Car hire excess insurance explained

The term ‘car hire excess insurance’ is sometimes encountered when hiring cars or dealing with car rental companies. It is a voluntary car-hire related insurance that can be taken out to give additional peace of mind. 
 
Most people know that car hire comes with insurance, and that the insurance may vary depending upon what type of cover is selected and paid for when renting.

What may sometimes be less clear is that most car hire companies will also specify an ‘excess’ as part of the agreement. This excess will be the financial amount that the hirer of the car will have to pay in the event of a claim. This amount is sometimes called the “first part” of any costs in the event of a claim and depending upon the country and hire company, it may be applied to any component of a claim including theft, fire, vehicle damage or personal liability. 

To consider a hypothetical case: a hirer has an accident that causes 2,000 pounds / dollars worth of damage to the vehicle. If the car hire agreement and insurance policy had an excess of 500 then the car hire company would expect the “first 500 pounds / dollars ” to be paid for by the hirer. 

Insurance excesses are quite normal with many types of insurance policy and it is not restricted to car hire insurance. The amount of the excess can vary and at times be high.

The good news is that most car hire companies offer deals whereby the hirer may buy additional insurance at the time the car is hired and by that reduce the amount of excess payable in the event of a claim. This may be called ‘top-up insurance’, ‘excess insurance’, or ‘car hire excess insurance’.

Another way of obtaining car hire excess insurance is to purchase a specific policy of this type from an insurance company. This would reimburse the hirer should they be required to make a contributory excess payment following a claim.

Considering the above example, if the car hire policy had an excess that meant the hirer had been forced to pay the car hire company the first 500 pounds/dollars of an claim following an accident, then this amount would be subsequently reimbursed to the hirer by their car hire excess insurance policy.

Car hire excess insurance can be purchased from specialist insurance companies and brokers often online.

One significant advantage of many forms of car hire excess insurance purchased from insurance companies is that they cover the policyholder globally and not a given hire vehicle or rental company. What this means is that it may be possible to purchase an annual or quarterly policy that will cover the policyholder for any hired vehicle in different locations throughout a period of time. This may offer significant cost advantages over the top-up insurance purchased from car hire companies.

These items may be included in the cover of car hire excess insurance policies sold by specialist insurance companies. As with all insurance, the policyholder should carefully check to see what circumstances are included and excluded and whether the policy will meet their needs.