Compare car hire excess insurance

Whether you’re hiring a car for a week or two to get you and your family around on a foreign holiday or need a car for a day or two in the UK – for a big IKEA trip, perhaps – car insurance will typically come as part of the package. But the excesses on rental car insurance can be sky high. If you want to avoid the risk of paying a small fortune if your rental car is damaged or stolen, you’ll need car hire excess insurance. You can buy this directly from the rental company, but you can often get a better deal with a standalone policy. We explain how to get the best cover.

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What is car hire excess insurance?

If you rent a car and it’s damaged, lost or stolen, the car insurance you’ll get as part of the rental package should protect you from the worst of the financial impact. But you’ll be charged an “excess” by the rental company – this is the amount you have to pay towards any insurance claim. Excesses for hire cars are typically several hundred pounds and can top £1,000.

Car hire excess insurance covers this amount so you don’t have to pay it.

How does car hire excess insurance work?

Excess insurance lets you claim back the excess that would otherwise be payable if your hire car was stolen or damaged following an accident.

Some policies will cover the full amount of the excess, while others will only cover part of it, so check the details before you buy.

There can also be differences in exactly what damage is covered. For example, some policies may exclude damage to peripheral parts of the car, such as tyres, wing mirrors or windscreens.

How do I get car hire excess insurance?

There are two main ways to get car hire excess insurance.

1. Get excess reduction cover straight from the rental company. This is the simplest option as you can arrange it directly through the rental company. You may also see it called “excess waiver”. It reduces the excess you will have to pay to a much more reasonable amount, and you won’t have to deal with a separate insurance provider to get your excess refunded. However, it’s typically much more expensive than buying standalone cover from a third party.
   Why choose this option? If you haven’t planned ahead and bought standalone car hire excess insurance in advance, this is likely to be the most convenient option.
2. Take out a standalone car hire excess insurance policy. This type of cover is designed solely to cover any car rental excess you may become liable for. As with travel insurance, you can choose between annual and single-trip cover.
   Why choose this option? This is a great and less expensive option if you need a flexible policy designed specifically for car rentals.

If you’re taking out a travel insurance policy for the same trip you’re hiring a car for, it could also be worth checking if your travel insurer offers car hire excess insurance as an add-on. If it does, compare the cost of the add-on to the cost of buying a standalone policy.

Bear in mind that if you don’t buy excess insurance directly from the car hire company, it may ask for a large upfront credit card deposit to cover the excess amount. You’ll get this back if you don’t need to claim.

What does car hire excess insurance cover?

Most policies will protect you from having to pay an excess in the event of the following:

• The hire car is damaged in an accident or by fire or vandalism
• The hire car is stolen
• You’re unable to return the hire car to the rental location
• Luggage or personal effects are stolen, accidentally damaged or permanently lost.

As well as covering the excess, policies may include cover for damage to areas that may be excluded by the rental company’s standard insurance, such as the windscreen and tyres. Additional drivers named on the rental agreement are also usually included on the policy.

Do I need car hire excess insurance?

When you hire a car, you’ll typically get a basic level of insurance for damage to the car and protection against theft. Usually, this is included in the rental deal; in some countries, such as the US, you may need to pay extra. You may see the following terms used:

• Collision damage waiver and theft protection
• Loss damage waiver
• Damage liability fee

However, in the event of an accident or theft of the car, you will be liable to pay an amount towards the claim – known as the excess. All car insurance policies have an excess, but the excesses for hire cars are usually much higher – usually at least several hundred pounds and sometimes more than £1,000.

This is where car hire excess insurance comes in, as it will dramatically reduce or even totally eliminate the amount of excess you have to pay. You’re under no obligation to take out excess insurance, but it can offer a financial safety net should the worst happen.

What are the different types of car hire excess insurance?

If you buy cover directly from the company you’re renting the car from, you’ll typically only be covered for the specific car rental period.

If you’re buying a standalone policy, you can choose to buy car hire excess insurance by the day, to cover a specific trip (or trips) or as an annual policy. A bit like annual travel insurance, an annual car hire excess policy covers you for multiple trips within a 12-month period. There may be a limit on each trip length.

You may also have a choice of UK-only, European or worldwide cover.

