Protect Your Excess

Probably the most common form of insurance for car rentals is daily car hire insurance. The insurance costs are quoted as a daily rate, which is then multiplied by the number of days of the rental.

For many rentals today, car hire insurance is bought from the car hire company. For each of the components of the insurance, Collision Damage Waiver, Third Party, CDW Excess and so on, the basic rate is multiplied by the number of days of the rental and totalled up to give a total cost for the car insurance.

Buying daily car hire insurance like this happens every time you rent a car and accept or purchase your car insurance from the rental company because the insurance relates to the rental and not to you.

You can also buy daily car hire insurance from one of the independent insurance providers who specialise in the car hire insurance market and this differs from the insurance bought from car hire companies in a number of ways. The first is that the insurance belongs to you as the policyholder. So while you may have bought it to drive one rental car only, you could typically use the same policy for another rental provided you did not exceed the daily duration of the policy.

Comprehensive protection

There are, however, other benefits of this type of insurance not the least being that it is normally much cheaper than the equivalent level of cover purchased from the car hire company. You may also find that the policies offered by the rental companies quite often exclude several areas of the rented car from their damage protection cover – typically the wheels, tyres, roof, undercarriage and windows. Any damage to those areas and the rental company will charge your credit card with the repair costs even if you have their insurance.

By contrast, the specialist providers of insurance will normally include cover for these areas in their policies.

Some car rental companies can offer what seem to be really good rental deals if you take one of their insurance included options. The basic insurance offered in these cases may not be very comprehensive though and you may feel that you would like to buy some additional excess or top-up insurance. Even in these cases you can still benefit from the cheaper insurance on offer from the specialists as you can buy your top-up and excess insurance from them and not from the car hire company.

Terms and conditions

To give a specific example, if you have an accident in the rental car and sustain damage to an area not covered by the rental company’s policy, then the car hire company may charge the cost of the repair to your credit card. You would then simply have to claim on your personal daily car hire insurance policy for reimbursement.

As with all types of insurance there are terms and conditions attached to daily car hire insurance policies sold by the specialist providers. This type of policy will not usually cover rentals of very high value, sports or vintage cars You may also find that your policy will not cover you if you want to rent a car within 150 miles of you own address.

A final point is that the independent specialists also offer annual insurance policies. These may be more convenient than daily car hire insurance if you know in advance that you are going to rent a car on more than one occasion in the course of a year.

Car rental excess insurance is something that you may chose to ignore completely – particularly if you happen to like large and unpleasant financial shocks.

Such shocks are a very real possibility when hiring a car. That’s because the insurance provided by the hire company will, in all likelihood, contain a critical limitation. Buried somewhere in the small print will probably be a clause to the effect that the policy contains ‘excess’ and the excess is usually stated to be a financial amount between 500 and 1500 pounds.

What you may be liable for

What does this mean in practice? Quite simply, if you have an accident that results in a claim then you will have to make a mandatory contribution to the cost – in other words the ‘excess amount’ that is sometimes also called the ‘first part’ of any claim. So if the policy excess is defined in the hire agreement to be 750 pounds and you have an accident resulting in 500 pounds’ worth of damage to the rented car, you should expect to see a charge to your credit card of the 500 pounds because it is below the policy’s stated excess. Should the damage be assessed at 1500 pounds, you will get a charge to your credit card for the full 750 pounds excess.

This is not a theoretical risk but a reality. Accidents happen and the renter may have little or no say over who assesses the damage or repairs it. So you may think you have paid for insurance on the rented car but after an accident you could find yourself anywhere between 500 and 1500 pounds worse off than you anticipated.

You can take steps to eliminate this risk. The first of these is to pay the car rental company for more insurance that will eliminate or reduce the excess on their main policy. They may call this car rental excess insurance or more commonly ‘top-up’ insurance. This insurance though is usually several times more expensive than the alternative.

There are specialist providers of car rental insurance policies that operate over the Internet in the open insurance marketplace. It’s very simple – if you have an accident you may still have to pay the rental company their ‘excess’ but you can claim this back from your own policy. The specialist’s car rental excess insurance is likely to be significantly cheaper than that of the rental company and you may find the cover is rather better.

