Car hire insurance is a generic term used to describe a large range of insurance policies that relate to the hire of vehicles or that are designed to offer additional protection to people when hiring a car.
As part of the standard hire cost, most car hire companies will include a basic form of minimum insurance. The cover of this basic insurance will vary by country and rental company and the specifics must be checked in advance. It may or may not cover the driver of the vehicle against fire, theft, third party liabilities, and some types of accidental damage to the hired vehicle.
Even in those countries where this basic insurance covers most of the categories of risk above, it could still be fairly restricted. As an example, the amount payable in the event of a third party claim could be capped at a specified level and some care will be needed to ensure that this is adequate given that court awards to third parties following an accident can be very high.
Typically there will also be what is called ‘an excess’ that means the hirer personally may have to pay a proportion of any claim – sometimes called ‘the first part’ of the claim. The amounts here may also be high and should be fully specified by the rental company at the time or booking or hire.
Many of the basic car hire insurances that are part of the standard terms of vehicle hire will also restrict the types of damage to the hired vehicle that are covered. Damage to tyres and wheels, windows and glass, and sometimes lights and roof areas, may all be excluded from cover. As these are all areas of a vehicle that are commonly damaged in even minor accidents, the costs payable by the hirer in the event of an accident could be significant.
This can lead renters to have both concerns over their cover and, in some cases, doubt as to whether the insurance costs being paid offer value for money.
Fortunately there are two ways in which a car hirer can protect themselves against such risks and in one case, check at the same time whether they can get a better insurance deal.
The first option is to purchase additional ‘top up’ insurance that may be offered by the car hire company at the time of renting. This will often reduce the excess payable in the event of an accident and may include cover for wheels and tyres etc.
The second method involves the purchase of a car hire insurance policy.
Through these policies it may also be possible to insure fully against any excess amounts payable in the event of an accident and cover those items and damage types that are excluded from standard cover. Should an accident arise, normally the care hire company and insurance company will settle all payments between themselves.
Using this type of insurance it may also be possible to increase the level of personal liability cover in place for third party claims.
Policies of this type can be found through specialist insurers and often can be taken out on-line. One major advantage of this type of policy is that it applies to an individual policyholder and not a given hired vehicle. This means that it is possible to purchase quarterly or longer period cover rather than vehicle-by-vehicle hire. This may offer cost advantages over purchasing individual ‘top up’ insurance on a rental-by-rental basis – particularly if one is hiring vehicles regularly. .
As with all insurance policies, car hire insurance will include some restrictions and limitations. Many policies of this type will not cover vehicles rented closer to a specified distance from the policyholder’s home. They may also exclude commercial vehicles, vehicles of a specialist nature such as high-performance sports cars, vehicles that are ‘vintage’ as defined by age (e.g. over 20 years of age) or very high value vehicles such as a Ferrari or a Rolls Royce.
Car hire insurance policies can vary in cost and detail of cover and it would be sensible to check the details carefully before purchase.
Version 1.0 Released 05 February 2009
