How much is the excess on a policy?

The amount of excess you may have to pay typically depends on your rental company. Some may ask for a lower amount than others. Whatever the amount of excess, this is money that has to be found out of your own pocket. However, with a car hire excess insurance policy behind you the financial costs for the excess generally come from the insurance policy. Your excess policy may cover the whole amount of the excess or up to so much of it. Even if you have to pay a small amount of the excess yourself, the insurance may save you a great deal of money in the long run.

So where might I get insurance for the excess?

The car rental company may ask you to take insurance from them, and they may even offer car hire excess insurance. However, you may be able to make savings on the cost of the insurance premiums simply by going to a specialist hire car excess insurance online provider. When taking on any form of insurance there are typically terms and conditions, so always ensure that you have checked these. Finding out that you cannot make a claim on the policy when you need may be devastating financially.

Say you were in a collision with another vehicle, or you hit a brick wall surrounding a property. You are probably able to claim on your rental insurance for the damage caused. Fair enough, but you still have to pay any excess – and this may be a large amount. With CDW insurance to fall back onto, typically you are able to claim on the policy and this typically covers your excess charge for you, or so much of it.

Without CDW insurance, you could find yourself facing unexpected costs in the event of an accident or damage to the vehicle (even damage that was caused while you had left it parked somewhere). With a car hire excess insurance policy behind you, if you make a successful claim, potentially you may only have a small portion to pay towards the excess.

Why do I need two different types of insurance?

When you rent a car, the company typically wants you to take out insurance in the event of you;

• causing an accident with the rental car which damages the car;
• causing damage or harm to a third party or their property.

The standard form of insurance policy typically pays out toward the above if you make a successful claim, but there is the generally an excess to be taken off any claim you make. The amount of excess may differ depending on the rental company, so it may pay to check this out.

The car excess insurance policy provides you with insurance solely for the amount of excess you have to pay if making a claim and the claim is successful. This type of insurance policy does not payout for anything else, such as third party claims or damage claims.

Do I have to take out insurance?

The answer to this question may depend on the country that you are in when hiring the car and the company you choose. Without insurance you may end up having to pay out an unexpected sum of money if you have an accident in the rental car. If you only have standard rental car insurance, you generally have to pay the excess for a successful claim and the rental company usually takes this from your credit card. If you have rental car excess insurance, the excess is still taken from your credit card and you then claim it back (up to a set limit).

What are excess charges?

When renting a car you usually have some form of insurance with the company you are renting from. This insurance typically provides protection against damage to the rental car, along with liability insurance for the third party. Typically a policy comes with what is known as excess. This is the amount that you need to pay if you make a claim before the insurance company takes over the rest of the claim. Typically this amount is taken off the credit card you paid with when renting.

What does the policy cover?

Car hire excess insurance typically covers or reduces the amount of excess you have to pay, up to a set limit.

Frequent users of rental cars

If you are a frequent user of rental cars you may be wise to check if you are able to take out an annual rental car insurance policy.

Typically car hire excess insurance is taken out at the time you hire a car. However you do not have to take out excess insurance with the place you hire your car from, you are able to search for a policy independently, and this may be a suitable way to save on the cost of cover. As with any type of insurance policy always check over the small print of any rental insurance you are offered.

When you’re hiring a car, like many renters you may find that the rental price includes some elements of insurance (although this may not be the case in the USA, Canada and a few other countries around the world). That may sound like a great thing and it may be, but typically it is unlikely to be all-inclusive in the sense that it will protect you from all costs following an accident.

The problem is that insurance supplied by a car rental company may bring with it the much-dreaded ‘excess’.

The excess is an amount of money, typically between £500-£1500, that the car rental company’s insurance will insist you pay as the first-part of any claim. It a sense, it can be seen as a mandatory contribution.

In other words, with an excess of £1000 and a claim for damage to the hire car of £800, you’re likely to see an £800 charge to your credit card. If the damage repairs had cost £1100, you would have been charged £1000 and the rental company’s insurance would have contributed the extra £100.

This is not always a risk people are prepared to accept and it is possible to do something about it.

The rental companies will typically be eager to charge you extra for insurance that will ‘top-up’ your cover by reducing or removing that excess.

You can also achieve the same thing and typically more cheaply, by purchasing what’s called ‘excess insurance’ from the specialist Internet-based providers of car insurance. If the rental company does bill you for ‘excess’, you can simply claim this back.

The specialist providers also have another trick up their sleeve in that they can sell such policies on an annual basis rather than just for the duration of a given car rental. The annual hire car insurance policy would then offer you protection against excess charges for any vehicle rented in the lifetime of the policy.

This annual hire car insurance may offer regular renters very attractive options for saving both time and money – in fact it may even be beneficial if you plan to rent just once in the period.

The annual hire car insurance sold by the specialist providers may not cover certain types of specialist vehicle hire such as sports cars or motor homes. Full details are typically available on their web sites.

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.

The excess on a car rental insurance policy

When you are driving your rented car, you probably would like to believe that your insurance cover offers you total protection against all eventualities.

Unfortunately, that may not be the case. Whether the insurance was included in the rental price or you purchased it separately from the rental company (as is typically the case in the USA) the chances are that it will contain an excess set between £500 and £1500. Of course this can vary among insurers.

This means that in the event of a claim (such as if you have damaged the rental car in some way) the rental company’s insurance will only pay out after you have paid the ‘first part’ of the claim.

In other words, if you have a claim totalling £800 and an excess of £1000, you will typically find the £800 billed to your credit card by the rental company. Had the claim been for £1200, the charge to your card may have been £1000 and only £200 will be met by the rental company’s insurance policy.

