Protect Your Excess

Car rental excess insurance is something that you may chose to ignore completely – particularly if you happen to like large and unpleasant financial shocks.

Such shocks are a very real possibility when hiring a car. That’s because the insurance provided by the hire company will, in all likelihood, contain a critical limitation. Buried somewhere in the small print will probably be a clause to the effect that the policy contains ‘excess’ and the excess is usually stated to be a financial amount between 500 and 1500 pounds.

What you may be liable for

What does this mean in practice? Quite simply, if you have an accident that results in a claim then you will have to make a mandatory contribution to the cost – in other words the ‘excess amount’ that is sometimes also called the ‘first part’ of any claim. So if the policy excess is defined in the hire agreement to be 750 pounds and you have an accident resulting in 500 pounds’ worth of damage to the rented car, you should expect to see a charge to your credit card of the 500 pounds because it is below the policy’s stated excess. Should the damage be assessed at 1500 pounds, you will get a charge to your credit card for the full 750 pounds excess.

This is not a theoretical risk but a reality. Accidents happen and the renter may have little or no say over who assesses the damage or repairs it. So you may think you have paid for insurance on the rented car but after an accident you could find yourself anywhere between 500 and 1500 pounds worse off than you anticipated.

You can take steps to eliminate this risk. The first of these is to pay the car rental company for more insurance that will eliminate or reduce the excess on their main policy. They may call this car rental excess insurance or more commonly ‘top-up’ insurance. This insurance though is usually several times more expensive than the alternative.

There are specialist providers of car rental insurance policies that operate over the Internet in the open insurance marketplace. It’s very simple – if you have an accident you may still have to pay the rental company their ‘excess’ but you can claim this back from your own policy. The specialist’s car rental excess insurance is likely to be significantly cheaper than that of the rental company and you may find the cover is rather better.

Superior cover

The cover may be superior because unlike the rental companies, the specialists are selling a policy to you as a policyholder rather than a given car hire agreement. Their policies can be purchased by the day or even annually. During the life of the policy they will cover any vehicle rented by you (though not some specialist types and those of a very high value – check the policy for full details) and this can offer huge cost and flexibility advantages, particularly for those renting regularly.

Car rental excess insurance purchased from a specialist supplier can’t stop you having an accident but it could stop your situation being made even worse by the rental company’s large and unexpected charges to your credit cards. It may be worth making further enquiries for the sake of your peace of mind!

If you have had ‘a bump’ in a rental car, you may not be too worried financially speaking. You may have purchased from the car rental company something called CDW (Collision Damage Waiver) that insured against damage to the rented car and therefore returned it without too much concern. It can therefore come as a nasty shock to subsequently see a large debit to your credit card from the rental company – and this can really happen unless you have car rental excess insurance.

So how can the insurance company charge you for the cost of an accident even though you had purchased insurance from them? This is explained by something called insurance excess. The excess is stipulated as a financial amount, usually between 500 and 1500 pounds that the insurance company will expect you to pay towards the cost of an accident.

They may call this the ‘first part’ of a claim because of how it works. If the policy carries a 750 pounds excess and you have an accident that causes 1000 pounds worth of damage, then you will have to pay the first 750 pounds of that 1000 as the ‘first part’ of the damage repair. If the damage was valued at 500 pounds, you would have to pay the full 500 pounds and the car rental company’s insurance would pay nothing.

This cost would usually be charged back directly to your credit card and it can prove controversial given that the renter usually has little control over who assesses the damage, who repairs it and at what cost.

Many people are understandably nervous about their excess and look for ways to reduce or eliminate it. There are usually two main ways of achieving that through something called car rental excess insurance.

The car rental company will be happy to sell you various forms of additional insurance, including this one. For an extra payment they will reduce the amount of excess payable, or in some cases, remove it entirely. Unfortunately you may find that their additional cover of this sort is expensive when compared to the other option.

There are direct insurance companies that sell car rental excess insurance through the Internet. These specialist suppliers are usually much cheaper than the car rental companies. Their policies operate by reimbursing you for any excess charge that the car rental company debit to your card.

As this type of policy also applies to you the renter rather than a specific car rental agreement, they also have the advantage of being purchasable for a period of days or even a year. What this means is that any vehicle rented by you during that period, providing the terms and conditions were met, would be automatically covered. This offers considerable benefit not only in terms of being able to purchase cheaper car rental excess insurance but also in terms of flexibility as no longer would you need to debate insurance options every time you arrived to collect your rented car.

The importance of car rental excess insurance should never be underestimated and is something that should be considered by anyone who rents a car.

It can be a nasty shock if you are unfortunate enough to have some form of accident when driving a rental car. Unfortunately you may get another one if you find that following the accident, the car rental company has charged you for the accident even though you purchased insurance from them. To avoid the risks of this happening, it may be worthwhile purchasing car rental excess insurance.

