Understanding rental car insurance coverage is important because if you hire a rental car and don’t understand the details, you may end up with a potentially large outlay on your hands.
Rental car insurance coverage – the basics
Car rental insurance seeks to provide you with protection against the financial consequences of an accident that involves:
- costs being awarded against you following injury to another party or damage to their property as a result of your use of the hire car (third party liability insurance) and;
- damage to or theft of, the rental car while you have it under contract.
Rental car insurance coverage – who provides it?
In the UK and many other countries, typically the rental car will be provided with both forms of the above insurance included in the basic rental price. In the USA and some countries, the rental car may come with only limited third-party insurance (possibly none at all).
If the insurance is not included in the price (in the UK by law unlimited third party cover must be included with all rentals) the rental company will typically offer it for sale separately. You may also be able to purchase it (perhaps more cheaply) from the online specialist providers of car rental insurance.
Rental car insurance coverage – what are the issues?
You may find that the insurance that comes with the vehicle (or that you have purchased separately from the rental company) contains two issues that are worthy of some thought if you wish to avoid significant costs following an accident:
- the policy will usually contain an excess – that’s the amount of contribution you may have to make towards the cost of any accident before the rental company’s insurance will start to pay out. The excess is typically in the range £500-£1600;
- the wheels, tyres, roof, undercarriage and windows may all be excluded from cover – if they’re damaged it will be you who pays.
All in all, given these two ‘gaps’ you may find that even a relatively minor accident results in money being charged to your credit card.
Protecting yourself further
The car rental companies will typically offer you the option of purchasing ‘top-up’ insurance or what they may call ‘super-CDW’. To all intents and purposes this is additional insurance that means that the excess will be removed and possibly all areas of the vehicle included in cover.
In fact, you may be able to obtain the same additional protection by purchasing protection insurance (often called ‘excess insurance’) from an online specialist provider of car insurance.
You can use their policies to claim back from them any costs you are charged by the car rental company for ‘excluded area’ damage or excess. These policies are typically cheaper than those of the rental companies.
Another advantage of this type of policy from a specialist provider is that it can be sold to you, the policyholder, either daily or annually. This means that with an annual policy you could cover any car rented by you during the life of the policy (subject to some terms and conditions) thereby saving you even more money.
Rental car insurance coverage is important so making sure you’re getting the best deal possible typically makes sense.