Protect Your Excess

When you rent a car, you may buy daily car hire insurance to protect yourself whilst the car is on rental to you.

What you may think is sensible to buy may be determined to a large extent by where you are going to drive the car.

Often when you rent a car for use in the UK or certain parts of Europe, there may be some collision damage waiver cover included in the deal. (Collision damage waiver (CDW) provides cover for damage to the car itself.) For rentals elsewhere there may be little or no collision damage waiver cover included in the deal and you may think it wise to buy this form of cover for yourself.

CDW cover almost always carries an excess. The excess represents an amount of money that you agree to pay towards any claims. Excess amounts vary between £500 and £1500.

In addition to the excess, CDW often excludes certain parts of the car from cover. These are typically the roof, windows, tyres and undercarriage.

So whether CDW was included in the rental or bought separately, your level of cover may still leave you exposed to facing some potentially large bills. You may feel that purchasing some additional daily car hire insurance to cover the excess and the exclusions may be a sensible idea.

You can of course buy this daily car hire insurance from the car hire company. There are, however, alternative sources for this type of cover that you may find to be considerably cheaper.

There are a number of Internet based insurance providers who specialise in daily car hire insurance cover and excess insurance in particular.

For UK and European rentals, their excess policies may be very attractive, especially when you consider that they may include those ‘excluded’ items at no extra cost.

If your rental is for the USA these specialists may be able to provide you with a full CDW and excess package. If you bear in mind that US rentals are unlikely to include much, if any, third party cover at all, you may also want to have a look at the Supplemental Liability Insurance (SLI) they have on offer. (You don’t need SLI for UK rentals since third party cover has to be unlimited by law).

While you’re browsing these sites you may also find it interesting to have a look at annual cover for your car hire. Annual policies could be a very economical way of buying car hire insurance particularly if you are a frequent or regular renter.

An annual policy insures you, the policyholder, in the same way as any other type of insurance. You may find that the car hire company may still charge your credit card for any due excess amounts if you have an accident and damage the car. All you would then have to do is claim these amounts back on your annual policy.

As with all insurance policies there will be terms and conditions that apply to cover of this nature. As an example, you may find that there are restrictions on the types of car that you can hire. Very high value vehicles, sports and vintage models are not covered but for the majority of renters this may not be an issue.

So if you’re looking for an alternative for your daily car hire insurance why not take a look at what these specialists can offer?

Probably the most common form of insurance for car rentals is daily car hire insurance. The insurance costs are quoted as a daily rate, which is then multiplied by the number of days of the rental.

For many rentals today, car hire insurance is bought from the car hire company. For each of the components of the insurance, Collision Damage Waiver, Third Party, CDW Excess and so on, the basic rate is multiplied by the number of days of the rental and totalled up to give a total cost for the car insurance.

Buying daily car hire insurance like this happens every time you rent a car and accept or purchase your car insurance from the rental company because the insurance relates to the rental and not to you.

You can also buy daily car hire insurance from one of the independent insurance providers who specialise in the car hire insurance market and this differs from the insurance bought from car hire companies in a number of ways. The first is that the insurance belongs to you as the policyholder. So while you may have bought it to drive one rental car only, you could typically use the same policy for another rental provided you did not exceed the daily duration of the policy.

Comprehensive protection

There are, however, other benefits of this type of insurance not the least being that it is normally much cheaper than the equivalent level of cover purchased from the car hire company. You may also find that the policies offered by the rental companies quite often exclude several areas of the rented car from their damage protection cover – typically the wheels, tyres, roof, undercarriage and windows. Any damage to those areas and the rental company will charge your credit card with the repair costs even if you have their insurance.

By contrast, the specialist providers of insurance will normally include cover for these areas in their policies.

Some car rental companies can offer what seem to be really good rental deals if you take one of their insurance included options. The basic insurance offered in these cases may not be very comprehensive though and you may feel that you would like to buy some additional excess or top-up insurance. Even in these cases you can still benefit from the cheaper insurance on offer from the specialists as you can buy your top-up and excess insurance from them and not from the car hire company.

Terms and conditions

To give a specific example, if you have an accident in the rental car and sustain damage to an area not covered by the rental company’s policy, then the car hire company may charge the cost of the repair to your credit card. You would then simply have to claim on your personal daily car hire insurance policy for reimbursement.

As with all types of insurance there are terms and conditions attached to daily car hire insurance policies sold by the specialist providers. This type of policy will not usually cover rentals of very high value, sports or vintage cars You may also find that your policy will not cover you if you want to rent a car within 150 miles of you own address.

A final point is that the independent specialists also offer annual insurance policies. These may be more convenient than daily car hire insurance if you know in advance that you are going to rent a car on more than one occasion in the course of a year.

For those of us that fail to qualify as being ‘rich’, searching for the best deals possible is a normal occurrence. If you are hiring a car, you may have searched diligently for the best hire rates for the vehicle itself but you may not realise that searching around on the same basis for daily car hire insurance could also save you a lot of money.

It works this way. If you are hiring a car, in many countries the basic rental price may include some components of insurance. This in turn may include one or more components covering various aspects of risk. There will normally be something called third-party liability that will cover any claims for injury or damage you have caused a third party. In addition, there is a form of cover called CDW (collision damage waiver) that covers the rental vehicle itself against damage.

In some countries such as the USA, the rental car may come with no insurance included in the rental price and the rental company will offer everything by way of the above insurances to you as extras.

In either case, it is usually advisable to check the insurance carefully. That’s because the insurance sold (or included it the price) by car rental companies is often limited in its cover and expensive.

