Wednesday 22 September 2010

Damage liability waiver – what is it?

Hiring a car may be either fun on holiday or something that’s essential for business. Whichever is the case, it may be important to understand a little about damage liability waiver if you are to be confident that you are well protected by appropriate insurance.

Basic car hire insurance
At the time you book your rental car, the hire price may include some components of insurance.
Depending upon the hire company you’re using and the country of rental, this may range from:
• little or no insurance in places such as the USA;
• third party cover only;
• third party cover and a basic form of damage liability waiver.

Damage liability waiver
This form of cover is sometimes called CDW for ‘Collision Damage Waiver’. It offers you protection against the costs of any damage done to the rental car while you have it on hire. It’s perhaps worth noting that this typically includes cover against theft.
If you do not have this form of insurance protection, you will be personally liable for all costs arising from damage to or theft of the hire car.

If your rental does not include it, you may be able to purchase it from the hire company or possibly at a more competitive rate from an on-line specialist provider of rental car insurance.
Exclusions and Limitations

The damage liability waiver provided by the car hire companies ‘in the price’ will typically come with two significant limitations:
• an excess of typically between £500 and £1500;
• several areas of the vehicle excluded from cover such as the tyres, wheels, roof, undercarriage and windows.

This means that following an accident, even if you have the rental company’s insurance, you may still end up facing some potentially large bills.

Options for additional protection
If you are worried about the extent of your financial exposure as a result of the above limitations, you do have options.

It may be possible to purchase additional insurance from the car hire company that will reduce or remove the excess and possibly also include cover for the typically excluded areas of the vehicle. The rental company may call this something like ‘top-up cover’ or perhaps ‘Super CDW’.
Once again, a cheaper alternative may be to purchase excess protection insurance from the specialist on-line providers of rental car cover. These policies work by reimbursing you for any excess costs that you may have been charged by the car rental company.

These policies also may provide an additional advantage. Not only can they sometimes be cheaper but you may be able to purchase them on an annual basis. This means they will cover any vehicle rented by your during the period – subject to some exclusions for special or exotic vehicle types

The excess protection insurance offered by the on-line providers of car rental insurance may offer you additional peace of mind by supplementing your basic damage liability waiver that came with the rental car.