay as a mandatory contribution towards the ‘first part’ of any claims. If that sounds rather complicated, in reality it’s quite simple, if potentially expensive. The typical rental company’s insurance on a hired car will set an excess on the policy of between 500 and 1500 pounds. If you have an accident resulting in damage valued at 2000 pounds and your policy carries 1000 pounds excess, then you will have to pay the first 1000 pounds of the 2000 and the rental company’s insurance will pay the rest. If the damage amounts to say 500 pounds, then you will need to pay it all.

This may not have been quite what you had in mind when you took out the rental company’s insurance in the first place. So is there anything you can do to protect yourself against ‘excess’ risks?

The answer is ‘yes’. Car hire excess waiver is a facility or form of insurance that the rental company may offer you. This will, for an additional cost, allow you to remove or reduce (i.e. ‘waive’) the excess from the policy. The bad news is that insurance like this sold by the rental companies is often several times more expensive than equivalent or even superior insurance sold on the open insurance market by specialist providers of rental car insurance.

Annual or daily cover

These companies also offer car hire excess insurance that means if the rental company charge you excess following an accident, you will be able to claim this back from your own insurance. These policies also have the significant attraction of being sold to you as a policyholder for a period of days (or annually) rather than just for an individual car rental. This means you can use them to protect you against excess charges from car rental companies throughout the period of your policy and for any cars rented (with the exception of certain specialist vehicles such as sports cars).

Purchasing car hire excess waiver insurance from a specialist provider of hire car insurance could save you a lot of money initially and even more money should you be unlucky enough to have an accident in a hire car. You can find these specialist companies on the Internet and it may be worth checking them out.

When you hire a car your Collision Damage Waiver or CDW will generally include excess, which you can avoid by buying an additional car hire excess waiver policy.

The excess on the CDW is the maximum amount that you would be liable to pay in the event of damage to the vehicle. If the cost of the damage is less than the excess you pay the actual costs. If it is more than the excess, you pay the excess amount. With excesses typically between 500-1500 pounds, this can amount to a hefty charge if the rental car is damaged.

You can take out additional insurance to remove or at least reduce the amount of excess payable. This is known as car hire excess waiver. You may also see it described as Super CDW. When you buy this type of cover you ‘waive’ your responsibility for paying the excess and the insurer takes on this responsibility.

You’ll probably find when you pick up the hire car keys that the hire company will try to sell you excess insurance. You’ll also probably find that the daily rate they quote you can significantly increase the total cost of your rental.

Given that you may have searched high and low to get the best possible rental deal, you may be interested to know that you can do the same for car hire excess insurance. Even if your rental agreement includes CDW insurance, you do not have to buy any excess or top-up insurance from the car rental company. You can look elsewhere for a better deal.

There are independent insurance companies who are specialist in this field and who can offer car hire excess waiver policies on a daily or an annual basis. You may find that these policies are significantly cheaper than those on offer from the car hire companies.

They may also provide cover for damage to those areas of the car normally excluded by most CDW policies. Areas like the windscreen and tyres are easily damaged and are therefore excluded from most policies including top-ups. The car hire excess waiver provided by independent insurers may include these areas as standard and so provide a wider level of cover than a similar policy bought from the car rental company.

You may also find the idea of an annual policy interesting. As the policy belongs to you, you can use it again and again in the course of the year for any number of rentals provided that the cars you hire are within the agreed conditions of the policy. This may mean that certain types of vehicle are excluded for example vintage or sports cars or those with a very high value.

The independent insurance companies can provide car hire excess waiver policies for your car hire needs in the UK, Europe, the USA as well as other destinations worldwide. The car rental company will charge any excess costs to your credit card and you would then simply have to claim on your waiver to be reimbursed by you insurance company. These are options that may be worth checking out further.

A car rented from an established rental company may come with some forms of basic insurance included in the rental price. Even if it does not, the rental company will offer insurance to you and they may also offer some forms of additional or ‘top-up’ insurance. One form of insurance you may see mentioned and that they may offer is car hire excess waiver.

This insurance relates to an aspect of car rental insurance called the ‘excess’. The excess is a financial amount that the car rental company will expect the renter to pay towards the costs of any claims even when insurance is in place.

