Protect Your Excess

If you have hired a car, whether the insurance was included in the price or sold to you separately by the car hire company, you probably would like to think you are fully covered. In fact, you are unlikely to be so because of something called car hire excess.

It works like this. Should you have an accident in the hired car, your first thoughts will be of the possibility of injury to you, your passengers or any third parties involved. You may hand the car back confident that the car hire company and their insurance will deal with the financial side of events. Then some weeks or months later you will see a charge to your credit card from the car hire company and it could be anywhere between 500 and 1500 pounds. What’s going on?

The insurance offered by car rental companies usually contains something called ‘excess’ in insurance speak. This is an involuntary contribution towards the cost of any claims that you will be expected to make even if you have their insurance in place. The amount is typically set between 500 and 1500 pounds.

If you have an accident resulting in a claim of say 2000 pounds for damage to the rented car, you will need to pay the excess and the car hire company’s insurance policy will pay the difference. So if the excess is set at 1000 pounds in the case of a 2000 pound claim, you would pay 1000 pounds and the insurance company the second 1000 pounds. If the claim was for say 500 pounds then you would have to pay it all.

It’s worth keeping in mind that even if you have a minor bump, you may have little or no control over who assesses the damage or repairs it and at what cost. There may be a significant risk of finding yourself hit with hefty bills in such a situation if you only have the rental company’s basic insurance.

If you’re unhappy with this position, you have two options.

The first is to pay the car hire company additional sums to increase your level of insurance protection by reducing or eliminating the car hire excess on the policy. They will be happy to do so but be warned – their costs for doing so may be high. The second option is to take out a car excess insurance policy with a specialist provider of rental car insurance. Operating over the Internet, these providers will insure you against car hire company excess charges. Following an accident, if the rental company charges you excess, then you will be able to claim reimbursement of the sums involved from your own policy.

The costs of this type of car hire excess insurance will be far lower than similar insurance offered by the rental companies. The specialist providers have a range of products that can be used to supplement or replace the insurance sold by the car rental companies. If you investigate this further you will see just how this could save you significant amounts of cash.

Many companies that are trying to sell something will try to make their headline price look at low as possible. One of the techniques some car rental companies use to achieve this is to offer a rental price that ‘includes insurance’ but not to make clear that this insurance also carries car hire excess.

What this means is that if you have an accident, you could still be facing significant costs even though you have insurance in place. This can best be illustrated with an example.

The car rental companies will usually offer insurance against third party liability, theft and CDW (collision damage waiver). CDW is the insurance that covers any accidents that result in damage to the rental car. These insurance types may be included in the rental price as is commonly the case in many European countries, or the car rental company may offer them as separate purchases as is more commonly the case in the USA.

If you hire a car that has its basic forms of insurance provided by the car rental company, then there’s a good chance to the policy will also carry something called ‘excess’ as mentioned above. The ‘excess’ on a policy is the amount of money that the car rental company will insist you pay towards the ‘first part’ of any insurance claim.

The car hire excess is usually set between 500 and 1500 pounds and works simply. If you have 750 pounds excess and an accident results in damage to the rented car of 1500 pounds, the car rental company will charge the 750 pounds to your credit card as your contribution. If the damage totals only say 400 pounds, this is the amount that will be debited to your card.

Although excess is a normal insurance technique, it has proven controversial in the past with car rentals. That’s because if the car is damaged, the renter has little control over who repairs the car and at what cost. That can prove a nasty shock when the charge hits your credit.

If you’d like to protect yourself against car hire excess then the good news is that you can do so. The car rental company will offer to sell you ‘top-up’ insurance that for an extra cost will eliminate the excess from the policy (or reduce it). Unfortunately this insurance can prove to be expensive if purchased from a car rental company.

The direct insurance companies that sell over the Internet offer a more affordable option. They will sell car hire excess insurance that mean should the rental company charge excess to your credit card, the amount concerned can be claimed back from them. These policies also offer numerous other advantages such as policies that are sold on a daily or annual basis. These policies will cover any rental car driven by the policyholder during the lifetime of the policy (subject to terms and conditions). The cost savings and increased flexibility here can be substantial – particularly for those that rent regularly. It may be worth considering.

When you are examining your car hire insurance, you will probably see that it is stated as being subject to ‘car hire excess’ or just ’excess’. It is important to understand what this means.