To explain why this is so, it is necessary to consider the nature of most car rental insurance provided by the car rental companies.

Essentially their insurance will cover you and the rented vehicle against claims from third parties, theft of the vehicle and damage to it. This sort of cover is usually called liability, theft and CDW (Collision Damage Waiver) insurance. It may come included in the rental price or you may purchase each component of it separately from the rental company.

This type of insurance purchased from the car hire company is usually ‘basic’ in that it typically comes with certain limitations and exclusions. You may find that the maximum amount payable under third party liability is capped at a maximum level that is far too low given possible court awards following an accident. It is also common to find that the rental company’s insurance will exclude certain areas of the vehicle from its cover. These are usually the wheels, tyres, roof, windows and undercarriage. These are all areas that are commonly damaged even in minor accidents and they can be expensive to put right. If they are excluded from cover, it is you as the renter who will have to pay.

Finally, the policy as a whole may carry what’s called excess. This is an amount that it stipulated as being the sum you will have to pay as the ‘first part’ of any claim. This sum is usually set between 500 – 1500 pounds. So if there is an accident that damages the vehicle to a total of 900 pounds and the policy has an excess of 600 pounds, it is you that will have to find the 600 pounds. This is where some renters find they receive an unpleasant surprise when examining their credit card bills after even a small accident with a rented vehicle.

Fortunately it is possible to protect yourself against high excess charges by purchasing additional insurance to cover these risks. The car rental company will usually offer you what they often call ‘top-up’ insurance that will allow the excess amount to be reduced and possibly the liability cover to be increased and other areas of the vehicle covered. This insurance though is usually considerably more expensive than similar products available from the general insurance market.

It is possible to purchase car rental excess insurance online from insurance companies and brokers. These policies will reimburse you for any excess payments you are forced to make to the car rental company following an accident. They can be taken out on a daily or annual basis and are often very considerably lower cost than similar insurance from the rental company.

Car rental excess insurance from the direct insurance companies also usually offer other benefits and cover types. Some policies may offer enhanced liability cover (sometimes called supplemental liability insurance or SLI) that will increase the maximum payable. They also typically will cover areas of the rented vehicle frequently excluded by the rental company.

As their car rental excess insurance policies are sold to you rather than a given rental agreement, they can be used for multiple vehicles hired during the lifetime of the policy. This can offer significant flexibility and cost advantages, although you may have to avoid renting sports cars, specialist vehicles or those that are over 100,000 pounds in value as they will be excluded from cover. This option may be worth checking in detail if you’d like better cover at reasonable prices.

Just what is car rental excess insurance? Hiring a car can be a great way to see more of a foreign country. It gives you a freedom that you wouldn’t normal experience if you stayed in your hotel complex, and means that you’re given the ability to explore places that go beyond just the pool, bar, local market and beach just down the road. However, it’s sometimes necessary for business trips too – many companies expect their workers to hire cars on business trips in order to maximise their efficiency while going to see clients, and because it saves them running up huge taxi bills.

Still, that’s not to say that it’s necessarily a cheap option. While car hire itself can often be relatively reasonably priced (unless you’re viewed as a particularly risky driver, such as someone under 25), the additional charges levied on car rental can be extremely high. As a result, many people find that car rental excess insurance is enough to put them off renting for themselves.

An excess is defined as the amount of an insurance claim you pay before the insurance company takes over; if you have a repair bill of £300 and an excess of £250, you’ll pay the first £250 and your provider will take care of the remainder. However, unlike most UK car insurance excesses, the excess insisted on by many foreign can hire insurance providers can be extremely large (perhaps even as high as a thousand pounds in some cases). Understandably, it’s unlikely that you’d want such a large risk hanging over your head.

But what are your options? If you don’t like the idea of being liable for so much money, you can take out car rental excess insurance when you arrange to hire your car. This usually takes the form of what’s known as a collision damage waiver (CDW) or theft protection policy, and is aimed at reducing the amount you pay in the result of a collision or theft while the car is signed over in your name. The cost of these premiums increase as they bring down your excess – the point where a ‘Super CDW’ or ‘Super Theft Protection’ policy will completely remove your excess altogether, meaning that your insurance provider is entirely liable for any accidents you might have – but these can often be expensive.

For a cheaper brand of car rental excess insurance, you might want to consider buying online. There are a whole host of companies that will allow you to pre-book your insurance before you go abroad, either on a daily basis or in annual instalments – useful if you’re planning on renting a car abroad more than once in a twelve-month period. These are often much cheaper, and mean you don’t get sidelined into buying other optional packages that you don’t really need, as well as streamlining the process of sorting out your car rental excess insurance.

Whichever option you choose, remember that even though car insurance is necessary, car rental excess insurance is usually just a way to get peace of mind, allowing you to enjoy your holiday as much as possible.