It works on the basis that the ‘first part’ of any claim following an accident will be charged back to the renter’s credit card by the car rental company, with the amount being as defined the excess clause of their insurance policy and hire agreement. In other words, if the car insurance carries with it a stated excess of 1000 pounds (and the excess is typically set at somewhere between 500 and 1500 pounds) then this is the potential amount the renter may have to pay if they have an accident.

If the accident claim is say 1500 pounds and the policy has excess of 1000 pounds, the renter will pay the first 1000 pounds of the total 1500 pounds claim. If the total damage claim is only 750 pounds, the renter will in those circumstances need to pay the total claim amount of 750 pounds.

The risks of needing to pay excess can make some renters unhappy and uncomfortable driving the rented car. For these reasons, many seek additional insurance that will allow them to reduce or eliminate altogether the excess.

Most car rental companies will offer what they may call car hire excess waiver insurance. What this means is that for an additional cost, the renter will be able to reduce or remove (i.e. waive) the excess on the policy. The costs here can be high and usually are much higher than seeking similar cover elsewhere.

The other option is to research the policies and products of the direct insurance companies. Many such companies sell policies through the Internet that offer additional protection against several of the shortcomings that may be found in the basic car rental insurance. One such type of cover would be their version of car hire excess waiver and it is likely to be significantly cheaper that the rental company’s offering.

These directly purchased policies offer other advantages. As they can be purchased for a daily or annual basis, they cover the policyholder for the duration of the policy and not just a single rental. This means that any vehicle rented by the policyholder will be covered providing it is within the life of the policy and is covered by the terms and conditions (e.g. these policies may not cover specialist vehicle types such as sports cars).

If you are uneasy about the excess on the car rental company’s policy and are looking for car hire excess waiver, this option could offer you increased flexibility and at a much lower price.

Car hire excess waiver is a slightly frightening term used sometimes in discussions around car hire insurance. It may pop-up on the rental documents and to understand what it means one needs to look at the basics of car rental insurance.

In some countries the basic car rental cost includes little or no insurance and this has to be purchased separately at an additional cost. In most countries though, the car rental price will include some forms of basic insurance. Whether the insurance is purchased separately or included in the rental price, it typically will cover third-party liability (i.e. any damage you cause to others with the hire car), theft and some forms of damage to the rented vehicle itself.

The insurance component that covers damage to the rented vehicle is often called collision damage waiver (CDW) or sometimes loss damage waiver (LDW).

Whether you have purchased insurance for the hire car from the car rental company in addition to the basic rental price or it was already included it in the basic price, you will probably find that it carries what is called excess. The excess is essentially a financial amount that you the hirer will have to pay towards the costs of any accidents and subsequent claim. In other words, if the policy carries an excess of 500 pounds sterling, then that is the amount you will have to pay if the car is say damaged to the tune of 1000 pounds. If the damage results in repair costs of 400 pounds, you will have to pay it all.

Some people are understandably concerned about the risks of excess, particularly so given that the excess on a policy may be anywhere between 500 and 1500 pounds sterling.

There are ways that the excess on a policy can be reduced or eliminated, and that through what is called car hire excess waiver. This is another form of insurance that forms part of what many people call car hire top-up insurance. This type of cover can be purchased from the car hire company in addition to their basic insurance and would mean that amongst other things, you could significantly reduce the amount of excess payable in the event of an accident.

This is though only one of several things that should be considered. It may be worth noting that other aspects of the basic car hire insurance from the car rental company are also limited. It lay be that the CDW policy excludes damage to several areas of the rented vehicle. In terms of third-party liability cover, although the maximum amount payable by law in the UK is unlimited, in other countries the policy may cap the maximum payout to an unrealistically low level far below the award levels a court may make following an accident. In such circumstances, the renter would need to pay the difference.

If you are looking for car hire excess waiver insurance, it may be worth thinking about buying rental car hire insurance not from the rental company but instead from a general insurance company or broker. You are not obliged to take the insurance offered by a car rental company and can use your own.

The car hire excess waiver insurance sold by direct insurers online is usually considerably cheaper than that of the rental companies and often offers additional benefits. As it is sold to a policyholder for a period (e.g. daily or annually) it covers all vehicles rented during the life of the policy not just one hire. The policies often cover areas of the vehicle typically excluded from cover by the basic CDW of the rental companies and they may also offer increases in third-party liability insurance levels where required. If saving money is of interest to you then it may be worth thinking about and researching!