Excess insurance

If the thought of this doesn’t exactly make you feel comfortable, you can pay the rental company for extra insurance. They may call this ‘top-up protection’ or ‘Super CDW’. For the additional cost they may agree to reduce or remove the excess amount.

Their option here is typically more expensive than the alternative offered by the specialist Internet providers of car rental insurance. These providers offer policies typically called ‘excess insurance’ that will reimburse you for any excess charges billed to your credit card by the rental company following an accident and related claim.

This may be a good idea, particularly given the harsh reality that following an accident you may have little or no control over who is assessing the damage to the vehicle or who is making the repairs and at what cost.

The internet-based specialist providers of rental car insurance

There may be two other significant advantages to purchasing excess cover from the specialists:

• their policies typically may be purchased for a period of up to 12 months and provide cover to you the policyholder rather than a specific vehicle rental – this means that they may cover any vehicle you rent during the period (subject to terms and conditions);
• you may find that the rental company’s insurance also excludes several areas of the vehicle from its cover – these may be covered automatically by your excess policy.

You can find out more about the benefits of excess insurance by checking the website of a specialist provider.

What’s going on?

This may arise because of something called ‘the excess’.

When you rent a car, it may come with certain forms of insurance included in the rental price. If it does not, typically the rental company will offer it to you for sale separately. In either case, the rental company’s insurance cover will most likely contain an excess – that’s the amount of money they may expect you to pay as the ‘first part’ of any claim.

It works in a relatively straightforward fashion. If the rental car is damaged to the tune of £1500 and you have an excess on the policy of £1000, then you will have to pay the first £1000 of the claim and the rental company’s insurance will cover the remaining £500.

The excess on policies provided by car rental companies is typically between £500 and £1500 and may be charged directly to your credit card. Of course, these amounts vary from insurer to insurer, so do check the excess amount.

Can these cost risks be removed?

Yes. The first option is to pay extra money to the hire company. For that, they may agree to remove the excess or at least reduce its level.

You may find though that the online specialist providers of car excess insurance offer a cheaper option. This form of insurance cover means that if you did suffer an ‘excess charge’ to your credit card following an accident, then you could simply reclaim it from your own car excess insurance policy.

Is lower cost the only benefit?

Typically, no. The car rental companies’ insurance may also exclude several areas of their vehicle from cover. If you damage any of them, it will be your credit card that gets billed for repair. You may find that any such ‘excluded area damage’ would also be covered by your excess insurance policy as well.

These policies may also be purchasable on an annual basis. This would mean that any car rented by you during the period would be covered (some specialist vehicle rentals may be excluded). This may offer big cost and time saving for regular renters.

Where is there more information?

The specialist internet providers of car excess insurance typically have websites that contain full details and prices. It may be a good idea to check them out before you hire your next car.

It can often come as something of a surprise at the last moment when you sign a deal to find that the excess on a policy provided by the rental company is quite high – perhaps as much as several hundred pounds depending on the car and where you are renting.

This has obvious implications as even if something happens which damages the vehicle which was not your fault you can end up paying a considerable amount of money.

To give an example, if you rented a brand new Audi from a dealer which was targeted by thieves who break in and steal a sound system, you could be liable to pay the first £300 towards its replacement if there is an excess of £300 on the policy provided by the rental company.

This is not only extremely frustrating but also potentially very costly. You may find you even end up paying more than it has cost you to rent the car, which is why some people have turned to taking out excess insurance.

Car insurance with liability in a rental deal of course does give you some peace of mind in that you do not necessarily need to overly worry if you do have an accident or even if the car is stolen completely. However, having to pay the extra charge of an excess can seriously hurt your wallet. If something happens you are likely to have to sign a report before the rental car company simply takes off the excess amount from the credit card you provided them with at the start of the rental agreement.

With excess insurance you can simply claim for reimbursement on the policy you have taken out. Note that it’s true that a number of rental car companies will offer their own form of excess insurance at the counter, but you are perfectly entitled to refuse this when you get there, but accept the basic car insurance with liability in the rental deal, having sorted out your own excess protection before you arrived.

But anyone who has rented a car before will know that while it is easy to sign up to an insurance deal provided by the rental company, there will nearly always be an excess.

As with other forms of insurance, car insurance excess is an initial fee you agree to pay before the insurance kicks in properly. So if the policy has an excess of £300 pounds and there is an incident which damages the car to the tune of £600, the policyholder will be liable for the first £300 in costs.

When you take out a rented car insurance deal, attached to it the excess can be anything from a couple of hundred pounds all the way up to over £1000 depending on the country and the type of vehicle. This can mean you may end up paying out a considerable amount of money even though you have an insurance policy covering the car.

Rental car insurance coverage can therefore sometimes make drivers uneasy as they know they are driving an unfamiliar vehicle on unfamiliar roads with an excess hanging over them. However, it is possible to take out excess insurance which will protect you in the event you do have an accident or suffer a theft.

This is a kind of independent policy which is like a bolt on to the insurance the rental company will provide. You can take it out before you travel and some companies even allow you to cover yourself for up to a year, guarding your excess on a number of trips.

To claim on this kind of policy you simply have to telephone a hotline to apply to have the excess which you have paid refunded by the insurance company. So in the event of an accident or theft the rental car company may take the excess off your credit card automatically – and you can then apply on your independent excess insurance to have this refunded.

Rental car insurance coverage therefore need not always come with that irritating catch of an excess, and for a few pounds you can protect yourself against even this unwanted charge while you get on with enjoying your holiday or business trip.