How It Works – Car excess insurance

Your car hire agreement will normally (although not necessarily in the USA/Canada) include insurance cover for damage and theft (often known as the ‘Collision Damage Waiver’ or ‘CDW’). Even so, if the hire car is damaged or stolen, the driver is normally asked to pay the first portion of the repair or replacement costs. This is known as the ‘excess’.

So, for example, let’s imagine that you are involved in an accident that causes £3,000 worth of damage to the car. If the car hire agreement included an excess of £500 then the car hire company would expect you to pay the first £500 pounds of the repair costs. Excess amounts vary, but can be as much as £2,000, so this could be very expensive. Excess payments are normally required to be made even if the damage was not your fault.

These costs can be avoided by taking out ‘car hire excess insurance’. For a small fee, you can have your risk reduced to zero. This means that even if the car is damaged or stolen you will be fully reimbursed.

Must I take out excess cover?

No, it is your choice, but it is highly recommended that you do so. When you hire a car, your rental agreement will normally already include cover for collision damage waiver and theft. However, if the car is damaged or stolen, you will be asked under the rental agreement to pay for a portion of the costs – called the ‘excess’. If you take out excess insurance, you can reduce that excess, ensuring that if there is loss or damage to the hire car, you will be fully reimbursed.

If you choose not to take out excess insurance (whether in advance or at the car rental desk on the day) you can be on the hook for a sizeable excess in the event of theft or damage.

Do I really need car hire excess insurance?

All insurance is essentially a gamble – you hope never to need it, but the time(s) you do it all becomes worthwhile. Remember it’s not just YOUR driving that matters but other unpredictable road users too, most likely in a country with which you are not familiar. It could be very expensive indeed to have no excess insurance at all, so it’s just not worth taking the risk of refusing the car hire company’s excess damage waiver without having a separate excess policy of your own in place.

Doesn’t my car rental already include insurance?

It depends on the country in which you are hiring, and the company you are hiring from. In Europe, it is normal for the car hire company to include insurance for damage and theft but you will normally be asked to pay any excess in the event of a claim. This is where your own car hire excess insurance policy is useful and recommended.

In other countries (notably the USA and Canada) insurance for damage and theft may not automatically be included, so you need to check the car hire policy very carefully, and make sure that you take extra cover if it is not automatically included. Otherwise you could be responsible for the cost of replacing the car if it is stolen or badly damaged. If you do take the extra theft/damage cover it will often reduce your excess to zero straight away, so in those cases you would not need car hire excess insurance on top.

Why do I need to take out cover in advance?

It is certainly true that many car rental companies will offer you the chance to purchase car hire excess insurance at the rental desk, but this is not always the case. Even if they do, it will be significantly more expensive to buy cover there and then, and their cover will still have exclusions. If you buy a policy in advance you can choose exactly the right policy, with the appropriate level of cover.

The internet providers listed on this site are specialist providers of excess insurance. Not only will you often find their prices to be much cheaper but also the cover they provide will often be superior.

How does an annual policy work?

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.

This means that it may be possible to buy an annual or quarterly policy that will cover you for any hired vehicle in different locations throughout that period of time. This can offer significant cost advantages over the top-up insurance purchased from car hire companies each time.

So, for example, if you might need to hire a car several different times over the course of a year (in one country or several countries), an annual policy will enable you to do this without needing a new insurance policy each time. You should review the policy carefully to ensure it meets your needs, and beware of exclusions (for example, rental of certain types of car, like ‘luxury’ cars might not be included).

Is it better to buy a daily or an annual policy?

It depends on your requirements. If you are going to hire a car for a few days in one location and you know that this will be your only rental in the next 12 months then a daily policy (for the relevant number of days) makes sense. However, annual policies are often very good value. So if there is any chance you will need to hire a car at any other times during the year it could be best to purchase an annual policy and know that any trips you make are all covered in advance. Review the policy carefully to ensure it meets your needs.

