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).

The ‘excess’ is an aspect of the car rental insurance provided by car rental companies that may end up costing you a lot of money over and above the rental price. The way you can protect yourself from these additional charges is called excess insurance.

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.

You may have enjoyed driving your rental car but once you return it you probably won’t want to hear anything more about it. Unfortunately that may not always be possible and long after you’ve sent it back it could be that you may see some hefty charges going through onto your credit card from the car hire company – unless you have something called car excess insurance in place.

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 more attractively-priced 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 (up to set limits of course).

Is an often potentially 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, though it will depend on your car hire excess insurance provider.

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 could be a cost and timee saving exercise 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.