The importance of car hire insurance

When you are looking for car hire, the position with respect to car hire insurance can appear complicated, confusing and expensive.

Most car hire companies have their own individual conditions and terms regarding their insurances and trying to read through these can be intimidating. The good news is that the situation is not as complex as it may first appear.

To begin with, in most countries the car hire companies will include some form of car hire insurance in their basic rental price. This may be what’s called ‘Third-Party’ and will cover you for any damage caused by you to third parties when driving the rented vehicle. This is often the legal minimum insurance required in most countries and some rental companies will also include in it insurance cover against theft risks to the rented vehicle itself.

If the rented car has cover of the above type, it is worth remembering that this will not cover you for damage to the rented car itself in an accident. If it is badly damaged and you only have third party car hire insurance cover, then all the costs of repair to the hire vehicle itself will need to be paid for by you.

Many car rental companies now include ‘in the price’ something called CDW that stands for collision damage waiver. CDW is insurance and it means that in the event of an accident most of the damage to the rented vehicle will be covered by insurance. Some caution may be advisable here though. The CDW cover included in the car hire insurance offerings of the rental companies may be limited in two important ways.

Firstly, it is common for such cover to carry excess – this ‘excess’ is the first part amount of any claim that you as the renter will be expected to pay in an accident. As an example, if the policy has an excess of 500pounds sterling then that is the amount you will have to find in the event of an accident. If the damage is 300pounds then you will have to pay all of it. If it is 1000pounds then you will need to pay the first 500pounds.

Secondly, watch out for exclusions. Typically, areas of the rented car such as the roof wheels windows and tyres will be excluded from the CDW cover of many car rental companies. You’ll have to pay for damage to these yourself.

If you’re looking for better cover and a lower price, then it’s worth remembering that you do not have to take the insurance of the car hire company itself. The specialist insurance and insurance broker companies offer policies online that are sold to you the policyholder rather than a given car rental agreement. As such they will cover all vehicles rented by you during the life of the policy and usually offer price and cover advantages such as no or only limited excess and they may also cover those parts of the vehicle excluded by the car hire company insurance.

Many such policies work on the basis that if you need to pay the car rental company an excess following an accident, then this will be paid back to you through your insurance policy.

Car hire insurance taken out through a direct insurance company may well be worth checking out so as to ensure that you’re getting the very best deal possible for the lowest cost.