Protect Your Excess

When you hire a car you need two types of insurance. One is Third Party which covers you for any damage or injury you may cause to someone else when driving the hire car. The second is Collision Damage Waiver Insurance (CDW) and this covers you for any damage to the hire car itself while it is in your care.

An important thing to remember with collision damage waiver insurance is that even if you have paid out and bought cover from the car hire company, you still may not be completely covered. In fact you could still be liable to pay out considerable sums of money in the event that you have an accident and damage the hire car.

This is because as with many types of insurance buying the basic insurance does not mean that you are fully covered. Insurance often comes with excesses and collision damage waiver insurance is no exception.

Excess

What this means for your rental is that if you are unlucky enough to have an accident in the hire car your collision damage waiver insurance may only cover part of the costs and you would be responsible for the remainder. How much the remainder would be depends obviously on the amount of damage but also on the size of the excess.

As an example, your collision damage waiver policy has an excess of 500 pounds and you unfortunately cause damage to the car that the insurers say will cost 750 pounds to repair. In this case, the insurance company will charge the whole of the excess amount to your credit card and they will contribute only 250 pounds. It may be worth pointing out here that excesses can be as much as 1500 pounds.

Another area where you can find yourself liable for costs is if you cause damage to the parts of the car normally excluded from insurance policies. These parts are the windscreen, tyres, roof and undercarriage; easy to damage and expensive to fix, particularly if you have no say in who does it or at what cost.

You can of course extend the cover of your collision damage waiver policy by buying additional insurance to remove or at least reduce the excess and possibly even include those exclusions.

What you may find though is that if you take the additional insurance offered by the car hire company you will end up paying a lot of money for the additional peace of mind of knowing that you are adequately insured.

An alternative to the car hire company insurance is to have a look at the policies offered by independent insurance providers on the Internet.

You may find that the car hire insurance offered by the specialist insurers will be significantly cheaper than the equivalent insurance offered by the car hire company.

Even if you rental deal includes a basic form of collision damage waiver insurance you can still buy any additional policies elsewhere and benefit from significantly lower prices. Many specialist policies may even include those ‘exclusions’ such as the tyres, windscreen etc as standard.

If you are unlucky enough to have a ‘bump’ in that rented car, you need to be prepared to start writing some very large cheques – unless of course you have taken out collision damage waiver insurance (sometimes called CDW).

Car rental insurance is quite easy to understand in its most important aspect – if you do not have all required forms of insurance and have an accident, then you and only you will be paying up. That’s why it is important to understand what insurance if any comes included in the basic rental price and those areas where it may be advisable to pay for some more.

Collision damage waiver insurance covers you against any damage to the rental car following an accident. The other major form of rental car insurance is third-party liability, which would cover you in the rented car should you injure someone or damage their property.

These forms of insurance may be included in the car rental price (as would commonly be the case in many European countries) or the rental company may offer them as optional extras (e.g. in the USA).

The collision damage waiver insurance sold, or included, by the rental companies is likely to be limited in several respects. You will probably find that it excludes from cover several easily damaged areas of the rented vehicle such as wheels, tyres, roof, undercarriage and windows. If these are damaged, you’ll have to pay for them. The policy also probably carries what’s called excess. This is an amount of money that you may have to pay as the first part of any claim – and it is usually set somewhere between 500 and 1500 pounds depending upon the individual rental company and country of operation. So if there is an accident resulting in 1500 pound’s worth of damage and there is 1000 pounds excess on the policy, then expect to see an additional 1000 pounds charged to your credit card by the rental company.

These limitations may give rise to the odd sleepless night! Fortunately there is an answer.

You can purchase ‘top-up’ insurance from the rental company. This may cover some of the normally excluded areas of the vehicle and it also may offer a reduction in the policy’s excess or perhaps reduce it altogether. Unfortunately such top-ups can be very expensive if purchased from the rental company.

If you’re looking for a better deal on collision damage waiver insurance, you may wish to check out the direct insurance providers that sell over the Internet. Their products are typically far cheaper than those of the rental companies. They offer a range of insurance for hire car policies including, as an example, one that will reimburse you should you have to pay the rental company excess or ‘uncovered areas’ costs following an accident. So even if some basic insurance is included in the rental price, you can purchase your ‘top-ups’ from the direct providers. It may be worth taking a few minutes to check out these options and companies on the Internet – you could save yourself a lot of money.

