To some extent it is true to say that people rarely concern themselves about the details of their rental car insurance coverage until such time as they have an accident and need to claim!
It would be nice to say that all rental car insurance coverage was the same throughout the world but unfortunately that is not the case and what is covered will vary considerably depending upon the rental company you use and the country you are renting in. These differences are not just trivial or academic – following even a minor accident they could make the difference between slight inconvenience and a major financial catastrophe.
To understand this, it is necessary to start by examining what insurance may be included in the standard rental price. In some countries and through some rental companies this may in fact be little. Each component of insurance will need to be purchased separately. In other cases the vehicle may come with third party liability cover that will protect against claims from third parties that you have injured them or their property with your vehicle.
The vehicle may also include protection against theft and possibly something called CDW (collision damage waiver). CDW is a form of rental car insurance coverage that protects the renter against damage to the rented vehicle. In other words, if you dent it, CDW may pay some of the repair costs.
The problem with the basic insurance that is included by the rental company (or that is purchased from them) is that the cover it provides may not be adequate and this could come as a nasty shock following an accident.
There are several possible risks. One of these is related to the fact that the third-party liability cover may be financially capped at a certain maximum level. In the UK this type of insurance must be unlimited by law but in other countries it may be capped at a level far below the possible awards of a court following injury to a third-party. If there is a difference, it will be the renter that pays.
CDW cover may also be limited in that many areas of the vehicle such as the wheels, tyres and roofs, may in fact be excluded from cover. If they are damaged then once again the renter will pay.
Finally, many rental company insurance policies carry excess – an amount of money that the renter will have to pay towards the cost of any claim even if they have insurance. This can be anywhere between 500 and 1500 pounds sterling.
It is possible to increase the cover available, or reduce the excess, by purchasing additional ‘top-up’ insurance from the rental company but this can prove expensive.
Fortunately there are specialist insurance companies and brokers online and they often provide a cheaper option for broader rental car insurance coverage. These policies are sold to a policyholder for a given period of time and have the advantage of covering all rented vehicles used during the life of the policy. Typically they will also offer wider coverage for other areas of the vehicle that are often excluded by the rental companies and additional third party liability benefits. As the renter is under no obligation to take insurance from the rental company, this option is worth checking out as a way to save money and obtain a better product.