Protect Your Excess

In most countries of the world, by law you will need some form of rental car insurance if you’re driving a hire vehicle.

Typically this will stipulate that you must have a certain minimum level of third-party liability cover so that you can cover a component of the financial consequences of any awards against you should you have injured someone (or damaged their property) with the hire car. In general, the car hire companies will include this ‘minimum third-party cover’ in their basic rental price.

It may be worthwhile being a little cautious. In some countries such as the USA, individual State or national laws may set the required minimum at a very low level. If the rental car comes with say US $25,000 of third party cover and following an accident you have $500,000 awarded against you, then it will be your finances that have to find the balance of $475,000!

In the UK the third-party protection that comes with the rental car insurance as ‘included in the price’ must provide unlimited financial protection by law.

In some countries the rental vehicle may also be provided with CDW (collision damage waiver) included – even where it is not, the rental company will usually offer it to you for sale.

CDW functions to cover you against the cost of any damage incurred by the rental car while it’s on hire to you – and this protection includes theft. Once again, if the car sustains damage and you do not have CDW then it will be you who has to sign some hefty cheques for repairs.

The CDW provided by the rental companies will possibly contain some clauses that may also get you reaching for your chequebook following an accident.

You may find that the policy won’t cover the vehicle in total and that some areas or parts are excluded from cover. It will also typically contain a large excess that may fall in the range £500-£1600. That may be debited to your credit card after an accident as your ‘mandatory contribution’ towards the total cost of the claim.

If you’re uneasy about the risks arising for your wallet as a result of third-party or CDW limitations, you can protect yourself by taking out a little extra insurance.

Typically the car rental cover will offer you what they may describe as ‘rental car insurance top-up’. This means that for an additional sum they may remove the excess and cover the entire vehicle. In countries where it is applicable, they may also offer something called ‘Supplemental Liability Insurance’ (SLI) which can boost the amount of protection you have for third-party claims.

You may be able to achieve the same protection at a lower cost by taking out a policy with an online specialist provider of rental car insurance. If you have one of their policies you would simply recover from them any costs debited to your credit card by the rental car company for things such as excess.
The specialist providers may offer you the opportunity to save some money on your rental car insurance. Checking them out further may be a smart move.

Selecting a rental car can be fun. Looking for the model you want and searching for the best deal or special offer can be rewarding. Looking for the best deal possible on rental car insurance doesn’t have quite the same obvious appeal but it can save you lots of money and potentially, from near financial ruin.

Once the rented car has been found and the rates checked is when it is necessary to sit back and consider the insurance position. Does the car come with all the types of insurance you need? Is the cover under each category sufficient to give you peace of mind? Are their any costs and exclusions that are perhaps not immediately obvious when looking at the headline price? Is there really any alternative to taking what the rental company are offering by way of insurance cover?

Rental car insurance may or may not come with some insurance included in the price. If it doesn’t, the rental company will offer it to you as separately purchasable elements. In such a situation, you are under no obligation to take their offerings – you can purchase your own cover from a direct insurance provider at a fraction of the cost the rental company would charge. We’ll come back to this later.

In other cases the rental company may include some or several components of insurance into the rental price. In those situations you can check with the rental company to see if they will offer a ‘rental only’ price without the cost of their insurance built in. That may also give you the possibility to purchase your own at a much lower cost though some rental companies may be unable to offer a ‘rental only’ price if the rental price is a special deal that includes mandatory insurance.

If the car rental company’s rental car insurance is included in the rental price and cannot be unpackaged from it, you may also wish to check it carefully. That’s because their basic insurance often excludes some areas of the rental vehicle from damage cover (i.e. you’ll have to pay if they’re damaged). It’s also possible that their third-party cover for damage you may do to others is capped at a maximum payout level that’s far too low given high court awards following an accident. If all that’s not enough, it is worth checking the excess on their policy. That’s the amount of money you may have to pay towards the costs of any accident – typically this will sit at somewhere between 500 and 1500 pounds.

So even if you have rental car insurance from the rental company, you may feel that it is just not enough to cover the risks.

In that case you can once again check out the direct insurance providers on the Internet. They also offer rental car insurance that exists to ‘bridge the gaps’ in the car rental company’s basic cover. If you have to pay the rental company for excess following an accident or for repairs to areas of the rented vehicle not covered by their insurance policy, your own direct policy would reimburse you. The policies and offerings of these direct insurers may be worth a look if you’re keen to save some money at the same time as getting better insurance cover in place.