When you rent a vehicle the car often comes with insurance from the rental company so you have nothing to worry about in the event that you suffer an accident in the car and it is damaged, or stolen – right? Actually this may not be so unless you had given some thought to taking out car hire excess insurance too.

Excess insurance for the rental car
You may not realise but the rental car insurance comes with a certain amount of excess. This is a sum of money that you have to find in the event of making a claim. This can sometimes be a large sum of money and it is typically charged to the credit card that you used when you hired the car. Therefore while the car rental insurance policy pays towards the cost of the damages to the car, so do you.

This amount will vary among providers but could range from £400 right up to and maybe even over £1,500!

Excess car hire insurance is an additional rental car insurance policy you are able to take to ensure that the excess is protected. As this may be a substantial amount of money, it may make sense to take out additional protection for what can be a comparatively small fee. If considering this type of insurance, the good news is that you may choose who to take the insurance with and an independent provider may offer a cost-effective way of getting hire car excess cover.

When you rent a car you may wish to give some thought to taking out additional insurance on top of the basic car insurance in the form of car hire excess cover. This type of policy is totally different from the type of insurance that comes when you rent the car.

Standard car rental insurance
The standard car rental insurance added in with the cost of the car rental typically protects you against you damaging the car; say if you are involved in an accident. The policy may not provide protection for certain parts of the car (such as the underside or tyres); however it does give some peace of mind.

If you were to have to make a claim on the rental insurance there is a certain amount of money that you need to pay out of your pocket towards the claim, this is the excess.

Car hire excess insurance is there in the event that you make a claim and you have to pay the excess. When a claim is made the rental car provider usually takes the amount of excess from the credit card that you signed up with when you rented the vehicle. You are then able to claim on your excess insurance policy and get some, if not all, of the excess back that you were charged. With some car hire excesses hitting the £1,500 mark, taking this cover could potentially save you money in the event of a claim.

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.

Car rental insurance can be thought of as comprising three main subject headings:

• What risks are there to be covered?
• What cover is available?
• Where does the cover come from and how good is it?

The risks
When you’re driving a hired car, you are exposed to two main categories of risk:

1. Claims from other people that you have damaged their property or injured them (or both) with the hire car. The costs here could be significant. If serious personal injury is involved a court could potentially award 6 or even 7 figure damages against you. If your insurance doesn’t cover it then it will be you that has to pay.
2. Claims from the car rental company that their vehicle has been damaged (or stolen) while being rented by you. As per above, if you don’t have insurance against such damage then you will have to pay from your own finances. This could in theory be as high as the cost of a replacement car.

The cover
The type of insurance that protects you against third party claims is unsurprisingly called Third-Party Liability Insurance.

The car rental insurance that protects you against claims for damage to the rented vehicle itself is called CDW – standing for Collision Damage Waiver.

Sources of the insurance
The car rental companies may or may not include some components of third-party and CDW in their rental price. It is difficult to be precise because practices vary between countries and rental companies. In those countries where they do not, they will usually be very eager to sell you third-party and CDW insurance separately.

You are under no obligation to take the insurance offered (or included) by the car rental companies. You can use your own and you may wish to consider doing so because often it is usually more attractively-priced and may provide more policy features and benefits. These types of policies can be purchased on the Internet from the specialist providers of car rental insurance.

Even if the rental company has included insurance ‘in the price’, you can still ask for a rental only price and then compare the figures for using your own insurance.

The cover of the specialists may be more attractive in some cases because the basic third-party and CDW insurance of the rental companies may contain exclusions and limitations that the policies of the Internet specialist providers generally do not.

You may find for example, that the rental company’s third-party insurance has a maximum payout cap that is set too low. Their CDW may exclude several areas of their car from protection and it may also contain excess of 500 – 1500 pounds. The excess is the amount you would be expected to pay towards the costs of any claims.

The car rental company’s answer to this will be to try and persuade you to purchase extra ‘top-up’ insurance – but this may not be needed if you have your own insurance in place as the policies of the specialists may not contain such limitations.

Summary
No brief article can explain in detail the nature of car rental insurance but the sites of the specialist providers contain a wealth of information. Having a quick look could not only prove educational but it could be the first step towards saving you some money.

Car rental insurance can be thought of as comprising three main subject headings:

• What risks are there to be covered?
• What cover is available?
• Where does the cover come from and how good is it?

The risks
When you’re driving a hired car, you are exposed to two main categories of risk:

1. Claims from other people that you have damaged their property or injured them (or both) with the hire car. The costs here could be significant. If serious personal injury is involved a court could easily award 6 or even 7 figure damages against you. If your insurance doesn’t cover it then it will be you that has to pay.

2. Claims from the car rental company that their vehicle has been damaged (or stolen) while being rented by you. As per above, if you don’t have insurance against such damage then you will have to pay from your own finances. This could in theory be as high as the cost of a replacement car.

The cover
The type of insurance that protects you against third party claims is unsurprisingly called Third-Party Liability Insurance.

The car rental insurance that protects you against claims for damage to the rented vehicle itself is called CDW – standing for Collision Damage Waiver.

Sources of the insurance
The car rental companies may or may not include some components of third-party and CDW in their rental price. It is difficult to be precise because practices vary between countries and rental companies. In those countries where they do not, they will usually be very eager to sell you third-party and CDW insurance separately.

You are under no obligation to take the insurance offered (or included) by the car rental companies. You can use your own and you may wish to consider doing so because it can often work out to be a more attractively-priced option and often provides additonal policy features and benefits. These types of policies can be purchased on the Internet from the specialist providers of car rental insurance.

Even if the rental company has included insurance ‘in the price’, typically you can still ask for a rental only price and then compare the figures for using your own insurance.

The cover of the specialists may be better because the basic third-party and CDW insurance of the rental companies may contain exclusions and limitations that the policies of the Internet specialist providers generally do not.

You may find for example, that the rental company’s third-party insurance has a maximum payout cap that is set too low. Their CDW may exclude several areas of their car from protection and it may also contain excess of 500 – 1500 pounds. The excess is the amount you would be expected to pay towards the costs of any claims.

The car rental company’s answer to this will be to try and persuade you to purchase extra ‘top-up’ insurance – but this may not be needed if you have your own insurance in place as the policies of the specialists may not contain such limitations.

Summary
No brief article can explain in detail the nature of car rental insurance but the sites of the specialist providers contain a wealth of information. Having a quick look could not only prove educational but it could be the first step towards saving you a lot of money.