Monday 16 February 2009

Car rental excess insurance explained

Just what is car rental excess insurance? Hiring a car can be a great way to see more of a foreign country. It gives you a freedom that you wouldn’t normal experience if you stayed in your hotel complex, and means that you’re given the ability to explore places that go beyond just the pool, bar, local market and beach just down the road.

However, it’s sometimes necessary for business trips too – many companies expect their workers to hire cars on business trips in order to maximise their efficiency while going to see clients, and because it saves them running up huge taxi bills.

Still, that’s not to say that it’s necessarily a cheap option. While car hire itself can often be relatively reasonably priced (unless you’re viewed as a particularly risky driver, such as someone under 25), the additional charges levied on car rental can be extremely high. As a result, many people find that car rental excess insurance is enough to put them off renting for themselves.

An excess is defined as the amount of an insurance claim you pay before the insurance company takes over; if you have a repair bill of £300 and an excess of £250, you’ll pay the first £250 and your provider will take care of the remainder. However, unlike most UK car insurance excesses, the excess insisted on by many foreign can hire insurance providers can be extremely large (perhaps even as high as a thousand pounds in some cases). Understandably, it’s unlikely that you’d want such a large risk hanging over your head.

But what are your options? If you don’t like the idea of being liable for so much money, you can take out car rental excess insurance when you arrange to hire your car. This usually takes the form of what’s known as a collision damage waiver (CDW) or theft protection policy, and is aimed at reducing the amount you pay in the result of a collision or theft while the car is signed over in your name.

The cost of these premiums increase as they bring down your excess – the point where a ‘Super CDW’ or ‘Super Theft Protection’ policy will completely remove your excess altogether, meaning that your insurance provider is entirely liable for any accidents you might have – but these can often be expensive.

For a cheaper brand of car rental excess insurance, you might want to consider buying online. There are a whole host of companies that will allow you to pre-book your insurance before you go abroad, either on a daily basis or in annual instalments – useful if you’re planning on renting a car abroad more than once in a twelve-month period.

These are often much cheaper, and mean you don’t get sidelined into buying other optional packages that you don’t really need, as well as streamlining the process of sorting out your car rental excess insurance.

Whichever option you choose, remember that even though car insurance is necessary, car rental excess insurance is usually just a way to get peace of mind, allowing you to enjoy your holiday as much as possible.

We are very grateful for insurance4carhire.com for providing this information.

Car hire insurance - How it works

Your hire car usually comes with inclusive insurance to cover three areas:
  • LDW/CDW (Loss/Collision Damage Waiver) - to cover damage to the car.
  • TP (Theft Protection) – to cover the car, or part of the car, if it is stolen or damaged during an attempted theft.
  • Liability/SLI (Third Party Liability) – the minimum cover that’s mandatory in most countries

However, on the Damage and Theft portions, the insurance is only reducing what you are personally liable for, and there is often an excess to pay in the event of having to make a claim. In Europe this can be a few hundred pounds. In other countries it can be as much as £1500.

Also windows, tyres, the roof and the undercarriage of the car are usually excluded (i.e. not covered). These are the parts of the car most prone to damage and often not covered by the car hire company’s insurance.

A company like insurance4carhire will provide car hire excess insurance to reduce your excess to zero. If you are hiring a car a few times a year then it makes sense to take out an annual excess policy, from only £49.

There are a number of policies available depending on where you will hire the cars, how many people you want to be insured for the cars, and how many days at a time you will be away on each trip.

You can take a daily policy at only £4.50 if you will only be hiring a car for a few days – or you are hiring a car close to home.

The policies will cover all named drivers on the car hire agreement plus any damage to the roof, windows, tyres and undercarriage of the car.

Naturally check their terms and conditions as these of course can always change.