Superior cover

The cover may be superior because unlike the rental companies, the specialists are selling a policy to you as a policyholder rather than a given car hire agreement. Their policies can be purchased by the day or even annually. During the life of the policy they will cover any vehicle rented by you (though not some specialist types and those of a very high value – check the policy for full details) and this can offer huge cost and flexibility advantages, particularly for those renting regularly.

Car rental excess insurance purchased from a specialist supplier can’t stop you having an accident but it could stop your situation being made even worse by the rental company’s large and unexpected charges to your credit cards. It may be worth making further enquiries for the sake of your peace of mind!

CDW stands for ‘Collision Damage Waiver’ and is a form of insurance that relates to rented cars.

If you are renting a car, you’ll probably find that the rental company will include in the price, or offer for separate purchase, CDW insurance. If you take it, you will be covered for some forms of accidents or damage to the rented car while it is out on rental to you.

The obvious implication here is that if you are using a hired car and do not have collision damage waiver in place, then you will have to pay for any and all damage sustained by the vehicle. It’s worth remembering that however careful a driver you are, the rental car could be damaged while in a car park or even stolen. All the repair costs up to potential full replacement of the vehicle, will make their way towards your credit card unless you have some form of insurance in place.

So, most renters tend to readily purchase collision damage waiver as a sensible precaution. This though will not offer you the full protection you may have hoped for.

Policy limitations

The insurance sold by a car rental company is likely to come with several significant limitations. It is quite likely that their basic collision damage waiver insurance will exclude several areas of the car from cover – notably the wheels, tyres, roof, windows and undercarriage. If any of them are damaged, you’ll have to pay. The policy will probably also carry excess of between 500 and 1500 pounds. The excess is the amount of money you would need to contribute towards the cost of a claim.

All in all, if you have an accident and only the basic CDW cover, you will probably find yourself on the receiving end of some hefty bills that may be charged directly to your credit card.

If you’d like to avoid this, you can purchase ‘top-up’ insurance from the rental company. They may also call this ‘Super CDW’ and it could reduce or eliminate the excess and possibly include cover to those areas of the vehicle usually excluded. You may find it interesting to know however that you can purchase similar or even better forms of such insurance on the Internet from specialist providers of rental car insurance.

Specialist providers

These companies can offer various forms of car rental policies to cover many risks. In some rental situations you may be able to substitute entire components of the rental company’s insurance for your own privately purchased and much cheaper policy. In others, you may be able to purchase ‘top-up’ insurance separately from the rental car. In that sort of situation you may, for example, still have to pay excess to the rental company following an accident but you could claim that back from your own policy.

The CDW cover offered by the specialist providers is sold to you as a policyholder and not just for a specific car rental. The policies can have a duration of several days or even a year. Subject to the terms and conditions of the policy, it will cover you for any vehicle rented during the lifetime of the policy. If you’re serious about protecting your interests as far as possible and saving money, then this is an option you may wish to research further.

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.

If you’re renting a car, you’ll want to know that you have the car rental insurance that’s right for you. In this context, ‘right’ probably means that you’ll be looking for the best possible insurance cover at the lowest possible price. Getting it wrong might mean that you’re not only paying too much for your insurance, but also that it may not provide you with the protection you expect.

In terms of protection, you will probably want to know that you are covered against the two main categories of risk. The first of these covers injuries you may cause to a third party or any damage to their property – this is called third party liability insurance. The second category relates to any damage caused to the rental car while it is in your care – that is called Collision Damage Waiver or CDW for short.

If you have purchased these two forms of car rental insurance cover from your rental company, you may feel that you have the cover you need. Sadly, this may not quite be the case as you could find out following an accident.

How much excess?

If you are renting a car for use outside of the UK, many policies sold by the rental companies will have their third party liability payout maximum capped at a level that may be far beneath the amounts that courts could award following an accident. (In the UK third party liability by law has to be unlimited). You may also find that the CDW insurance excludes from its protection several areas of the vehicle that can be easily damaged and expensive to repair – this often includes the wheels, tyres, windows, roof and undercarriage. It’s also likely that the rental company’s policy will carry excess of between 500 and 1500 pounds, and that’s the amount you may have to contribute towards the cost of any claims.

