Protect Your Excess

Having a car on hire can sometimes be risky. Even the smallest of accidents could result in you facing potentially large bills for repair costs unless you have the right sort of cover through your insurance for hire cars policy.

Doesn’t insurance for hire cars come included ‘in the deal’?

Really, this is perhaps better thought of as two separate questions:

• does the hire cost include insurance?;
• is the insurance adequate for your needs?

The rental car may or may not come with insurance included in the deal. Typically in most of Europe and many other countries it will have some insurance included, whereas in the USA and some other countries it may not.

If it does not have insurance included, the rental company will typically offer it for sale as an extra. If insurance is included, you may need to look at it carefully to see what is covered and what is not.

What needs to be examined with insurance for hire cars?

Once again, this may vary depending upon the country you’re hiring in and the company you’re using.

When insurance is included, it typically provides financial protection to cover two forms of risk:

• the risks that other people may sue you for injury you have caused them or for damage you’ve done to their property, with the hire car;
• the risk that the car rental company holds you responsible for damage done to their vehicle while on hire to you – this could be up to the full replacement cost of the vehicle.

The first category of risk is covered by third-partly liability insurance and the second by CDW (collision damage waiver) insurance.

If you do not have these two forms of insurance and with both providing adequate levels of cover, you may end up facing potentially large costs if you have an accident in a hire vehicle.

If these two forms of cover are in place, what else is there to worry about?

The insurance provided by a car hire company, whether included automatically or purchased separately, will typically also contain two limitations:

• it may carry an excess of between £500 - £1600 which could end up being debited automatically to your credit card following an accident;
• it may exclude several areas of the rental car from its cover – possibly including wheels, tyres, undercarriage roof and windows.

The upshot is that even if you have the rental company’s insurance for hire cars, you may find yourself facing a large bill after an accident.

Can these cost risks be avoided?

Yes.

You may have the option of paying the hire company extra and for that they may reduce or remove the excess and possibly the exclusions also.

Alternatively, you may find that it can be cheaper to purchase what’s called ‘excess protection insurance’ from an online specialist provider of rental car insurance. If you have a policy of this sort, you could obtain reimbursement of any excess or excluded area costs you’d been forced to pay to the rental company.

Is there more information available?

Yes.

If you’re looking to improve the protection you receive from insurance for hire cars, the sites of the specialist providers typically contain full explanatory details of their products and how they may benefit you.

Make no mistake – insurance for hire cars is critically important. It may be expensive but if you have an accident in a hire car and you don’t have sufficient insurance, the costs to you could be quite literally ruinous.

There are two main types of insurance that apply here. The first of these is called third party liability. It basically means that you have insurance to cover any claims you may receive if you have injured a third party or damaged their property. In the UK this insurance comes with hire cars and by law it must be unlimited to cope with any court awards however large they may be. Some caution is required in other countries though, because the car rental company may cap the maximum payout level at an unrealistically low amount. Remember that if a court awards an amount higher than the liability cap, it will be you who will have to pay the difference.

The second form of insurance for hire cars is called CDW (Collision Damage Waiver). This gives protection against damage caused to the rented vehicle while you’re responsible for it. This cover usually includes theft protection. Once again, if you do not have this in place and the car is damaged, it will be you who pays.

Car rental companies may include one or both types of this insurance in the rental price or they may invite you to purchase them separately.

Whichever is the case in a given rental, this insurance is likely to be very much more expensive if taken from the car rental company than if purchased from a direct insurance provider through the Internet.

You are under no legal or commercial obligation to take the car rental company’s insurance. In many cases you can decline it and use your own insurance that you have purchased separately, thereby saving yourself a lot of money. If the car rental company have included insurance in a ‘special deal’ price where it cannot be unbundled from the rental cost, you may still need to consider alternative sources of insurance.

The need for this arises from the fact that the insurance for hire cars that the rental companies include ‘in the deal’ may be limited in terms of its cover. It will very likely carry excess (an amount up to 1500 pounds that you would have to pay towards the costs of any accident) and exclude damage to several areas of the vehicle that are typically easily and expensively damaged even in minor accidents.

You can purchase additional insurance for hire cars to cover these gaps and financial exposures from the car rental company but this is likely to again be very expensive. The same type of cover can be purchased from the direct providers at significantly lower cost. Should you be charged excess by the car rental company following an accident or for repairs to a part of the vehicle ‘excluded’ by their policy, you can them claim this back from your direct insurance. It could potentially save you a lot of money.

Insurance for hire cars is an important subject. If you are not familiar with it and are thinking of hiring a car, it would be advisable to take a few minutes to get to grips with the basic principles. You could save yourself a lot of grief and very probably a lot of money.

