The term car excess insurance is especially used in the vehicle rental market, but works in a similar way to the insurance excess that probably attaches to the cover you have arranged for your own car. That is to say, the excess represents the first part of any claim for loss or damage to the vehicle. This is a risk – and possible cost, therefore – which you bear yourself.

Probably the biggest different between the car excess insurance on your own vehicle and one you have chosen to rent, however, is that the latter is likely to be a considerably larger sum. For example, in some parts of the world, the excess on the standard insurance cover that comes with your hire car can be more than fifteen hundred pounds.

An excess effectively represents an uninsured loss and is the first part of any claim to be paid under the terms and conditions of the service – if the cost of repairs or replacement of any lost, stolen or damaged parts of your hire car are less than the excess, therefore, you will be responsible for paying for any repair or replacement; if those costs are greater than the excess, then will be liable for payment of the whole of the excess.

Car excess insurance helps protect you against this liability. Although this “top-up” insurance is frequently sold by car rental companies themselves, the typically often expensive daily rate may add a significant amount to your car rental bill. An alternative, therefore, and one that could prove relatively more affordable, is the purchase of excess insurance separately and in advance from an independent specialist.

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When you rent a car, you may typically find that there are elements of rental insurance included in the price of your deal. You may also find, however, that you may still be responsible for the excess on the policy. Since this could be as much as £1600, topping up your cover with car excess insurance may typically make sense.

CDW and excess

CDW or collision damage waiver is the term used to describe the protection you have against being held financially responsible for the costs of repairing damage to the rental vehicle.

Typically, through CDW the car hire company waives or relinquishes their right to charge you for the loss of their car, through theft etc or for damage to it. Except, that typically they do not give up all of their rights.

They still reserve the right to charge you the excess or first part of any claim. The actual value of the excess may vary but you may find that it may be in the range £500-£1600.

That is quite a sum of money to be asked to contribute to the repair of someone else’s car and you may, quite understandably, wish to take steps to avoid this happening. This is where car hire excess insurance comes in.

With this type of top up cover, it would be the policy that paid out rather than you. Car hire companies are typically more than happy to sell you this additional protection.

CDW and exclusions

You may find though, that there are alternative sources for car excess insurance that may offer both better value for money and additional benefits.

CDW policies may typically exclude certain parts of the car, typically the windscreen, tyres, roof and undercarriage from cover. So you may find yourself responsible for repairs to these parts irrespective of the level of excess top up cover that you have.

With car hire excess sourced from on of the independent specialists however, you may find that these car parts are included as standard.

With an independent policy, in the event of damage to the car which resulted in you being responsible for the excess, the car hire company would typically still charge this to your credit card.

You would then simply claim on your car excess insurance for reimbursement.

Many car rental agreements these days come with insurance included as part of the deal. Topping up this car insurance for car hire peace of mind, might be something that you wish to consider.

Car insurance for car hire is similar to the cover that you may need for your own car.

There’s:

• third party cover – to assist you financially if you are sued by someone claiming that you injured them or damaged their property with the rental car;
• collision damage waiver (CDW) – which protects you from the financial effects of needing to repair or even replace the hire car.

So, just what aspects of this cover may leave a bit to be desired and justify additional or top-up cover?

For rental in the UK, the main areas you may wish to consider are the excess and the exclusions.

Excess

Excess is a device used by many forms of insurance and it represents an amount of money that you will pay towards the cost of any future claim.

For example, if repairs to your rental car are to cost £500 and there is an excess on your hire insurance of £750, then you would be charged £500. If the excess were £300, then you would pay £300.

Since you may find that a typical excess on a car hire policy may be anywhere between £500 and £1600, taking out car excess insurance may make sense.

Exclusions

In a typical CDW policy, you may find that the windscreen, tyres, roof and undercarriage are not included in the cover. If these parts are damaged then it would your credit card that would be funding the repair or replacement.