You therefore have a choice. You can live with these shortcomings and hope you don’t have an accident or you can insure against them.

This is where you may need to start thinking about price. You can take out additional insurance with the car rental company that can increase the third party liability cover and reduce the excess etc. The rental companies often call this ‘top-up’ insurance. This is a real option but it is a very expensive way of dealing with the shortcomings of the rental company’s insurance cover.

Affordable protection is available

Car rental insurance of various types can also be purchased through the Internet from specialist providers of car rental insurance. Their prices will usually be several times cheaper than those of the car rental companies and may very well offer better cover.

You can use their policies in various ways. If your car rental company does not include insurance in their rental price you can purchase your own from one of the specialists and save yourself a lot of money. If the rental company has included basic forms of CDW and third party in the price, you can purchase just your top-up insurance from the specialist and still save money.

Car rental insurance purchased from a specialist provider offers many advantages over the policies and cover sold by the car hire companies and this is not just price related. As an example, because they are sold to you rather than an individual rental agreement, they can be taken out for a period of time. During that period they will cover any vehicle you hire (check the policy for details of certain specialist vehicle exclusions) which can save you not only money but also administration and hassle at the car collection desk. It may be worth having a look at their web sites to see what they’re offering.

If you’re hiring a car and using the rental company’s insurance, then you are very likely to spot somewhere in the small print that the insurance carries with it something called ‘excess’. In certain situations this is something that could cost you a lot of money unless you have also taken out something called car hire excess insurance.

To begin with, it’s necessary to think a little about what excess actually is. The car hire company may have included some forms of insurance in the rental price or perhaps they will try to sell them to you separately. The insurance will probably also be described as covering two forms of risk.

The first is third-party claims. These are claims against you from other people that you have injured them or damaged their property with the rental car. The second form of insurance is called CDW which stands for Collision Damage Waiver and this covers you against costs arising from damage to the rented vehicle itself.

Whether you have paid the rental company for these forms of insurance in the rental price or separately, in reality the insurance cover story doesn’t end there. That’s because if you have an accident the rental company will insist that you make a mandatory contribution to the cost of any claims – even though you have their insurance in place.

The excess

This ‘contribution’ is called the policy excess or simply excess. It works on the basis that you will have to pay the first part of any claim up to a specified amount of money and it is this amount of money that is in fact ‘the excess’.

It operates simply and for the renter, expensively. If the excess is set at 1000 pounds (and it is typically set between 500 and 1500 pounds on car rental company policies) then in the event of an accident you could need to pay up to 1000 pounds. If the claim totals say 1500 pounds and you have 1000 pounds excess, then you will need to pay the first 1000 of that 1500 pounds claim. The rental company will often bill it directly to your credit card.

If the claim is for 750 pounds, then you will have to pay it all. This might not be quite what you were expecting when you paid the rental company for the insurance to begin with.

Getting covered

You do have two ways of dealing with this risk. You can purchase additional insurance from the car rental company that will reduce or eliminate their excess. That though is a very expensive way of purchasing such additional insurance.

A much cheaper option is to purchase car hire excess insurance through a specialist provider of rental car insurance. Operating through the Internet and open insurance market, these providers can sell you a policy that means should you be charged excess by a car rental company, you will be able to claim this back through your personal car hire excess insurance policy.

Such policies are not only far cheaper than those of the rental companies but they have the added advantage that they are sold to you the policyholder for a period that can be a number of days or even annual.

This means that they would cover any vehicle rented by you during the period with the exception of certain specialist vehicle types that are outlined in their terms and conditions. Buying your car hire excess insurance from a specialist provider could save you large amounts of money on an individual rental and if you’re renting regularly the savings could be even greater. It may be worth having a look at their products and services.

When you hire a car the type of insurance that you need falls into two categories. The first is the insurance that you need to cover other people and their property for damage that you may cause them whilst you are driving the hire car. This is known as Third Party Insurance. The second is the cover you need for damage to the car itself. This is known as a Collision Damage Waiver or CDW insurance policy.

CDW insurance can also be known as Loss Damage Waiver. When you take out a CDW policy you are in fact waiving or surrendering your responsibility for paying for the repair or replacement of the hire car.