• UK-only cover: As the name suggests, this only covers you for cars you hire to drive in the UK. It’s usually the cheapest, but also the most limiting, cover. Some companies may not have a separate UK policy and will instead combine UK and Europe into one policy.
• European cover: This will cover your car hire excesses for driving in Europe, including the UK. Different companies may have different definitions of what counts as “Europe” for the purposes of cover; for example, some may include Egypt and Israel.
• Worldwide cover: This will cover you to drive in the UK, Europe and further afield. Some companies may break this down into worldwide including the US and Canada or worldwide excluding the US and Canada. Bear in mind that you may not be covered to drive in countries that the UK government has advised against travel to.

Should I buy annual or single-trip excess insurance cover?

The best option will depend on how often you need to hire a car and where you plan to travel. If you only hire a car once a year, a single-trip policy will probably be cheaper. If you expect to hire a car more often, check the cost of annual cover too as it may work out cheaper than buying several single-trip policies.

How much does car hire excess insurance cost?

It depends on how you buy it, whether you’re buying a single-trip or annual policy and where in the world you’re hiring a car.

One thing that’s certain is that buying car hire excess cover directly from the rental company is likely to be much more expensive – many firms charge £25 or more per day, adding up to the best part of £200 for a week’s car rental.

Buying it in advance from a standalone insurer could cost as little as £30, or in some cases even less, for the same period of cover.

It’s really worth looking for the best deal well in advance of your trip.

What should I look for when taking out car hire excess insurance?

As is often the case with insurance, exactly what is covered and any exclusions will differ between policies. Depending on your needs, it’s worth checking the following:

• Whether the policy covers the whole excess or only part of it
• Whether the policy covers additional drivers
• Any age restrictions on the drivers
• Whether there are any limits on how far you must be from home when problems occur
• If you have annual insurance, how many trips the policy covers you for and how many days per trip
• Exactly what damage will be covered. For example, will the excess be covered in the event of vandalism? Is damage to the headlights, tyres, windows, windscreen or wing mirrors covered?
• Whether the policy will reduce your rental excess if you’re involved in a “single-vehicle accident” (such as scraping the car on a wall) or only if you’re involved in an accident with another vehicle.

What doesn’t car hire excess insurance cover?

As well as checking the features and exclusions above, which can vary by policy, as a general rule, you will not be able to make a claim under any car rental excess insurance policy in the following situations:

• You were under the influence of alcohol or drugs at the time the loss occurred.
• You do not act sensibly and responsibly to protect yourself and your property.
• You do not do everything possible to reduce your loss.
• Your claim is a result of you breaking the law or breaking a government ban or regulation.
• Your claim is a result of an act of war, rebellion, revolution etc.
• Your claim is a result of an act of terrorism or nuclear contamination.
• Your claim arises from motor sports of any kind.
• The loss or damage is caused by detention or confiscation by customs or other officials or authorities.
• You are travelling against the advice of your doctor or you’ve booked or undertaken your trip after being diagnosed with a terminal illness.
• Your claim arises from or is exacerbated by an existing medical condition.
• Your claim involves suicide or a self-inflicted injury.

How to compare car hire excess insurance

Some, but not all, car rental companies publish the cost of their car hire excess insurance on their websites. You may be offered the chance to buy it when you book your car hire and doing this is likely to be cheaper than buying it at the desk when you pick up the car.

Before you hit the buy button, though, compare the cost of standalone policies, such as those in the table at the top of this page. Make sure you think about exactly what cover you are likely to need – for example, single-trip or annual cover and European or worldwide cover.

How can I save on my car hire excess insurance?

Use the following tactics to avoid paying more than you need to for car hire excess insurance.

• Don’t wait till the last minute. Waiting until you’re at the car hire desk to buy excess insurance is almost certainly the most expensive option.
• Shop around among standalone insurers. You’re likely to pay much less with any third-party insurer than buying excess insurance from the rental company, and shopping around will secure you the very best deal. The comparison table at the top of this page is a great starting point.
• Don’t prioritise upfront price over quality. Check that the policy covers everything you need, and covers the full amount of the excess. Otherwise, you could find yourself faced with unexpected charges in the event of a claim.
• Consider an annual policy. If you expect to hire a car more than once a year, an annual policy may work out cheaper than multiple single-trip policies.

How do I make a car hire excess insurance claim?

It depends on whether you bought your excess insurance directly from the car rental company or from a third-party insurer.