When you hire a car in Europe and most other countries of the world, you will probably find that some tyres of insurance are included in the rental price. What is or is not included will vary by country and the hire company concerned, so you’ll need to check carefully to see what you’re getting. It’s also worth noting at the outset that in some countries (notably the USA) there may be little or no insurance for hire cars included in the basic rental price – it all needs to be purchased separately.

Whether insurance is included in the hire price or purchased separately from the rental company, you’ll probably find that it breaks down into two major categories. One of these is called third party liability. This basically means that if a third party is injured, or their property damaged, by you while driving the rented car then you do have some insurance to meet those claims.

The key thing to check here is that the level of liability cover is sufficient to meet the sometimes very high awards made by courts following an accident. Although by law such insurance in the UK must be unlimited, in many other countries the hire company may cap it at an unrealistically low level.

The second category of insurance for hire cars is usually called CDW (collision damage waiver). This basically covers you against any damage arising to the rented car while in your care.

Your CDW cover may need to be checked for two things
• It should include cover for theft of the vehicle
• Are some areas of the vehicle excluded from cover – typically these may include the tyres, wheels, roof, windows and undercarriage and they can all prove expensive to repair if damaged.

It may also be prudent to check if the rental company’s insurance carries excess. The excess this is the amount of ‘contribution’ the car rental company will expect you to make towards the costs of any claims and typically it is set somewhere between 500 and 1500 pounds.

It is possible to purchase ‘top-up’ insurance to improve the cover available and remove some risks such as the excluded areas of the vehicle. This can be purchased from the rental company although you may find that their products are considerably more expensive that similar policies purchased directly online from specialist insurers.

The insurance for hire cars purchased directly from insurance companies will also usually offer more flexibility. They will cover excluded areas of the rental car and will reimburse you for any excess you may have to pay to the car rental company. They also offer products that significantly increase the levels of liability insurance cover. As these policies are sold directly to you as the policyholder on a daily or annual basis, they will also cover all vehicles rented during the period (subject to terms and conditions such as no sports vehicles etc). This could be very beneficial and particularly so for those renting on a regular basis.

When you look for insurance for hire cars, you’ll probably find that the terms you’re familiar with for private car insurance just don’t apply. In their place are things like Collision Damage Waiver (CDW) and Theft, Supplemental Liability Insurance (SLI), Excess, the Deductible etc.

To all intents and purposes, you can probably think of CDW as a form of comprehensive insurance. Therefore CDW and Theft offer cover against damage to or theft of the vehicle.

Car hire in the UK and for many parts of Europe will normally include third-party cover that offers protection should you injure a third-party or damage their property while driving the rented vehicle. This may be limited in terms of the maximum amounts payable and you can choose to increase this amount by purchasing SLI to provide additional financial cover. It is worth noting that court awards to third parties following an accident may be very high so the limits of your cover payout should be carefully checked.

In the USA insurance for hire cars is not mandatory and will not be included in the rental price of the vehicle. Collision Damage waiver and Supplemental Liability Insurance can be purchased separately. The price will be quoted as a daily rate and will significantly increase the cost of the rental. Many find it more cost effective to purchase insurance for hire cars in advance from one of the many independent insurance companies who operate in the UK on the Internet or High Street.

You’ll find that most insurance policies carry excess. The excess is the amount of contribution the insurance company will expect you to make towards the cost of the claim. This can be a fairly substantial amount and varies from insurance supplier to insurance supplier. Typical values for excesses relating to insurance for hire cars can be anywhere between 500 and 1500 pounds. You can take out an insurance policy or waiver to provide you with cover for these excess payments.

Many but not all insurance companies will sell insurance for hire cars that excludes certain areas of the car from cover. These exclusions will typically be the windows, tyres, roof and undercarriage of the vehicle and any damage will have to be paid by the renter.

Insurance for hire cars does not have to be obtained from the car rental company. There are numerous specialist insurance companies in the market place and it may make sense to look at what these independent companies are able to offer before you accept the quote from the car hire company. Many may be able to offer a much more competitive quote better targeted at requirements of the renter.

The car rental company will sell you insurance for the duration of the rental only. Independent insurers can operate in this way as well but many also offer daily or annual policies that can be very cost effective particularly if you know that you are going to rent a car on a number of occasions. Some offer policies that cover areas of the vehicle normally excluded by the rental company’s insurance meaning that damage to those vulnerable areas will be covered.

Whoever you chose for your insurance for hire cars, it is usually a good idea to read the policy detail carefully. Know exactly what you want and what you have paid for. That way in the event of an accident and a claim being made there will be no unexpected surprises!