Very few CDW policies will provide complete cover and you may find that you are still liable to pay substantial amounts in the event that the car is damaged and has to be repaired or replaced.

This is because CDW policies normally come with an excess. The excess defines an amount of money which your insurer would expect you to pay toward the cost of repairs to the hire car before the policy would come into play. So if your policy stipulated an excess of 500 pounds and the damage to the car came to 600 pounds you would have to find 500 pounds and your policy would pay the remaining 100. If the cost of the damage was 400 pounds you would have to pay for it all.

Excesses can be fairly substantial. Amounts anywhere between 500 and 1500 pounds are not uncommon.

Exclusions

There may also be exclusions on a CDW policy. These exclusions refer to areas of the car, typically the windscreen, roof, tyres and undercarriage, which the policy won’t cover if they get damaged. The repair of these items can be expensive particularly when you have no control over who carries them out or at what cost.

The good news is that you can buy additional insurance to remove or reduce the excess. This excess insurance can also be called CDW excess or Super
CDW.

If you buy collision damage waiver insurance from the car hire company, it will almost certainly come with a high excess and the top up insurance they may offer to reduce this excess will be expensive. Even then you may still be liable to pay for any damage to those ‘excluded’ items.

There are other sources of CDW insurance for hire cars. There are independent insurance providers in the market place some of whom have internet sites where you can quickly and easily get a quote for your hire car insurance needs.

Even if you have hired a car with insurance included in the price you can still buy your top up or excess insurance from a specialist provider. You may even find that the policies sold by these suppliers will also cover as standard, the items excluded by many of the policies sold by the car hire companies.

Nobody likes to spend more than they have to for CDW insurance so it may be worthwhile to check out the independent suppliers. You may be surprised at how much you could save.

If you have hired a car and taken out the appropriate insurance, you may understandably think that there is little or no possibility of ‘unexpected costs’ coming from the car rental company. Unfortunately you could be mistaken – even if you have purchased from the hire company something called Collision Damage Waiver insurance.

Collision damage waiver or CDW, is a form of insurance that covers you, the renter, against any costs arising from an accident than damages the rental car. CDW may be included in the rental price or in some countries, most notably the USA, the rental company may offer it to you as a separately chargeable option.

If the rental company have not bundled CDW into the rental price, it may be worth thinking about buying it from a specialist provider of car rental insurance. Such companies operate in the open insurance marketplace, usually on the Internet and often sell various forms of rental car insurance at far cheaper prices than the car rental companies.

What to look out for

If you have taken or purchased your collision damage waiver insurance from a car rental company, you may have to watch two aspects of their policy cover and this is where the risks of unpleasant surprises and additional costs come from.

It is highly likely that their insurance will not cover all areas of the rented vehicle and may exclude the wheels, tyres, windows, undercarriage and roof. The second potential issue relates to the subject of policy excess. The car rental company’s policy will almost certainly carry excess to the value of 500 to 1500 pounds. That is the amount the rental company could bill you following an accident as your ‘obligatory contribution’ towards the cost of any accidents even if you have their insurance in place.

So even if you have only a minor accident AND you have the rental company’s collision damage waiver cover in place, you could still find yourself with a large and unexpected charge to your credit card for repairs. This does happen and when it does, the amounts can be high – so be warned!

You can pay the car rental company for additional insurance that may reduce or remove the excess and possibly cover the often-excluded areas of the vehicle.

Buying it independently

The good news is that if you have purchased your CDW from a specialist provider then there may be no areas of the vehicle excluded from their policy and another large bonus is that their policy may also not carry excess. This could work out far cheaper than paying for additional ‘top-up’ insurance through the rental company.

One final point relating to the collision damage waiver products sold by the specialist insurance providers is that they are sold for a period of time (a daily or annual basis) rather than a specific car rental. What this means is that the policyholder can use their insurance to cover any vehicle they rent during the lifetime of the policy, with the exception of some specialist vehicles such as sports cars or those over 100,000 US dollars in value. It may be worth finding out more through one of these web sites if you’re interested in saving yourself a lot of money.

When you hire a car you need two types of insurance. One is Third Party which covers you for any damage or injury you may cause to someone else when driving the hire car. The second is Collision Damage Waiver Insurance (CDW) and this covers you for any damage to the hire car itself while it is in your care.