You may find that the daily car hire insurance offered by the car rental company does not, for example, offer sufficient third-party liability cover given the large awards the courts can make following an accident. The CDW insurance may exclude from its cover several commonly and expensively damaged areas of the rented vehicle. It’s also very likely that the insurance will carry excess – the excess is a financial amount that the car rental company will expect you to contribute towards the cost of an accident. The excess is often set between 500 and 1500 pounds or sometimes even higher.

For all these reasons, you may find it a good idea to shop around a little.

The good news is that there are direct insurance providers that offer their policies through the Internet and at considerably lower prices than the car rental companies. Contrary to popular myth, you are not obliged to take the rental company’s insurance and can replace this or supplement it with direct insurance purchased elsewhere. Many of the direct insurance providers offer daily car hire insurance policies that are not only considerably cheaper but also offer better cover. Most will not carry excess and will cover those areas of the vehicle typically excluded by the car hire companies.

Even if the basic car rental price has some insurance included with it, you can use the insurance of the direct providers to provide additional cover. As an example, you can use it to insure you against things such as excess charges. If you have an accident and the car rental company charge you excess, you can claim this back through your direct insurance provider’s policy. Similarly, if you have to pay the rental company for damage to an area of the rented vehicle normally excluded by their ‘in the price’ insurance, your direct policy would reimburse you.
In a nutshell, if you’re looking for daily car hire insurance, it may be advisable to look around. You could find yourself a bargain!

The car hire company, as part and parcel of the whole car rental agreement, has traditionally provided daily car hire insurance. The use of ‘daily’ here merely indicates that the insurance is charged at a daily rate for each day of the rental.

There are two main categories of daily car hire insurance although the number of terms used to describe it may make it seem that there are a lot more.

The first, known as Third Party covers injury to someone else or damage to their property or vehicle. By law in the UK, this cover is unlimited and is mandatory. This means that not only will the basic rental cost for the vehicle include this as standard but also that in the event of a claim for damages as a result of an accident; there will be no limit on the amount that the policy will fund. There could still be excess on the cover but there will be no upper limit. Elsewhere in the world, Third Party cover is likely to be limited and in some countries like the USA may be optional. This would mean that if there was a claim for damages greater then the amount (or limit) you insured for then you would be personally responsible for the shortfall. You can purchase a top-up insurance known as Supplemental Liability Insurance (SLI) to increase your third party cover.

The second category of insurance is known as Collision Damage Waiver (CDW) or sometimes Loss Damage Waiver. This provides cover for damage to, or loss of the hire car itself.

Car rental companies will either quote a rate for the car and a separate rate for their car insurance or they may quote an ‘all in’ price that includes a limited level of CDW cover.

The daily car hire insurance provided by car rental companies will almost certainly still leave you liable for the whole cost of damage to those easily damaged areas of a car typically excluded from the main CDW cover, (windscreen, tyres, windows, undercarriage and roof) and for excess charges.

The excess on this type of policy may be anywhere between 500 and 1500 pounds which means that in the event of damage to the car, for example, you have to pay the cost of the damage or the total excess amount which ever was the lesser. The insurance will only contribute to damage costs that are greater than the value of the excess.

It is possible to buy top up insurance, commonly known as Super CDW, to reduce excess charges or remove them completely.

Top-up insurance bought from the car hire company can be expensive and you may find that there are still items excluded from the cover. However it is possible to find this and other types of hire insurance from independent insurance companies.

Daily car hire insurance bought from these specialists can cost you a lot less than the same level of cover bought from the car rental company. It can even cover you for damage to the items normally excluded by other insurers.

You may find it worthwhile to shop around a little for daily car hire insurance rather than automatically taking that offered by the car hire company. The potential savings may pleasantly surprise you.

Hiring a car abroad can be a tricky business. Even before you get used to the nuances of driving in a foreign country, you might find yourself struggling to work out exactly how much insurance you need to purchase with your hire care. While in some countries, a basic package is bundled in with the cost of hiring the car itself, other countries (most notably the USA) insist that you purchase it separately. Either way, if you want to drive your hire car, you’re going to need some form of daily car hire insurance – and as a result, you’re going to have to sift through all of the extraneous ‘optional’ policies to work out which is the right one for you. Of course, this can take a great deal of time, which is the last thing you want when you’re about to start your holiday. So what can you do?

Well, most car hire companies will offer you the opportunity to take out additional policies in order to protect yourself further, but most people tend to look for services that reduce the excess they’d pay should the car be involved in a collision or theft. The excess is defined as the amount you pay towards any repair bill before the insurance company takes over; if the excess is set at £300 and the repair bill comes to £400, you’ll pay everything up to the excess and the insurance company will take up the remaining £100. Unfortunately for people planning on renting a car, however, it’s not unusual for the excess on hire cars to be set extremely high, making the potential cost of daily car hire insurance quite substantial.

The only way around this, if you’re unhappy with the possibility of having to pay such a large fee in case you have an accident, is to take out an additional policy designed to reduce your excess. This is commonly known as collision damage waiver insurance (or CDW), but there are a number of different types available.

It’s important to note that it won’t completely remove your excess – unless you opt for a ‘Super’ CDW package, which generally will set your excess to zero, leaving the insurance company entirely liable for any repair bill – and, due it being paid by the day, can rapidly build up to be quite expensive. One way out of this cost is to book daily car hire insurance online before you get to your destination.

Planning a little way ahead, especially if you know you’re planning on renting a car once you get abroad, can save you a lot of time. Daily car hire insurance will help you lower your excess for an often very reasonable fee, and allows you to make sure you don’t book additional policies you don’t need. Additionally, you can purchase annual insurance packages as well as day-by-day cover, which can save you even more money. Either way, this can allow you to get your car hire insurance out of the way before you start your holiday, and save you both time and money.