What is rental car excess insurance?

So, you have rented the car and are signing the hire agreement documents. Suddenly you see at the bottom of the form a section that confirms the insurance on the vehicle carries ‘excess’ and which invites you to buy rental car excess insurance for an additional cost.

What does this mean?

When you hire a car, in most countries you will find that included in the price are some forms of insurance against third party liability and perhaps damage to the rented vehicle. The renter should check these carefully to examine whether or not they are suitable for their purposes.

Whatever is included or not in the basic car hire insurance, it is very common to find that the policy carries excess. This is a technical insurance term used to describe the amount or ‘first part’ of any claim that the renter would be expected to pay following an accident or damage to the vehicle. This amount varies both by country and car rental company but a figure between 500-1500pounds sterling may be expected.

This means that if the car suffered damage to the tune of 2000pounds and there was excess on the policy of 1000pounds, then you the renter would have to pay that 1000pounds.

The risks here can be of concern to many renters. This is understandable because in the event of an accident you may have little control over who repairs the vehicle and at what cost, so even a minor accident could result in the need to pay a large repair bill.

Most car rental companies offer for sale a form of top-up insurance that means the excess on the policy can be reduced. This is what you are being invited to purchase when the rental agreement says something like “tick here to secure rental car excess insurance” or sometimes it may be called ‘Super CDW’.

It’s worth noting that excess insurance isn’t the only issue that requires some thought. Many of the insurance policies that come with the hired vehicle ‘in the price’ may have caps on the amount of third party liability they will provide (by law the amount is unlimited in the UK). If so, it may be worthwhile considering uplifting the amount of cover, as court awards can be large. Also, some basic CDW can be limited in terms of what type of damage it will cover to what areas of the vehicle – several areas and damage types may be excluded.

The car rental company will offer various forms of top-up insurance to cover all these areas but this can prove pricy and there is an alternative.

As a renter you are not obliged to take the rental company’s top-up insurance. Rental care excess insurance can be obtained from specialist insurance companies and brokers usually online. It typically works on the basis that you purchase a policy that will provide you with excess cover. In other words if you have an accident and need to pay excess to the car hire company, then your insurance company will reimburse you.

Quite often the rental car excess insurance available through insurance brokers will also offer additional benefits such as increasing the amount of personal liability cover and covering areas of damage to the vehicle excluded by the standard policy of the car rental company. Typically they will also be cheaper than the top-up insurances offered by the rental companies and it may be worthwhile checking out if you’re looking to save money.