Protect Your Excess

To be satisfied with your hire car experience typically involves making sure that you’ve found the right vehicle for your needs at, of course, a good price. Yet making sure that your selection also includes the right sort of insurance for rental cars may also be imperative if you’re to avoid a potential large outlay following an accident.

How could such a situation arise given you have insurance in place?

The problem may arise because of the way some rental cars are described as ‘including insurance in the price’ when they’re advertised. That is perfectly correct as a statement but it may lull you into a full sense of security because in reality you may not be ‘fully covered’ – and there is a difference.

The insurance for rental cars provided by the rental company typically provides a degree of protection in the shape of:

• third party cover that aims to meet the costs of any awards against you for damage you have caused to a third party – either to their person or their property;
• CDW (collision damage waiver) – which will offer financial cover for the costs of any damage done to the hire care while under contract to you (or its theft).

Although this sounds fine, the rental company’s policies may contain two potentially very important points of note:

• typically they will carry an excess of anywhere between £500-£1600,
• they may also exclude a number of significant areas of the vehicle from cover and that means you’ll have to pay for any damage to them – typically including the wheels; tyres, roof, undercarriage and windows.

So, following an accident, the rental company may place some charges against your credit card even if you have their insurance for rental cars covering you.

The good news is that it is possible to reduce the risks of finding such costs facing you after an accident.

This can be done typically through one of two routes.

The first is to purchase ‘top-up’ or ‘Super-CDW’ insurance from the rental company – they will typically offer this to you as part of the car booking and perhaps again when you pick the car up. For an extra cost, this insurance may remove or at least reduce the excess and possibly also provide cover for the ‘exclusions’.

The second route is to purchase what’s called ‘excess insurance’ from an online provider of insurance for rental cars. These specialists offer policies that will allow you to claim back from them any excess or related costs you’ve had to pay to the rental company. They can be cheaper than the similar protection offered by the rental companies.

Such policies may also have the advantage of being available on an annual basis meaning they would cover any rental car hired by you during the period (with some special exceptions such as sports cars etc).

You may be able to find out more information on insurance for rental cars and how you could potentially save money by visiting the website of a specialist provider. A gentle browse through their materials and prices could be time well spent if you’re interested in controlling your costs!

When driving that rental car on a business or private trip, you probably don’t want to be worrying constantly about insurance or what would happen if you had a bump in it. For peace of mind you’ll want to be sure that you have in place the right insurance for rental cars.

Insurance for rental cars isn’t always easy to understand. The terminology can change between rental companies and countries, as in fact can the commercial and risk basis of the policies. That means that it is possible to drive a rented car with insufficient insurance or with insurance that you have paid far too much more. How could this happen?

To begin with, some rental companies in some countries may offer little if any insurance included in the rental price (e.g. the USA). All insurance is purchased separately as optional extras.

In other countries some forms of insurance will be bundled into the rental price. These usually cover the renter against damage caused to the rented vehicle (CDW insurance) or injury/damage caused to third parties (third party liability). Although this may sound ideal, in fact the insurance included in the price by car rental companies is usually very expensive when compared to the same insurance purchased from a direct insurance provider on the Internet.

You can purchase these types of insurance for rental cars from the direct providers and save yourself a lot of money. If the car rental company offer the insurance as optional extras you can decline it and show them that you already have direct insurance cover. If they have it included in the price, some rental companies may agree to offer a revised and lower rental only price without insurance and you can use yours.

Even if the rental price includes insurance that cannot be ‘unbundled’ by the rental company, you may still need to pause for thought. That’s because the car rental company’s basic insurance may come with certain important limitations. Normally these would include things such as some areas of the rented vehicle being excluded from cover, unrealistically low maximum payout levels being set on third-party insurance and large excesses on the policy. The excess is that amount of contribution the car rental company will expect you to make as the ‘first part’ of any claim – it is often between 500 and 1500 pounds.

Many renters are unhappy with these sorts of risks and there are two possible routes to reduce them. The first is to purchase additional ‘top-up’ insurance from the car rental company. This is likely to be far more expensive than the second option which is to purchase comparable cover from the direct insurance providers.

Their policies in those circumstances would reimburse you for any excess or repair costs you had been forced to pay to the rental company. They also have added advantages. As insurance for rental cars purchased from the direct providers is offered for a daily or annual period, it would cover any cars rented by you during that period, subject to terms and conditions. This could offer not only financial savings but also increased flexibility.

If you’re looking for insurance for rental cars, you will probably find that you are facing one of three situations – depending upon the country you’re renting in and the rental company you’re using.

The first is that in some countries such as the USA, the rental price may include little or no insurance. You will need to purchase it all separately and the car hire will offer their own insurance products as optional extras.