When renting a car in most countries, you may be reassured to see that the rental price includes insurance. This insurance will usually cover third partly liability, theft and collision damage waiver (or CDW as it is known). Together these insurances will offer cover against injury or damage you cause to another party or the property of another party, the risk of theft of the car, while CDW covers against the risk of damage to it.

In some countries, most notably the USA, the basic rental price may include none of these insurance products and you would need to purchase them all as optional extras.

The basic ‘in the price’ insurance provided by many car rental companies will usually carry what’s called excess. The car hire excess is a financial amount that the rental company will expect you to pay as the ‘first part’ of any insurance claim. In most cases the car rental company will set the car hire excess at an amount between 500 and 1500 pounds.

This works on a simple basis. If the rental company state the excess to be 1000 pounds, then if you have an accident and the claim total is 1500 pounds you will have to pay the first 1000 pounds of this amount. If the claim is 900 pounds, you will have to pay all of it.

In such unfortunate circumstances, the care rental company will usually charge the excess amount directly to your credit card.

Many renters feel uneasy about driving a rented car that has a large car hire excess on the insurance policy. The good news is that taking out additional insurance called ‘top up’ or perhaps ‘car hire excess insurance’ can reduce this risk. There are two ways of doing this.

Firstly, you will probably find that the car rental company will be keen to sell you additional insurance that may reduce the excess amount or possibly remove it entirely. Although perhaps useful, this insurance is usually expensive and significantly more so than the alternative option.

The second option is to purchase car hire excess insurance and related insurance cover from a direct insurance company online. They offer a variety of products aimed at the car rental market and in this particular case, they will offer policies that protect you against the excess payments charged by the car rental companies. Following an accident, if the car rental company charge excess to your credit card, you would be able to claim this back from your insurance policy.

Car hire excess insurance policies purchased from a direct insurance company are not only cheaper but also frequently more flexible. You can purchase them on a daily or annual basis and they cover you the policyholder rather than a specific car rental. This means that you can use them to cover you for any vehicle rented during the lifetime of the policy, with the exception of certain vehicle types such as sports cars or those of over a certain amount. This could be very convenient and flexible – particularly if you are renting regularly.

If you hire a car then there is a fair chance you will have encountered the term ‘car hire excess’ and perhaps have wondered what that meant.

When you hire a car, it may come with some insurance included in the basic rental price or in some countries the insurance is added-on as an optional and chargeable extra.

Whichever in the case, you will probably find that parts of the insurance or perhaps the overall policy, contains something called excess. The excess is the amount of money, often called the ‘first part’ in insurance speak, that you as the renter will have to contribute towards any claim arising. The amount of excess varies between rental companies and countries but a figure of somewhere between 500-1500 pounds sterling would not be unusual.

The excess works quite simply. If the car rental company has a stated excess of say 500 pounds, then if you have an accident that causes damage to the rental vehicle of say 1000 pounds, you will be expected to pay 500 pounds of that 1000. If the total damage cost were 400 pounds, then you would have to pay the whole amount.

Car hire excess can be a cause for concern to many renters. There is of course the uncertainty coupled with the fact that if there is damage to the rented vehicle you will have little control over who repairs it and how. Costs can rapidly escalate even for small accidents.

It is also worth mentioning two other aspects of car insurance where some attention is usually required. Firstly it is worth checking carefully to make sure that the third party liability cover (essentially covering you against injury or damage you may cause to others with the rented vehicle) is adequate for your needs. Sometimes this is capped at a maximum payout level that is unrealistically low given the awards that courts can make following an accident. Secondly it may be worthwhile checking any exclusions contained within the rented vehicle damage insurance (often called CDW). You may find that many areas of the rented vehicle such as tyres, wheels, roofs and windows are in fact not covered.

You have two options if the car hire excess or other shortcomings in the car rental company’s insurance are of concern you.

You do have the option of taking out additional insurance through the car rental company. This can reduce or eliminate the excess, increase third party liability cover, and sometimes include in cover those areas of the vehicle normally excludes. These additional insurances may prove expensive though.

It is also possible to take out car hire excess insurance through a general insurance company or broker online. These policies offer all of the cover forms referred to above but they have the advantage usually of being considerably cheaper. As they are also sold to you the policyholder rather than just a single car rental agreement, they will cover most vehicles rented by you during the life of the policy. Do note, however, that as with all insurance policies, there will be terms and conditions, such as the provider’s set limit, which is typically 100,000 pounds, and the exception of some cars such as classic and sports cars and, motorhomes.