Protect Your Excess

Hiring a car may be either fun on holiday or something that’s essential for business. Whichever is the case, it may be important to understand a little about damage liability waiver if you are to be confident that you are well protected by appropriate insurance.

Basic car hire insurance

At the time you book your rental car, the hire price may include some components of insurance.

Depending upon the hire company you’re using and the country of rental, this may range from:

• little or no insurance in places such as the USA;
• third party cover only;
• third party cover and a basic form of damage liability waiver.

Damage liability waiver

This form of cover is sometimes called CDW for ‘Collision Damage Waiver’. It offers you protection against the costs of any damage done to the rental car while you have it on hire. It’s perhaps worth noting that this typically includes cover against theft.

If you do not have this form of insurance protection, you will be personally liable for all costs arising from damage to or theft of the hire car.

If your rental does not include it, you may be able to purchase it from the hire company or possibly at a more competitive rate from an on-line specialist provider of rental car insurance.

Exclusions and Limitations

The damage liability waiver provided by the car hire companies ‘in the price’ will typically come with two significant limitations:

• an excess of typically between £500 and £1500;
• several areas of the vehicle excluded from cover such as the tyres, wheels, roof, undercarriage and windows.

This means that following an accident, even if you have the rental company’s insurance, you may still end up facing some potentially large bills.

Options for additional protection

If you are worried about the extent of your financial exposure as a result of the above limitations, you do have options.

It may be possible to purchase additional insurance from the car hire company that will reduce or remove the excess and possibly also include cover for the typically excluded areas of the vehicle. The rental company may call this something like ‘top-up cover’ or perhaps ‘Super CDW’.

Once again, a cheaper alternative may be to purchase excess protection insurance from the specialist on-line providers of rental car cover. These policies work by reimbursing you for any excess costs that you may have been charged by the car rental company.

These policies also may provide an additional advantage. Not only can they sometimes be cheaper but you may be able to purchase them on an annual basis. This means they will cover any vehicle rented by your during the period – subject to some exclusions for special or exotic vehicle types.

The excess protection insurance offered by the on-line providers of car rental insurance may offer you additional peace of mind by supplementing your basic damage liability waiver that came with the rental car. Finding out more may be a good idea.

There are two main components of car rental insurance cover. The first covers loss or damage to the rental car itself (damage liability waiver) and the second covers damage caused by the rental car to someone else or their property or car (third party)

Damage liability waiver can also sometimes be known as collision damage waiver or loss damage waiver. It is like insurance but on a technicality - it’s not really!

Generally, when you rent a car the rental company holds you responsible for any damage, loss, theft etc to the car. If you then buy damage liability waiver from the car rental company you ‘waive’ your responsibility for the damage and pass it back to them or to the company that supplies the waiver. It’s how any damage to the car will be paid for. So it acts like an insurance policy and for most people the fact that it isn’t doesn’t really make any difference.

Damage liability waiver will generally come with exclusions and excess which are costs that you would be responsible for within the terms of the cover. The exclusions are normally the tyres, windscreen, roof and undercarriage and without additional insurance damage to these areas would have to be paid for by you.

The excess is also known as the deductible and is that part of any costs not covered by the policy that you have to pay. As an example if there were an excess of 750 pounds and damage to the car of 500 pounds then you would pay 500. If the damage amounted to 1000 pounds then you would pay 750 pounds and the insurance company would pay 250 pounds.

You can buy additional insurance to remove or at least reduce the excess. The car rental company will almost certainly offer to sell you an excess insurance policy to cover any excess charges on the damage liability waiver.

You will find that this is a very expensive way of obtaining this type of cover and you may think it useful to shop around some of the independent insurance providers, many of whom have outlets on the Internet.

These independent insurance companies specialise in this type of insurance and you may find that they can offer prices which are considerably cheaper than those available from the car rental companies.

Their damage liability waiver policies may even be able to include cover for those exclusions in the rental company’s cover so you can have complete peace of mind when motoring.

They not only offer cost advantages but also increased flexibility. As they sell their policies to a policyholder for a period of days or a year, it will cover all rental vehicles driven during the lifetime of the policy. This may be very cost-advantageous and could also save a lot of time at the car collection desk for those people that rent regularly. It’s certainly worth a quick look at their sites to discover more. You could end up with better cover at a considerably lower price.

The thought of having an accident while driving a rented car would worry most people. Even if nobody is injured, the costs of repairs to the rented vehicle will be payable by you, the renter, unless you have in place a form of insurance called damage liability waiver.

