We all know that we need car hire insurance but sometimes the terminology used to describe the various types of cover can be a bit confusing.
Collision Damage Waiver, Loss Damage Waiver, Supplemental Liability Insurance, damage waiver, liability waiver, excess, are all terms that slip easily off the tongue of the rental agent but what does it all do, how much do we actually need and do we have to buy it from the car hire company?
So to start with ‘what does it do?’ There are two main categories of car hire insurance.
The first provides cover for damage to, or the loss/theft of the hire car. This is commonly known as Collision or Loss Damage Waiver, CDW or LDW.
The second covers damage to someone else or to their car or property. This is known as Third Party Insurance and in the UK by law it is unlimited. This means that in the event of a court claim against you by a third party, all damages will be covered by the policy. If you are hiring a car in another country and particularly in the USA, any cover provided may not be unlimited but can be increased by purchasing Supplemental Liability Insurance or SLI.
How much do we need? This depends on the level of risk you are willing to accept to save money but it may be worth remembering that a few pounds saved on insurance may lead to significant expenditure costs in the event of a claim. This is because even if you buy CDW insurance there may be excesses and exclusions on the policy.
If your policy comes with excess then this excess is the maximum amount that you will be liable to pay in the event of damage to the car. Your policy will only cover amounts over and above the excess level. These excesses can be as much as 1500 pounds.
It is normal practice for car hire companies to exclude certain items from their policies. These items are typically the windscreen and other windows, the undercarriage, roof and tyres – all areas of the car most easily damaged. So if these excluded areas are damaged then you will be liable to pay for the repair.
You can take out additional car hire insurance to remove or substantially reduce the excess levels but this can be expensive if purchased from the car hire company.
This brings us to the final question, ‘do we have to buy insurance from the car hire company?’
The answer to this is no. There are insurance companies specialising in car hire insurance cover. They can provide insurance either on a daily basis for the duration of the rental or on an annual basis which means that if you rent another car later on, you can use the same policy. You can either take out all of your car hire insurance with the specialist or top-up the cover provided by the car hire company.
If your car hire agreement comes with some insurance included you may find that this is very limited in the amount of cover that it actually provides. So you can however use a specialist company to increase the level of cover.
The specialist company may have a limit on the value or type of car that they can cover. They may exclude vintage or sports cars for example or very expensive ones.
Most people though may find that the specialist company can provide car hire insurance at a significantly lower cost than similar cover sourced from the car hire company.
Tags: Car Hire Insurance