The second situation covers Europe and many countries around the world, in all probability the rental company will include some forms of basic insurance in the rental price.

Insurance for rental cars usually covers third party liability, theft and CDW (collision damage waiver – this covers you for damage caused to the rental vehicle). In countries where insurance is included in the rental price, this almost invariably includes third party liability and theft and MAY include CDW although CDW can also be excluded from the basic rental cost and available as an optional extra.

The third situation covers the nature of the insurance. Whether it comes included in the price or the rental company are selling it separately, the key thing to ascertain is whether or not it provides the cover you need and require.

That’s necessary because the basic level car insurance offered by the car rental companies usually contains potentially significant exclusions and limitations. Third party liability cover must by law be unlimited in the UK, but in other countries the payout level may be capped at an unrealistically low level given the awards courts can make following an accident. The basic form of CDW insurance will usually exclude damage to certain areas of the rented vehicle such as its wheels, tyres, undercarriage, the windows and possibly roof.

The car rental company’s insurance probably will also carry what’s called ‘excess’. This term is used to describe an amount of money that the car rental company will expect you to pay as the ‘first part’ of any claim, and the excess is typically set between 500 and 1500 pounds. If you have an accident that results in a claim of say 1500 pounds and the policy has excess of 1000 pounds, then you’ll have to pay that 1000 pounds. If the damage is 750 pounds, you’ll need to pay it all.

All things considered, many renters feel uneasy about these financial exposures and look to protect themselves by purchasing additional insurance. If you feel the same way, you will find that you have two options.

It is usually possible to purchase additional ‘top-up’ insurance directly from the rental company. The disadvantage here is that this is typically considerably more expensive that similar insurance for rental cars purchased from a direct insurance company.

There are insurance companies online that specialise in insurance for rental cars and they are usually much cheaper than the rental companies. They have policies available that will increase the amount of third party liability cover, cover those areas of the rented vehicle normally excluded by the rental company and which will reimburse you if you need to pay the rental company excess. Their policies are sold on a daily or annual basis so any car rented during the life of the policy will be covered (subject to terms and conditions). These policies could offer not only significant cost savings but also increased flexibility. It may be an option worth investigating.

Renting a car can make travel arrangements that bit more convenient or a holiday that much more fun. In fact at times it is essential. Yet many people admit that they are confused and even worried by what they perceive to be the complexities of insurance for rental cars.

This is understandable. The car rental companies have different offers, terms and conditions that all vary by company and frequently by country. Many of these affect the insurance for car rentals and to make matters worse, it is not unusual to see apparently confusing insurance terminology used in their advertisements. Many people will admit to having scratched their head in bafflement when reading in the advertisement things such as the car rental price did (or did not) include ‘collision damage waiver’ or ‘extended third party liability insurance’.

In fact the position is nowhere near as complicated as it may appear on a first reading. The potential renter only really has to keep in mind three things when considering insurance for rental cars:

 What insurance is available for third party liability – in other words how much insurance cover is available for damage caused by the renter and hired car to other people or their property?
 What insurance is available for any damage caused to the rented car itself?
 What exclusions and conditions apply to the policy and critically, what excess does it carry?

It’s worth remembering that although third-party liability cover is unlimited by law on rental vehicles in the UK, in many other countries the maximum amount payable is capped by the policy. Given that court awards following injuries can be very high, a limited cover could prove financially catastrophic for the renter because they will have to pay any difference between the maximum payable by the policy and the court award.

The insurance that covers damage to the rented vehicle itself is often called CDW for collision damage waiver. That is fine, but the basic form of CDW may well exclude damage caused to many areas of the vehicle such as tyres, roof, windows and wheels – all areas that can be easily damaged and expensive to repair and with only basic CDW those repair bills will be coming the way of the renter!

Then there are conditions including the excess. The excess is a financial amount that the car rental company will expect you to pay towards the cost of any damage. Typically the excess will be somewhere between 500 and 1500 pounds sterling, so if the repair costs are 1000 pounds and there is a 500 pound excess then the renter will need to pay that 500 pounds.

Insurance for rental cars can be purchased from either the car rental company or online from a specialist insurance company or broker. Some rental companies will include in the rental price some of the above insurances but they may be ‘limited’ in their protection. It is possible to buy ‘top-up’ insurance from the rental company to reduce the excess or cover other parts of the vehicle, but this can prove expensive.

The insurance for rental cars available online through the specialist insurers and brokers is frequently considerably cheaper. As it covers a policyholder rather than a vehicle, it can be used to cover all cars rented during the life of the policy and this again can generate considerable savings. The cover may well include those areas of the rented vehicle normally excluded by the rental company and offer additional benefits such as increased third-party cover. It may well be worth looking into this further.