Car hire insurance is important. If you don’t get it right you could be taking risks that could seriously damage your financial well being in the event of an accident.
When you hire a car you may find that the insurance offers and options are confusing bordering bewildering! It’s important to remember that what is or is not included in the basic hire price will vary by country and rental company. In some countries virtually no insurance is automatically included and driving a vehicle with little or no insurance is a very large risk. In other countries some basic insurance is included, but upon examination this may be seen as offering insufficient coverage.
Car hire insurance, whether included ‘in the price’ or not, usually exists to cover two primary types of potential risk.
The first of these is the risk to a third party, in other words a person or property you injure or damage with the hired vehicle. This is called third party liability. In many countries this is the minimum insurance required by law before a vehicle can be driven on a public road. In the UK the amount of cover provided by the third-party policy that comes with the car rental is unlimited by law, but in many other countries the car rental company’s policy may be ‘capped’ in terms of maximum payout. These caps may be set at levels that are completely insufficient given the potential large awards made by courts.
The second category of risk covered is that relating to the rented vehicle. If you have only third party insurance and the rented vehicle is damaged, then it will be you that has to meet the full cost of repair.
If the rental agreement includes something called CDW (collision damage waiver) then you will have some cover against many damage types but this again is likely to be limited. The CDW that comes with the rental agreement often excludes damage to areas of the rented car such as roofs, tyres, wheels and windows – all areas easily and expensively damaged. There is also a fair chance that the policy will carry excess – in other words an amount called ‘the first part’ of any damage claim that you as the renter will be expected to pay. The amount of excess may vary but it is likely to be somewhere between 500-1500pounds sterling.
It is possible to take out supplemental or ‘top-up’ insurance to provide additional peace if mind. This additional insurance can be used to increase the amount of third party liability insurance, cover those areas of the vehicle normally excluded from the basic CDW and reduce or eliminate the excess.
It’s quite likely that the car rental company will try to sell these additional insurances at the point of car rental or collection. That has the advantage of being convenient but their policies can be very expensive.
As an alternative, if you are looking for additional car hire insurance to bridge the gaps in the basic cover, the specialist direct insurance companies and brokers may be worth investigating. Their policies can be purchased online and because they are sold to you the policyholder rather than a given car hire, they are valid for most vehicles that you hire during the life of the policy, though there are exceptions, and up to a specified limit of course, which is usually 100,000 pounds. As an example, if a claim arises and you have to pay excess to the car rental company, then the insurance policy will reimburse you. It couldn’t be simpler, and it may well be a lot cheaper than buying the same cover from the rental companies!
Tags: Car Hire Insurance