Renting a car while on holiday or abroad for business can be one of the simplest and most straightforward ways of getting around – there’s no need to become confused over bus and train timetables and you can go virtually anywhere you want. However, hiring a car can come with its catches, not least in relation to the excess on the insurance policy. However there are some extra forms of car rental insurance which will protect against this excess, ensuring you are not stung with an unpleasant extra cost.

Normally when you hire a car in the likes of Europe, South Africa, New Zealand and Australia you’re provided with an insurance policy by the rental firm. This normally covers damage, third party liability and theft.

But you will also have to agree to an excess – an initial amount you have to pay towards the cost of any repairs or replacement before the insurance kicks in, in full.

This can be quite considerable and may be in the region of £200 or £300 all the way up to over £1000. As such car rental insurance often comes with something of a catch which means you could end up paying out hundreds of pounds or more for something which was not your fault.

Excess insurance is a voluntary kind of cover can be bought from independent online companies. Normally a policy will cover you for excess on damage to the vehicle, the excess on theft and on damage to windows, tyres and the undercarriage and roof.

The detail of this is important because some car hire companies will try to sell you excess insurance themselves, but this often excludes undercarriage damage and window and tyre damage.

Furthermore, it is possible to buy annual excess insurance policies which include unlimited use over the period of one year. To give an example, if you hired a car for 15 days in June, you can also hire another one later in the year and typically be fully covered without the need to buy an extra policy.

Common conditions include that no one rental is longer than around a month and it is usual to find that to be covered properly you have to rent the car a set distance from your home address – ie not rent a car close to where you live for the insurance to be active.

It is also usual to find that not only the policyholder is covered, but also any drivers named on the car’s rental agreement. There are a few other things to bear in mind if you are renting a car in places like America and Canada. Here it is common to find you do not get an insurance policy as standard but are offered the opportunity of purchasing one perhaps for a daily fee. Excesses are not charged in general but the person renting the car is often considered to be responsible for any damage to windows, tyres, the roof and the undercarriage.

Excess insurance works by either refunding the cost of excess which is taken straight off your credit card by the car rental company, or by simply paying the excess for you once you have shown your agreement for excess insurance to the car rental company, taking the headache of excess charges away from a car rental insurance deal.