Damage liability waiver (this may also be called CDW for Collision Damage Waiver) is insurance that will pay for some types of damage to the rented vehicle. In some cases this form of insurance will be included in the basic rental cost of the vehicle or in others you may have to purchase it separately as an optional extra. This will vary by country and perhaps the rental company and you can check their rental agreements for details.

Although it is often tempting to save money by economising on insurance, it is worth keeping in mind that if you do not have this in place you will have to pay for all repair costs to the vehicle if it is damaged in an accident. This could run to several thousands of pounds.

Unfortunately, having damage liability waiver in place isn’t quite the end of the story if you’re trying to protect yourself from such risks. That’s because the basic damage liability waiver insurance provided by the car rental company, either in the price or purchased separately, will have limitations. It will very likely not cover damage to certain parts of the car such as the wheels, tyres, roof, undercarriage and windows. These are all areas typically damaged in minor accidents and they can be expensive to repair.

The policy will also probably carry excess. The excess is stated to be a financial amount that the car rental company will expect you to pay as the ‘first part’ of any claim. It is usually set at a figure between 500-1500 pounds. If it is stated to be 750 pounds and you have an accident that causes 1000 pounds of damage to the car, you will have to pay the 750 pounds excess. If the total cost is 400 pounds, you will have to pay it all.

If you are unhappy with these two limitations, you will probably have the option to purchase additional ‘top-up’ insurance from the rental company. This could reduce or eliminate the excess and possibly extend cover to excluded areas of the vehicle. It’s worth noting though that this type of insurance sold by the car rental companies is expensive – usually very much more so than similar insurance purchased directly online from an insurance company.

The direct insurance companies will sell damage liability waiver insurance that is not only cheaper but also more flexible. They are selling their policies to you as a policyholder and they can be taken out on a daily or annual basis. What this means is that the policy covers you not a given rental, so any car you hire during the life of the policy will be covered (there will be some exclusions for specialist vehicle types such as sports cars or very high value cars of over 100,000 pounds in value).

Purchasing damage liability waiver insurance from a direct insurance company could save you a lot of money and improve your level of protection – it may be worth thinking about!

Having a minor driving accident is always traumatic. It can be even more so if you are driving a rented vehicle that suffers damage because you can find yourself facing a very large repair bill. You are going to have to pay this unless you have taken out something called damage liability waiver.

When you rented the car to begin with, it may have had something included in the price called damage liability waiver (more commonly called collision damage waiver or CDW). If it didn’t, you will probably have been invited to purchase CDW by the car rental company.

Damage liability waiver or CDW, is essentially a form of insurance that looks to protect a car renter against the high costs of repair they will have to pay if they have sustained even minor damage to the rented vehicle. If CDW in place, the damage would be paid for in part by the car rental company’s insurance policy.

The basic form of CDW sold by the car rental companies, or included in the rental price, is useful but it can still leave a renter facing large bills after an accident. That is because the basic CDW sold by car rental companies often excludes cover for areas of the vehicle such as wheels, tyres, roof and windows. These are all parts of a car that are easily and expensively damaged.

Most CDW policies from the car hire companies will also carry excess. The excess is the first financial part of any claim that the renter will be expected to pay out of his or her own pocket – in other words it is a form of ‘contribution’ towards the repair costs. The excess amount on the policy varies widely, but a figure somewhere between 500 – 1500 pounds would be commonplace.

If you are concerned about the risks and possible bills involved, it is possible to offset these by paying a little extra.

Most car rental companies will be very keen to sell you additional ‘top up’ insurance to increase the cover on things such as damage liability waiver. These additional policies can reduce the excess payable and possibly include insurance cover to areas such as the tyres etc. Although sometimes convenient, taking out this type of cover through a rental company can be very expensive.

The online direct insurance companies and brokers offer an alternative option. These offer various forms of car rental insurance and their policies are very different to those of the rental companies because they cover a policyholder and not the hire of an individual car. As they typically are sold for a period of days or even a year, they will cover any vehicles rented during that period and their cover is often broader based and superior to that offered by the car rental companies.

The damage liability waiver cover offered by these companies is frequently considerably cheaper that that purchased from a car hire company. If you are unfortunate to need to pay the car rental company the excess following an accident, then the insurance company will reimburse you through this ‘top up insurance’. This could be a way of saving a lot of money!