Do you need annual car hire insurance?

Everyone who rents a car needs to have car rental insurance. For many renters this is something they leave to the hire company to deal with on a rental-by-rental basis but there is an alternative – annual car hire insurance.

In many circumstances, at the time the car is booked or collected the renter will need to consider what basic insurance is included in the hire price, whether they are happy with that, and whether or not to purchase an alternative form of insurance or just basic 'top up' insurance.

This can be a complicated and sometimes tedious process. Much basic 'in the price' car insurance is limited in several ways including excess requirements, numerous exclusions and possible financial limits on the maximum amounts payable. Some hirers feel they need to reduce the excess amounts payable in the event of an accident , increase the breadth of cover or alternatively they may feel they are being charged too much by the car rental company for the insurance cover in place.

Trying to attend to this on a rental-by-rental basis can prove time consuming and expensive for people hiring multiple vehicles per year.

Fortunately there is an alternative for regular car hirers – annual car hire insurance. This is essentially a longer term 'open' car hire insurance policy that may also include extended coverage against excesses and damage to areas of the hired vehicle that are normally excluded from basic daily car hire insurance provided by the car rental companies. As it is sold to a policyholder in advance rather than in the event of a single specific car hire, it may be a very cost effective way of insuring hired vehicles.

This type of policy can be purchased for extended periods of some months or in the case of true annual car hire insurance, for a 12 month period. With an annual car hire insurance policy, a single annual premium covers the policy holder and any other named driver on the rental agreement.  The policy holder must be the person hiring the car and the policy will allow them to rent a car as many times as they wish in that 12 month period.

These policies are usually purchased from specialist insurance companies and frequently on-line, although some car rental companies may offer similar products based upon rentals through their company. If the policyholder has a policy of this type issued by an insurance company, they may be able to use it to 'waive' some of the basic insurances provided by the car rental company but the circumstances here can become complicated and would need to be checked in advance with the specific rental company. 

 As with all insurance policies the policyholder will need to be sure that they are buying the right product for their needs. There may be conditions applied to the annual car hire insurance policy which could mean that is not the best option.  As an example – it may not be valid for all countries or cover in Europe may not be valid for car rentals in the USA. Typically there could be a limit on the number of consecutive days that any one rental agreement can cover.  It may also not be possible an annual policy to rent a car within a certain minimum distance from the renter's normal home address.

The types of vehicles you can rent may also be restricted to private cars – commercial vehicles may be excluded. Certain very high value cars may not be covered  and this restriction could include vintage models. An annual car hire policy may not be the best solution for a fly-drive holiday where the insurance premium is only a small part of the total.

In the event of a claim you will not normally need to get involved.  In most cases the car hire company will claim any damages directly from the insurance company that provided the annual car hire insurance and no charges will be made to the renter's credit card. There could be times though, particularly when the amount of damages is very small, that a charge will be made to your credit card and you will have to reclaim this from the insurers.