An important thing to remember with collision damage waiver insurance is that even if you have paid out and bought cover from the car hire company, you still may not be completely covered. In fact you could still be liable to pay out considerable sums of money in the event that you have an accident and damage the hire car.

This is because as with many types of insurance buying the basic insurance does not mean that you are fully covered. Insurance often comes with excesses and collision damage waiver insurance is no exception.

Excess

What this means for your rental is that if you are unlucky enough to have an accident in the hire car your collision damage waiver insurance may only cover part of the costs and you would be responsible for the remainder. How much the remainder would be depends obviously on the amount of damage but also on the size of the excess.

As an example, your collision damage waiver policy has an excess of 500 pounds and you unfortunately cause damage to the car that the insurers say will cost 750 pounds to repair. In this case, the insurance company will charge the whole of the excess amount to your credit card and they will contribute only 250 pounds. It may be worth pointing out here that excesses can be as much as 1500 pounds.

Another area where you can find yourself liable for costs is if you cause damage to the parts of the car normally excluded from insurance policies. These parts are the windscreen, tyres, roof and undercarriage; easy to damage and expensive to fix, particularly if you have no say in who does it or at what cost.

You can of course extend the cover of your collision damage waiver policy by buying additional insurance to remove or at least reduce the excess and possibly even include those exclusions.

What you may find though is that if you take the additional insurance offered by the car hire company you will end up paying a lot of money for the additional peace of mind of knowing that you are adequately insured.

An alternative to the car hire company insurance is to have a look at the policies offered by independent insurance providers on the Internet.

You may find that the car hire insurance offered by the specialist insurers will be significantly cheaper than the equivalent insurance offered by the car hire company.

Even if you rental deal includes a basic form of collision damage waiver insurance you can still buy any additional policies elsewhere and benefit from significantly lower prices. Many specialist policies may even include those ‘exclusions’ such as the tyres, windscreen etc as standard.

It’s very easy to just take the insurance offered to you by the car rental company. Whether they’ve included it in the price or try to sell it to you separately, it is tempting just to pay up. That would be a pity though, because you can save yourself a lot of money by looking at alternative sources for your car hire insurance and specifically things such as daily car hire excess insurance.

These opportunities for savings arise because of the nature of rental car insurance. The car rental company’s insurance policies will almost certainly come with something called excess. That is an amount of money you may have to contribute towards the cost of any claims after an accident and it is usually set between 500 and 1500 pounds.

It works like this – you may have paid for insurance but the policy may contain excess of (e.g.) 1000 pounds. You subsequently have an accident that results in damage of 1500 pounds to the car. The rental company’s insurance will pay for 500 pounds of that 1500 and you will receive an additional charge to your credit card of 1000 pounds for ‘excess’. If the claim totalled, say 750 pounds, you would have to pay it all.

If, like many, you don’t like the sound of that very much, then the car rental company will work very hard to try and persuade you to purchase what they may call top-up insurance. This means that, for additional sums of money, they will agree to reduce or remove the excess altogether. At that stage it’s easy just to say ‘yes’ simply for peace of mind and convenience. In fact the rental companies hope you’ll do just that because their insurance is often several times more expensive than the same insurance purchased elsewhere.

The good news is that you have an alternative. There are specialist providers of rental car insurance operating on the Internet. They offer a range of products and policies aimed at rental cars including daily car hire excess insurance. This operates on the basis that if you have an accident and the rental company charge excess to your credit card, you will be able to claim this back from your daily car hire excess insurance policy. This method of cover may be far cheaper than the equivalent offered by the rental company.

As the name suggests, the specialist providers can sell this insurance on a daily or annual basis. What this means is that for the life of the policy you would be covered for any vehicle rented, though you may need to check the conditions as some specialist vehicle types may be excluded. The costs and time savings here could be significant as no longer would you need to engage in debates and form-filling at the car collection desk every time you rent.

The specialist companies operating in the open insurance marketplace also offer many other insurance products that can complement or in some cases entirely replace the insurance offerings of the rental companies. So whether you’re looking for daily car hire excess insurance or for cheaper (and often better) alternatives to the other types of insurance offered by the car hire companies, the specialist providers may be worth checking out.