Car hire excess insurance is an additional form of insurance protection that relates to the use of hired cars.

If the idea of purchasing ‘additional insurance’ for a rented car doesn’t immediately seem to sound like the best idea you’ve ever heard, it may pay to read on. You may save yourself some serious amounts of money!

Rental company insurance cover

The rental company’s insurance whether purchased separately or included in the rental cost, typically provides cover against third-party claims (third party liability insurance) and damage to the rental car (CDW or Collision Damage Waiver).

It may also come with what’s called an ‘excess’.

The excess is a financial amount, usually set between £500-£1500, (though it can vary from this) that you agree to pay as the ‘first part’ of any future claim during your confirmation of the booking and signing of the contract at car collection.

Once in place, it means that you may find significant amounts of money being billed to your credit card after an accident.

The maths is typically pretty simple. If you have an excess of £750 and there is a £500 repair bill to the hire car following an accident, you will find the entire £500 billed to your credit card. Had the damage cost £1000 to repair, you would have been billed for £750 as the full excess and the rental company’s policy would have paid the remaining £250.

Protecting yourself against excess charges

The excess constitutes a considerable financial risk for renters and the hire companies recognise that fact.

They may offer the option of protecting yourself further by paying them additional sums for what they sometimes call ‘top-up insurance’ or perhaps ‘Super-CDW’. For an additional sum, this form of additional car hire excess insurance will typically reduce or even possibly remove the excess from the policy.

What the car rental company may be less inclined to tell you though, is that you may be able to achieve the same degree of protection (or possibly even more) and at a lower cost by purchasing your car hire excess insurance not from them but from an Internet based specialist provider of car rental insurance.

The Internet car hire excess insurance market

On the Internet there are companies that specialist in car rental insurance cover and typically their prices will be lower than those of the rental companies. They also sell something that they may call ‘excess insurance’ and if you are charged an excess by a rental company, then all you have to do is get this reimbursed to you through your own direct excess policy.

Another potential advantage of purchasing this insurance from a direct provider is that they may also offer it on an annual basis. If you have an annual policy then subject to a few restrictions around specialist vehicle types (e.g. sports cars) it would typically provide financial protection for any vehicle you rent during the life of the policy.

If you rent regularly or even more than once in a year, an annual policy may offer even more scope for saving both time and money.

The car hire excess insurance sold by the specialist providers may be worth investigating further if you’d like to improve your peace of mind when driving that hire car.