Protect Your Excess

When you hire a car, the insurance cover may vary depending upon the rental company that you’re using and the country you’ve decided to rent in. As insurance for car hire could make the difference between an accident being a minor inconvenience or a large outlay, learning a little more about it might be a good idea.

Insurance for car hire

In the USA and a few other countries, the price you pay for the hire car will typically include little if any insurance. It may be offered for sale as an optional extra by the rental company or alternatively, purchased from an online specialist provider of rental car excess insurance. The latter option can sometimes turn out cheaper.

In many other countries including the UK and much of Europe, the rental car’s hire price should include some components of insurance.

‘In the price’ insurance for car hire

Typically car rental insurance covers two forms of risk through two types of insurance:

• third party liability – to financially cover claims from other parties that have suffered personal injury or damage to their property;
• collision damage waiver (CDW) – to offer financial protection against claims from the car hire company arising from any damage the hire car may have sustained while you have it on hire.

In some countries, the ‘in the price’ insurance may only include third party liability. In others it may also provide a basic form of CDW.

Limitations of ‘in the price’ insurance

It may be advisable to check the insurance for car hire that is part of the rental cost as:

• the rental company’s policy may contain a large excess of between £500 and £1600 – that amount could be charged to your credit card following an accident as your contribution to the insurance claim costs;
• the CDW may exclude several important areas of the vehicle from its cover notably the wheels, tyres, windows, roof and undercarriage.

If you find these to be the case, you may decide that you are not entirely comfortable with the large financial risk presented. If so, you may wish to consider additional insurance to cover these ‘gaps’.

Additional insurance protection

The hire company may offer you something they call ‘top-up cover’ or possibly ‘Super-CDW’. This is essentially additional insurance, which means they will reduce or remove the excess. It is also possible that they will remove the ‘exclusions’ and cover all areas of the vehicle.

An alternative source for this protection is the specialist providers of rental car insurance that you can find on the Internet.

They offer a product typically called ‘excess insurance’ which will pay you back any sums you need to pay the rental company for excess or damage to excluded areas following an accident.

The policies provided by the specialists are typically cheaper that the ‘top-up’ insurance offered by the rental companies and they may also offer superior cover.

Finding out more

The web sites of the specialist providers of insurance for car hire typically contain full details of their products. Looking at one of their sites may be time well spent as it may be able to save you money.

It’s normally fairly easy to find a good hire car and at a good deal price. Finding insurance for car hire at the best possible price may require a little more thought.

The reason for that is because many people renting cars just take the insurance offers that are put down in front of them by the rental company. That’s a pity because these types of insurance for car hire are usually expensive and may have gaps in cover. In fact, the renter is generally not obliged to take the car rental company’s insurance and can use their own.

To explain – when hiring a car many people see that the rental price includes some forms of basic insurance. Usually these are insurances to cover damage the renter may do to other people or their property (third party liability) or damage to the rented vehicle itself (CDW for ‘collision damage waiver’).

In some countries, the rental price may not include these forms of insurance and the rental company will offer them for sale separately.

When renting a car in a country where insurance is not included, the renter can usually purchase their own forms of CDW and Third Party liability and decline the car rental company’s offers. Such insurance is sold via direct insurance providers often through the Internet. Their prices are usually very significantly cheaper than the prices offered by the car rental companies.

In situations where the insurance is ‘bundled’ into the rental price, it may be possible to ask the rental company for a price that excludes their insurance. In some cases this may not be possible but even there, the renter may still have the option to save money.

That’s because even when the car rental company has bundled the insurance into the rental price, it is often the case that this basic insurance is too limited for many renters’ needs. It may be that the rental company’s policy carries large excess (the amount of contribution the renter would have to pay towards the cost of an accident) and excludes damage to certain areas of the rented vehicle. The risks of incurring high costs following an accident may surprise some renters who thought they had insurance included ‘in the price’!

In such situations, many renters look to take out additional insurance to cover these risks. Once again the car rental company will offer what they may call ‘super CDW’ or ‘Top-up’ insurance but these cover types will be far higher than the same purchased from a direct insurance provider.

It is also possible to purchase from the direct providers, various forms of insurance for car hire that are aimed at providing this additional cover to bridge the gaps in the car rental company’s cover. Their insurance in this case would mean that if for example you accepted the rental company’s insurance but subsequently had to pay excess to them, you would be able to claim this back from your direct provider’s top-up policy.

Having a look at the direct insurance providers could save you a lot of money when purchasing that insurance for car hire. It may be worth a little effort to see what they’re offering.

It is a common misconception that all insurance for car hire is included in the basic rental price paid to the rental company. Sadly this is not the case and following an accident you could experience some unpleasant financial surprises unless you check carefully what insurance is in place and how far it covers you.

In many countries, particularly the UK and Europe, rented cars usually come with various forms of insurance cover included in the price. This is often a basic insurance and it may or may not be adequate for your particular needs. In other countries, with the USA being a good example, little if any insurance may be included in the basic price and it is all offered for sale by the rental company as an optional item.

Whatever the normal practice and policy of the car rental company you are using, and the country you plan to rent in, it is likely that the basic insurance supplied or sold by the rental company will have limitations that you may wish to think about.

Firstly, it may have third-party liability insurance that offers you cover against claims from other people whose person or property you have damaged. Unfortunately in many countries this insurance is very limited and may be restricted to a maximum payout level that could be wholly inadequate given the sometimes very high sums that a court may award the inured third party.

Secondly the insurance for car hire often called CDW (Collision Damage Waiver) is intended to provide you with cover against damage caused to the rented car itself. Commonly though, the basic car rental company’s CDW will exclude damage to areas such as the car’s wheels, tyres, undercarriage, windows and roof. If these are not covered, then you will have to pay for any damage to them.

Finally, the basic insurance for car hire provided by a car rental company will almost certainly carry excess of between 500 and 1500 pounds. The excess is a financial amount that the car rental company will expect you to pay as a contribution following an accident. If there is stated excess of 500 pounds and the vehicle is damaged to 1000 pounds in value, then you will have to pay 500 pounds of that. If the damage totals 350 pounds then you will have to pay the whole amount.

If you are unhappy with the insurance limitations and exclusions in your rental agreement, you essentially two options, excluding of course ‘do nothing’!

You can purchase additional insurance to cover these areas from the car hire company. They may offer these to you but you should be aware that these policies are usually very expensive compared to similar policies purchased elsewhere.

Alternatively you can purchase various forms of insurance for car hire from direct insurance companies online. These policies will cover you against the risks outlined above. They can be used to increase the amount of liability cover available to you (this is often called Supplemental Liability Insurance or SLI). They can also cover your excess risks and will reimburse you for any excess payments that you have to make to the rental company following an accident.

These types of insurance for car hire policies are not only cost-effective but also very flexible. That is because they are sold as a policy to you the policyholder. As you can purchase them on a daily or annual basis, they will cover all vehicles rented by you during that period although there will be some exclusions that cover very valuable (over 100,000 pounds) cars and specialist models such as sports cars. All in all, it may be advisable to check this option out.