Collision Damage Waiver insurance is the basic form of insurance for car rentals which covers damage to or theft of the rental car. By taking out the waiver, the renter of the car passes on their responsibility for the cost of the damage or loss, to the insurance company.

Some car rental companies now offer rental terms, which may include Collision Damage Waiver Insurance as part of an all inclusive rental package – the daily rental rate quoted will include an allowance for insurance. Others will quote you a much cheaper daily rental rate and show the insurance costs separately.

Collision Damage Waiver insurance bought from the car rental company generally comes with large excesses and some exclusions.

The excess amount is the level of cost above which the collision damage waiver policies will start to pay out. All costs for damage to the rental vehicle at or below this value will have to be paid for by the renter of the car. Since excesses can range from between 500 to 1500 pounds this can result in a hefty bill should the car suffer damage.

The exclusions on the policy relate to areas of the car like the windscreen, roof, tyres and undercarriage. They are excluded from the policy – they are not covered. If something happens to them you have to pay for their, potentially expensive, repair or replacement.

So while Collision Damage Waiver insurance may be an essential part of your car rental insurance, it is not necessarily the whole story.

No matter how it is calculated, when renting a car it is your responsibility to make sure that you are happy with the level of insurance cover offered. If you think you need more then you should perhaps consider buying more.

You can take out additional insurance to cover the exclusions and the excesses of your CDW policy. This can be bought either from the car rental company or from an specialist insurance company. Many of these specialist insurance companies can be found on the internet and you may be surprised at how much cheaper their rental insurance can be when compared to the equivalent level of cover from the car rental company.

One interesting product that the direct hire car specialists can offer is an annual excess policy to top up the Collision Damage Waiver. When bought from the car rental company, this will provide cover calculated on a daily basis for the duration of the rental. The independent companies however have annual policies, which can be used over the course of the year for a number of rentals. These polices may offer significant savings particularly if you know that you are going to be renting a car more than once in a yearly period. There are terms and conditions which you will need to comply with, but you should be able to find something to meet your needs.

Nobody wants to have an accident or damage their rental car but knowing that your Collision Damage Waiver Insurance together with an excess top-up gives you complete cover can offer welcome peace of mind leaving you free to enjoy that holiday or business trip.

Having a bump in a rental car can happen to anyone. In such circumstances what some renters then find is that their credit card has been billed a large amount by the car rental company for repairs. If you’d like to avoid this situation happening to you, it may be advisable to consider something called collision damage waiver cover.

This is a form of insurance that applies to rented cars and basically protects you against the costs of repairs to the rented vehicle if it is damaged while in your care. It may come included in the rental price or it may be an optional extra that the car rental company will advise you to purchase. It is important to remember that if you decline the collision damage waiver cover (sometimes called CDW) then you will personally have to pay for all repairs to the vehicle following an accident.

There are two other things that you should take note of in this area. Firstly, the basic Collision damage waiver cover sold (or provided in the price) by the car rental company is very likely to be limited in terms of what it covers. It will typically exclude damage to areas of the car such as the wheels, tyres, roof, undercarriage and windows. These areas of a vehicle can be easily damaged even in trivial accidents and they can be expensive to repair. If they are excluded, you’ll have to pay.

Secondly, the policy will probably carry excess. The excess is an amount of money that the car rental company will expect you to pay towards the cost of any repair bills even if you have collision damage waiver cover in place. This figure is often between 500-1500 pounds. So if you have excess of 1000 pounds on the policy and the repair costs are 1500 pounds then you will need to pay 1000 pounds towards the costs. If the repair costs are 750 pounds you will have to pay it all.

You can avoid some of the risks here by purchasing additional insurance (sometimes called top-up) that can reduce the excess and extend cover to include areas of the vehicle normally excluded.

The car rental company may offer top-up insurance but in general their insurance will be significantly more expensive that the same policies purchased from a specialist insurance company online. These companies offer collision damage waiver cover that will reimburse your costs should you have to pay the car rental company excess or form damage to parts of the car excluded by the car rental company’s own basic policies.

Purchasing collision damage waiver cover from a direct insurer may not only save you money but it could offer significant additional flexibility. That arises from the fact that these companies sell their policies to a policyholder and they can be purchased on a daily or annual basis. What this means is that the policy will cover any vehicle rented by the policyholder during the life of the policy (subject to their conditions). This could save significant amounts of time cost and administration – particularly for those renting regularly.

There can be large differences in insurance practice between car hire companies and between countries. One area where this may be particularly true is Collision Damage Waiver Insurance or as it is sometimes known, CDW Insurance.

