Protect Your Excess

Excess waiver insurance is a type of insurance that applies to rental cars and it could save you money. How?

The excess on rental car insurance
For many people renting cars, the words on the car hire company’s site that say “insurance included” are a source of comfort. Yet this may not be the end of the story.

There are two common forms of rental car insurance:

• third party liability – this provides a financial shield against costs awarded against you following a claim from a third party relating to injury or property damage you may have caused them with the rented vehicle;
• CDW (collision damage waiver) that does the same thing but for any costs you may incur due to damage to (or the theft of) the rental car.

The policy may however carry what’s called an ‘excess’.

The excess is defined as an amount of money, typically between £500-£1600, that the rental company may debit to your credit card following an accident.

It works like this, using an example of an £800 excess. If you have an accident that leads to £1000 worth of damage, you may find £800 pounds of that charged to your credit card and the rental company’s insurance would pay the balance of only £200. Had the damage cost £750 you would have paid it all.

Excess waiver insurance
It would be understandable if you were a little concerned about this. Following an accident you may have little or no control over who assesses the damage to the hire car or who repairs it and for what cost.

You can protect yourself from the risks of an excess charge by taking out excess waiver insurance. This typically comes in two forms:

• purchased from the rental company (who may call it ‘top-up insurance’ or possibly ‘Super-CDW’);
• purchased from an online provider of specialist car rental insurance.

In the case of the former, the rental company’s excess waiver insurance means that they may agree to reduce or perhaps even remove entirely, the excess from their policy.

The specialist providers of excess waiver cover operate by offering you a policy that you can use to reclaim any excess charges you’ve been billed by the rental company. Typically these forms of policy will be cheaper than the cover offered by the car rental companies.
You may also find that the policies of the specialist providers bring added benefits.

Typically the basic CDW insurance provided by a rental company will exclude a number of important areas of the car from its base protection. These may vary but typically include the wheels, tyres, roof, windows and undercarriage. Any damage to those could also result in a charge to your credit card.

The policies sold by the specialist providers may also cover you against these charges. Not only that but they can be purchased on an annual basis. This means that if you rent regularly you could use the one policy for all your excess waiver insurance needs during the lifetime of the policy (subject to terms and conditions). So it could save you even more money!

Most insurance for car rentals comes with excess but it is possible to remove or at least reduce it by buying additional excess waiver insurance.

Excesses can be a substantial size. Amounts of between 500 and 1500 pounds are not uncommon. So you would potentially need to find significant amounts of money if you were involved in an accident while driving your rental car and had to contribute to the repair costs.

It may be worth noting that while by law in the UK third party cover is unlimited, which means that there is no upper limit on the amount that the insurance will pay out if you injure someone else or damage their property, there can still be an excess on third party cover.

Car rental companies will always offer you the chance to buy excess waiver insurance to reduce the excesses that may exist on their basic collision damage waiver and third party policy cover.

You may find that if you accept the prices offered by the car rental company, the overall cost of your rental increases dramatically. They typically quote you a daily rate which can sound ok, but when multiplied by the number of days of your rental, the costs can really start to mount up.

You may still even be left with some excess to pay and it is very unlikely that the excess insurance offered by the car rental company would include damage to those areas of the car normally excluded from most collision damage waiver cover - the windscreen, roof, tyres or undercarriage.

There is though an alternative to buying your excess waiver insurance from the car rental company. There are specialist insurance providers who offer this type of cover and you may find that their prices are much lower than those of the car rental company. Their excess cover may also include as standard those ‘exclusions’ in other policies.

They can offer you all the excess cover you need for rentals at home or abroad although they don’t cover vintage, sports or very high value vehicles.

These specialist providers can offer cover on a daily rate basis for the duration of your rental or they can also sell you an annual policy.

An annual policy can be used again and again in the course of a single year. It is not tied in to any car rental agreement but belongs to you the policyholder. So if you know that you are going to need to rent a car on more that one occasion in the coming 12 months then it may be worthwhile looking at what these companies can offer.

In fact even if you don’t have plans to rent more than once it may still be more economical to buy insurance from the specialist.

With this type of policy the car rental company would charge the costs of any damage to the car to your credit card. You would then simply have to claim on your excess waiver insurance policy for full reimbursement.

The basic forms of car insurance supplied by a car rental company will most likely still expose you to significant costs in the event of an accident, unless you have in place something called excess waiver insurance.

To understand what excess waiver insurance is and how it could protect you, it’s necessary to explain the basics of insurance for rental cars.

