When driving a rented car, most people want the reassurance of knowing that they are well protected by insurance. One form of rental car insurance is called CDW (Collision Damage Waiver) and it offers protection against the costs of any damage caused to the rented vehicle. Unfortunately the CDW sold or offered by car rental companies does not, in itself, offer full protection from such costs. To ensure you are fully covered will mean taking out CDW excess insurance.
That may sound slightly confusing and to some extent it is! The problem arises because of the nature of the basic CDW insurance sold (or included in the rental price) by the car hire companies.
This insurance will almost always come with what’s called ‘excess’. The excess is an amount of money that the rental company’s insurance will expect you to pay towards the cost of any claims – even if you have their CDW insurance in place. This amount is usually set between 500 and 1500 pounds and may even be higher in some cases.
How it works
To illustrate how the excess works, let’s take the case of a policy that carries 750 pounds excess. If you have an accident that results in a 1000 pounds claim, then the rental company will charge your credit card with 750 pounds excess which they may call ‘the first part’ of the claim. They would recover the remaining 250 pounds from their insurance company. If the damage cost ‘only’ 500 pounds – then you would pay it all.
The excess is rarely popular and many renters look for ways of covering this via additional insurance. This is where the idea of CDW Excess Insurance comes in.
There are specialist suppliers of rental car insurance that operate on the Internet and in the open insurance marketplace. One of the many products they offer is CDW excess insurance and it works on the basis that if you have to pay the rental company excess following an accident then you will be able to claim this back from your policy.
The car rental company will probably also be very keen to sell you such insurance that they will probably call ‘top-up’ or ‘Super CDW’ cover. In reality, their prices for this insurance will probably be several times higher than the specialist providers – and you are under no obligation at all to purchase your rental insurance from the hire company.
What is covered
It’s worth keeping in mind also that the rental company’s CDW insurance usually excludes from its cover a number of areas of the vehicle such as wheels, tyres, roof, undercarriage and windows. The policies of the specialist suppliers may well include these in your ancillary cover. Their policies can also be taken out for a year or for a number of days meaning they will cover any vehicle you hire during the period (with some exceptions such as sports or very high value cars etc).
You may or may not think that purchasing CDW excess insurance from a specialist provider makes sense. It will depend upon your circumstances and views of risk etc. It may though prove sensible to compare their policies and offerings to those of the hire company. You may be amazed at how much money you could save at the same time as improving your cover.
Tags: CDW Excess Insurance