In some countries such as the UK as well as many in Europe, the rented car will have some forms of insurance included in the price. Third party liability covers the driver against injury or damage they cause to other people and their property. As the name suggests, theft insurance protects against criminal removal of the rented vehicle.

Collision damage waiver insurance insures the renter of the vehicle against the costs of repairs to the rented car should it suffer damage in an accident.

In some countries such as the USA, these insurance policies may not be included in the basic rental cost and the renter needs to make their own provisions for insurance. In these cases the car rental company will usually offer their insurance policies to cover the above circumstances.

The insurance sold by car rental companies is usually expensive by the standards of the general insurance market and also may have some fairly significant limitations. In the UK, third party car hire insurance is unlimited in terms of financial cover. In many other countries third party liability cover will be limited to a financial amount that may be totally inadequate given the risks of large court awards following an accident.

The collision damage waiver insurance sold by the rental company may also have shortcomings that may concern some renters. Typically it will not cover the entire rented vehicle, as it will probably exclude the wheels, tyres, roof, windows and undercarriage. These can be expensive to repair if damaged.

Additionally, the policy most probably will carry excess. This is a term used to describe an amount of money that that the car rental company will expect the renter to contribute towards the costs of an accident even if insurance is in place. The excess range is usually between 500 and 1500 pounds.

As a result of these limitations, many renters purchase additional insurance to reduce or eliminate the excess, increase the amount of liability insurance available and to improve the cover of the collision damage waiver insurance to include areas of the vehicle otherwise excluded.

There are usually two options for doing so. The first is to purchase additional ‘top-up’ insurance from the car rental company. This is possible but it may also prove to be a very expensive option as this insurance is also available at a much lower cost from the general insurance companies or brokers.

These companies offer collision damage waiver insurance online, where it can be taken out on a daily or annual basis. It is not only cheaper but also more flexible. That is because it is sold to the policyholder for a period of time and during that period, it will cover any vehicle rented not just a single rental agreement (not including certain specialist vehicles such as sports or expensive vehicles over 100,000 pounds in value).

The collision damage waiver insurance purchased directly from an insurance company will reimburse the renter for any excess they are forced to pay the rental company and it will usually cover the costs of damage to excluded areas of the vehicle. It may be worthwhile considering it further.

If you’re thinking about hiring a car while on holiday (as a lot of people do), you might want to consider budgeting just that little bit more than you’d originally anticipated. It can turn out to be a very expensive affair and, while it might be worth it to have the freedom to explore your new location, many people find themselves shocked and confused by the procedures involved in renting a car in a foreign country, including the difficulties you might find when trying to get extra cover (such as collision damage waiver insurance).

Despite this, there are many similarities between rental car insurance and its more common counterpart. The excess is one of the most important things to consider when looking for insurance – that is to say, the amount you have to pay on any claim before your insurance company picks up the rest of the bill (if, for example, you have a crash and the repair bill comes to £250 with a £100, you’ll pay the first £100 and the insurance will pay for the rest; if it’s less than £100, you’ll pay it all). However, it’s generally much higher for rental cars, and it’s not at all uncommon to find excesses around the thousand pound mark. This is a huge amount of money, and one that many drivers feel uncomfortable being liable for.

As such, many people choose to take out collision damage waiver insurance, or CDW insurance. This is a policy that aims to lower your excess by charging you a daily premium – in effect making you pay up-front for not crashing the rental car. As a rule, the more you pay, the lower your excess will become (the the point where a fairly expensive ‘super’ collision damage waiver insurance policy will remove it completely), but this can often work out to be extremely expensive, especially if you consider that it’s added on per day of cover you need.

An alternative to buying your cover at the counter is to make sure you’ve organised it via an online collision damage waiver insurance provider before you even set off on your holidays. This can work out cheaper (and save time as well, as you don’t have to worry about figuring out complicated insurance forms while you should be focusing on enjoying the beaches and sunshine), and typically comes in two options – either a short term plan, which will allow you to purchase your cover by the day or week, or a long term annual plan, aimed at people who rent cars abroad on a fairly regular basis (at least more than once a year). While the latter can sound expensive, twelve months’ worth of cover is a long time, and it can save you quite a hefty sum of money if you think you’ll be using the services of a rental company more than once.

Whichever you choose, collision damage waiver insurance can be a good way to keep some peace of mind when driving abroad, allowing you to forget about spending a fortune on repairs if you crash and instead giving you the opportunity to focus on having fun on your holiday.