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.