European car rental insurance explained

If you plan to use a rental car in Europe then you will need to insure youself and all of the other named drivers on the rental agreement. European car rental insurance is usually easy to obtain and easy to understand.

In most European countries the basic rental agreement and price will include some forms of basic insurance – typically third party liability, fire, theft and possibly CDW (collision damage waiver) that will cover against some types of damage to the vehicle.  Any of these insurance areas may have limitations, exclusions and maximum amount payable 'caps' and all these should be checked carefully as per normal common sense practice.

It's worth remembering that the insurance cover available through one of the major global car rental companies may be different to that of a small hire company in say a holiday resort and there could also be differences between countries of the European Union and those countries outside of the EU. Once again, it would be sensible to check the inPidual details carefully.

However, as per most of the world, in Europe the basic car rental insurance that comes 'in the price' may be limited. On all of the above categories of insurance you may still be liable to pay an excess should you have to make a claim for loss or damage. Excess amounts vary by company and type of car but to illustrate - if there is an excess of 400 and the cost of damage is 90 then you will have to pay all of the 90 cost. If the cost of the damage is 500 then you will have to pay 400 and your policy will cover the final 100.

Another area that needs a little caution is exclusions. It is fairly normal for many areas of the hired vehicle to be excluded from basic CDW cover and these may include the wheels, tyres, windows and roof. Should these be damaged the repair costs may be significant. 

 
Finally, any caps applied to financial payout amounts should be well understood – particularly third party liability. In some countries such as the UK, the amount of third party liability cover is unlimited by law, but in other countries you may find that the maximum amount covered is unrealistically low given the potential size of court awards.

The traditional way of adding insurance cover to protect your interests when hiring a car is to pay for additional or 'top-up' insurance directly with the car rental company.  This may allow you to reduce the excess payable amounts, cover areas normally excluded by standard CDW and possibly increase the personal liability cover maximums.

Insurance of this type purchased directly from the care hire company typically will relate to a given car hire.

There is another alternative to buying additional European car rental insurance from the car hire company.

If you intend to pay for your car hire using your credit card you may find that this automatically gives you some additional insurance cover in some areas but you should read the policy details carefully to satisfy yourself that the level of cover is adequate and be cautious as some credit card providers may block or reduce credit facilities in the event of a large claim being processed.

It is also possible to arrange your European car rental insurance with a specialist insurance company and this may save money.  There are many types of such cover available (including policies called Super CDW, Excess Insurance, Car Rental Cover etc) but they will all operate in a broadly similar way and offer broadly similar cover against the shortcomings of the basic 'in the rental price' insurance.

Essentially you would still have to pay the car rental company the excess and any damage to areas not covered by their basic insurance, but would then claim these amounts back from your insurance policy.

These policies can usually be taken out in advance and online.  As they cover the policyholder rather than a given vehicle, they would cover you for any vehicle hired during the life of the policy. Your cover can be taken out as a daily rate for the duration of the rental only as in the case of cover bought from the car rental company or you could take out a quarterly or annual policy which may be very cost effective if you intend to hire a car more than once in the year.

When buying any form of European car rental insurance always make sure that the insurance company knows which country or countries you are going to be driving in. Some European countries may have different insurance requirements to others. Also as per normal good practice, remember to check the policy carefully as it will have its own conditions, exclusions and limitations.