If paying out significant sums of money for the repair of someone else’s car is something that you’d hope to avoid, then you can do this by topping up the standard CDW with car excess cover.

Buying this type of cover from the car hire company is obviously an option but you may find that this may not be the most cost effective way of securing this all important peace of mind.

There are independent providers of car insurance for car hire who may be able to offer more competitive prices. Their policies may also typically cover those parts excluded by other policies at no extra cost.

Although it’s comforting to know that there is always an insurance policy on the table from a car hire company, reading the small print can contain one or two uncomfortable surprises. The excess on a car hire insurance policy can be anything from around £400 up to and over £1000 depending on the vehicle and the country. This means that in the event of theft or accident the person who has hired the car will have to pick up the initial cost up to the limit of the excess. There is a tried and trusted way of avoiding this called car excess insurance.

Anyone who has rented a car in Europe or other parts of the world will know that a typical agreement includes protection for the vehicle with collision damage waiver, third party liability and theft. But then there is the excess which can also be called the deductible or non waiver.

This means you have to pay the initial portion of the costs up to a set limit in the event of an incident. For example, if the excess on the car hire policy is £200 and a wing mirror is snapped off in an accident which costs £180 to replace, you will be liable for the whole cost.

Car excess insurance on the other hand would refund you the money which you have to pay. Although the car hire company will normally use your credit card number to take the excess cost, you can simply apply on your excess insurance later to get the money back. In essence, the policy covers the policyholder and not the rental vehicle.

Companies also offer excess insurance policies which protects for a number of car rentals up to a set limit in any one year. These annual policies are useful for people who regularly travel abroad on business or pleasure and hire cars. A policy like this will cover excess damage to the vehicle, including the undercarriage, and also the excess on theft, plus window and tyre damage.

One of the common conditions to bear in mind with this kind of insurance is that it normally applies a distance restriction. This means that the policy must be taken out on a rental car which is hired within a set distance of your normal place of residence, otherwise it will be invalid. So to give an example if somebody lives in London and takes out a rental car and gets excess insurance with a 150km condition, they cannot rent a car which is within 150 kilometres of their London home.

Cover like this can be taken out for locations far and wide and not just within Europe. Many companies allow policies to be active across the globe, save for a few locations considered as high risk areas such as Zimbabwe and Afghanistan.

Car excess insurance is therefore one way of removing the potential headache which is the excess attached to a typical car rental insurance agreement. Although in many cases a rental period will pass smoothly, a simple scratch, shunt, bump or theft can see somebody ending up paying hundreds of pounds or more on an excess and ending up out of pocket, sometimes potentially through something which was not their fault, i.e. a window is smashed in a break in.

Why might you consider a policy called car excess insurance? Well if you are renting a car you may wish to take out this additional insurance. While the rental car insurance protects the hire car up to certain limits, it comes with a certain amount of excess that you have to pay out of your own pocket in the event of a claim.

For instance, if you were to have an accident in the rental car and did considerable damage to the vehicle, you may be covered in part by the insurance policy included when you rented the vehicle.

However bear in mind that some parts of the rental vehicle such as the under body and glass may not be covered in the policy. If you make a claim for damage to the parts that are covered, you have to find so much, the excess, before the company takes over the rest of the claim. In some cases this may add up to hundreds of pounds, which are typically taken from the credit card you used to sign up for the rental car.

If you have car excess insurance to fall back onto you are usually charged the excess by the car hire company and then are able to claim it back from the excess insurance policy. While this is an added expense it may be something worth considering as affordable cover can sometimes be found.

If you have financial products such as home insurance or regular car insurance then you may have heard of the ‘excess’. Typically the ‘excess’ is the amount of money that you need to pay toward any claim that you make on the insurance policy. If you are renting a car, you generally have insurance included in with the rental and this insurance policy comes with a certain amount of excess. You may therefore wish to take out car excess insurance to help cover the cost of 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).