If you bought car hire excess insurance directly from the car rental company and need to make a claim, your cover should be applied automatically. Depending on the terms of the cover, this will either dramatically reduce the excess you need to pay or mean you don’t have to pay any excess at all.

If you bought standalone car hire excess insurance and need to make a claim, the car rental company will deduct the excess from the card you used to pay for the rental. You will then need to claim for the amount of the excess from the third-party provider, which will reimburse you. Make sure you keep hold of any paperwork and receipts relating to the car hire and the claim, as you may need to show these to the third-party insurer.

Making a claim – tips to make sure you’re paid

• Before you travel, make sure you know what evidence you will need to make a successful claim. If you are travelling with expensive items that you wish to cover, you will likely need original receipts or proof of ownership. Similarly, in the event of an accident, you may need to obtain police and medical reports to validate your claim. Take photos of the damage. If another car hits yours, get the driver’s details.
• Get a damage list. If the car is damaged while it’s in your possession, ask the rental company for an itemised account of any repairs required.
• Contact your insurer as soon as possible. Don’t leave it till you get home to speak with your insurer. Contact them as soon as possible so you know exactly what they require for your claim to be paid.
• Cooperate. Make an effort to work closely with your insurer to provide them with everything needed for your claim.
• Get evidence from officials. If you are trying to claim for loss or theft or for damage to your rental vehicle or luggage, make sure you get an official report.
• Take your time with the claims documents. Make an effort to fill out all the necessary documentation as best you can and provide all the necessary supporting documentation on time.

Bottom line

If your rental car is stolen or damaged, by default the rental company will charge you an excess. The only way to avoid this is by getting car hire excess cover. It can be tempting to assume you won’t have any problems and decide not to pay the extra fee for this, but when excesses can exceed £1,000, this could be a false economy in the event of a claim. Buying from your rental company when you collect the car can be convenient, but also pricey. To keep costs down, shop around among standalone insurers before you go and consider an annual policy if you expect to hire a car more than once a year.

Frequently asked questions

• Will my travel insurance cover car hire?

  Most travel insurance policies won’t cover insurance for car hire or car hire excess insurance as standard. Your travel insurance provider may offer car hire excess insurance as an add-on to your main policy, however.

• Does car hire excess insurance cover scratches?

  You should check the small print to be sure, but usually, yes. In fact, it’s just this type of minor damage where car hire excess insurance can be really beneficial. Without excess insurance, the cost of the repair would usually be lower than the excess, so you’d probably have to pay for the full cost of repairing a scratch.

• What's the difference between collision damage waiver and loss damage waiver?

  Collision damage waiver covers the cost of damage to a rental vehicle in the event of an accident. Loss damage waiver includes this, plus the cost of replacing the car if it is stolen or lost.

• What happens if you damage a rental car without insurance?

  This is a very unlikely scenario, as basic collision damage waiver insurance is usually covered as part of a car rental agreement. But in the theoretical eventuality of damaging a rental car without insurance, you’d be liable for the full cost of repairs.

• Do I need to buy additional insurance from my car rental company?

  In most cases, the basic insurance you need – third-party insurance (a legal obligation in most countries) and damage to the rental car – will be included as part of the standard rental package. In some countries, such as the US, you may need to pay extra for it. But while you’re not usually under any obligation to buy additional insurance, unless you have a standalone car hire excess insurance policy, you’ll be liable to pay a large excess in the event of a claim.

  Some car rental companies will try and persuade you to take out their own, often expensive, excess insurance (or excess waiver). If you already have a standalone policy, stand your ground and be clear that you don’t need the rental company’s extra cover.

  If you don’t have your own car hire excess policy, then you’ll need to weigh up the cost of excess cover against the risk of having to pay the full excess if you need to make a claim.

• Is car hire cheaper closer to the hire date?

  Generally speaking, no. If you’re renting a car in a less popular location, at a quiet time of year, prices probably won’t change that much over time. There is a small chance that prices may drop closer to the time if demand for cars is very low, but there’s no guarantee of this.

  If, on the other hand, you want to hire a car in a popular location and/or at a busy time of year (school holidays, for example), prices are likely to increase closer to the date, so it’s best to book as soon as you can.

• Who can take out car hire excess insurance?

  As a general rule, if you can hire a car, you should be able to take out car hire excess insurance. Some policies won’t cover under 21s, but this age restriction usually applies to being able to hire a car in the first place.