When you hire a car, it may come with some forms of basic insurance included in the price. These insurances may cover third party liability (i.e. the injury or damage you may cause to someone else or their property), theft of the rented vehicle and something called collision damage waiver (CDW) that will cover some of the repair costs should the rented be damaged.

Even if the rental price does not include some or all of these types of insurance, as is often the case in the USA, the car rental company will usually offer to sell these types of cover at additional cost.

Whatever the position, it is usually the case that the basic insurance supplied or sold by the rental company will be limited in one or more important respects. One of these is something called the policy’s excess. The excess is an amount of money that the car rental company will expect you to pay towards the cost of any claim. It operates on the basis that the car rental agreement will specify the excess amount (typically between 500 and 1500 pounds).

Should you subsequently be unfortunate enough to have an accident and the repair costs total 1500 pounds, if there is excess on the policy of 1000 pounds then you’ll have to pay that 1000 pounds as the ‘first part’ of the claim. The rental company will charge it directly to your credit card. If the damage totalled 750 pounds then that total amount will be debited to your card.

Many renters express some shock at the amount of financial exposure and risk involved given they thought they had paid for insurance. There are options available to reduce these risks and one of those is excess waiver insurance.

The car rental company will usually offer for sale various forms of ‘top-up’ insurance that are designed to bridge some of the gaps in their basic cover. One of these will probably be called excess waiver insurance and this essentially means that for an additional cost you will be able to reduce or perhaps eliminate entirely the stated excess on the basic policy.

Excess waiver insurance purchased from a car rental company is likely to be expensive compared to the same insurance available online through the specialist insurance companies. The direct insurers offer policies designed to offer protection for people renting hire cars and this includes covering the excess. They work on the basis that if you have an accident and need to pay excess to the rental company, then your insurance company will reimburse you. This is usually a significantly cheaper route than the insurance offered by the car rental companies.

The direct insurance companies policies also offer other benefits. One of these is that they can be purchased on a daily or annual basis. The advantage here is that as a policyholder owns the policy for the stated period, any vehicle rented by them during that period will also be covered although this will normally not include specialist vehicles such as sports cars or those over a certain value.

If you’re thinking of excess waiver insurance to protect your interests, it may be worthwhile checking out these direct insurers through the net.

You’ve rented your car and the person behind the desk asks if you want Excess Waiver Insurance. Your inclination is probably to say yes because the car hire company must know best. They wouldn’t ask you if you want it if you didn’t actually need it would they?

Before you make any decisions you need to be sure that you know three important things
• What is excess waiver insurance?
• How much is it?
• Is this a good deal if I go ahead and buy it?

The basic forms of insurance normally considered a minimum safe level when renting a car are third-party, theft and Collision Damage Waiver (CDW). Third-party insurance provides cover should you inure someone or damage their property with the rented vehicle and theft cover is, of course, self-explanatory!

In the event of an accident, CDW provides cover for damage to the rented vehicle. As with most types of insurance the policy may also list some exclusions to the cover, typically the windscreen, tyres, roof and undercarriage, with damage to any of these areas to be paid for by the renter of the vehicle. There will also almost certainly be what is termed excess on the policy. The insurance company will not pay for any damage below the excess. So with an excess of 500 pounds and damage of 750, you would have to pay 500 and the insurers 250. If the value of the damage were 400 you would have to pay it all.

Excess waiver insurance is an agreement with the insurance company that they will ‘waive’ their right to charge you for the excess. They will sell you a policy, with premiums normally priced as an amount per day, which means that they will cover (almost) all of the cost of any damage. The ‘almost’ refers to damage to any excluded items which may not be part of the excess waiver.

The amount of the excess varies from company to company. It will typically be in the range 500-1600 pounds. Excess waiver is a voluntary form of insurance so it is up to the individual to decide whether or not to buy it. You would have to decide whether it is it worth the risk of potentially facing payments of up to 1600 pounds to save on the excess premiums.

To decide whether or not anything that you want to buy is a good deal, you may wish to compare it to what others may be selling. Car hire companies sell these insurances but they are not specialist insurance providers and their prices can be very high compared to other sources. They will normally quote you one price. Even if you have bought your main car insurance from the rental company, there are many independent insurance companies either in the high street or on the Internet who specialise in excess waiver insurance and who may be able to offer more attractive terms.

If you investigate this option and purchase the insurance directly, you can arrive at the car rental desk with your insurance cover in-hand. Excess waiver insurance can be purchased in advance from most of the specialist insurers. Some will offer cover for a period of days or even a year. This means that the policies cover a policyholder for the entire period of the policy and can therefore be used during that period for any number of rentals. The cost savings are usually very significant over the same insurance sold by the car rental companies.