It is not unusual to hear comments from people who rent cars to the effect that although the basic car rental price is reasonable, they are sometimes shocked at the cost of the car hire company’s insurance. There is a way these costs can be reduced – through something called annual car hire insurance.
The role of annual car hire insurance and the amounts it could save you will vary depending upon your circumstances, the car rental company you may use, and what country or countries you plan to hire vehicles in.
To explain why, it is necessary to think about the basics of car rental insurance.
In some cases the rental company may include some basic insurance in the rental price but in others they will not and the renter may need to purchase it from the company as an optional extra. The nature of the cover provided by the rental company’s insurance would depend partly on the rental company’s commercial position and partly on the laws of the country they are operating in.
Whichever is the case, you may find that this basic insurance does not offer you the full protection you require for several reasons.
It is not unusual to find that the third party insurance that comes as standard will have a maximum level of payout specified that may be too low for comfort given the risks of large court awards following an accident. The insurance may also include something called CDW (Collision Damage Waiver) that covers damage to the rental car but this frequently excludes damage caused to areas such as the wheels, tyres, undercarriage, roof and windows – all very expensive to repair or replace if damaged.
Finally, the rental company’s insurance will almost certainly carry excess. That is a financial amount that you as the renter will be expected to pay as a contribution towards any accident costs. The amount here will vary but typically it will be in the range 500 to 1500 pounds.
As a result of these exclusions and limitations, the sums payable by you following an accident could be significant. It is possible to purchase additional or ‘top-up’ insurance from the car rental company. This could have the effect of reducing the excess, increasing the amount of liability cover and possibly covering those areas of the vehicle normally excluded from CDW. Unfortunately though this insurance when purchased from the rental company will be expensive and considerably more than similar insurance purchased in the open insurance marketplace.
The alternative is to purchase annual car hire insurance online from a general insurance company or broker. This insurance can be purchased on an annual basis or in fact daily, and it covers the above risks. It can provide supplemental liability insurance (SLI) that will protect you against third party awards. Similarly, following an accident if you are forced to pay the excess to the rental company then you will be able to get this reimbursed to you by your insurance policy. These policies also will typically cover those areas of the rented car that are excluded from cover by the car rental company.
One of the major advantages of annual car hire insurance purchased from a direct insurance company is that during the lifetime of the policy, it insures the policyholder for all cars rented. This gives additional flexibility and the opportunity for cost savings. This would exclude the rental of exotic cars such as sports models or those of very high value – usually in excess of 100,000 pounds. As an option for saving money, it is well worth exploring.