Is window and tyre damage included?

As with any insurance policy, you need to check the small print to see what is included and what is excluded. Some companies include damage to windows and tyres, while others do not. Our Detailed Policy Reviews section will help you decide which policy is the right one for you.

What age range is covered by this insurance?

It depends on the provider, but most companies will at least cover people between the ages of 21 and 74. Check the policy carefully in each case.

Can I use this insurance when hiring cars in my home country?

Most companies allow this, but some providers exclude rentals hired within 150km of your home address so if this is important to you, check the policy carefully. Sometimes the insurance companies only exclude rentals within 150km of home in their annual policies, so taking out a daily policy for those days might be possible instead.

Are other people travelling with me covered too?

Check the policy carefully. Some providers cover only one person, but many companies will cover all the people listed on the car rental agreement, as long as the main named driver is the car hire excess insurance policy-holder.

How do I take out a policy?

Take a look at our Policy Overview section and then, for more information, you can review the more detailed explanation for any policies you are interested in at the Detailed Policy Reviews section. You can follow the link from either section through to the providers themselves and follow the instructions on their websites to purchase the policy you need.

When should I take out a policy?

You should have an excess insurance policy in place before you leave the rental counter, at the very latest. It is rarely possible to add excess insurance part-way through a rental. If you will be purchasing a policy online rather than at the car rental desk, you will need to do so in advance but note that many companies allow you to purchase a policy when you are already overseas. The rental itself must not have started, but you can already be in the country in question – you don’t need to take the policy out in the UK before you go abroad.

So, for example, if you travel to France for two weeks and only decide when you have been in France for a few days that you would like to hire a car for a week, you can go online and take out a policy – many companies will allow this even though you are already in France, as long as the rental itself has not already started.

What should I do at the rental counter if I already have excess insurance?

You should decline the car rental company’s excess cover when you collect the car. If they have automatically included it, ask them to remove it as you have your own cover. You do still need their general insurance (often called ‘Collision Damage Waiver’ or ‘CDW’) as this is what gives you your insurance while driving but, at least in Europe, this should automatically be included. The part you don’t need is the excess insurance. For a more detailed explanation of the difference between CDW and excess insurance click here.

What do I need to be aware of when hiring in the USA and/or Canada?

When you hire a car in the USA and Canada on a .com website, or by walking up to the counter in the USA or Canada, you will have the choice of taking a rental that is either inclusive, or exclusive of insurance. The insurance which is required is Collision Damage Waiver / Loss Damage Waiver (covering damage, theft and loss of use of the rental vehicle), and Supplemental Liability Insurance (covering third party). This is offered at the car rental counter and will generally cost between US$20 and US$30 a day. Excess is not generally charged and the renter is generally responsible for damage to windows, tyres, the undercarriage and the roof. Ensure that you have sufficient insurance cover before driving away – either by taking out a policy suitable for the USA/Canada in advance online, or by taking their cover at the counter.

If you book your US rental in the UK, or on a co.uk website, the car rental agreement will generally include cover for Third Party, Collision Damage Waiver and Theft. Excess is not generally charged in the US, although it is starting to be charged. The renter is usually responsible for damage to windows, tyres, the undercarriage and the roof. Car rental agreements are not standard and it is always necessary to check the details of your rental agreement so that you are clear about the cover that is offered.

You must ensure that you have sufficient basic and supplemental insurance to cover you for all possible claims which, in the USA in particular can be very expensive. If no excess is going to be charged you would not need a car hire excess insurance policy for that particular rental.

How do I make a claim on my excess insurance?

If the car is damaged or stolen, the car rental company will charge your credit card for the excess amount and you then claim for reimbursement on your car hire excess insurance policy. You will need to provide certain documents to support the claim – details can be found in the Detailed Policy Reviews section. Make sure that you keep these documents safe, and send in everything that the insurance company needs.

What is the difference between ‘CDW’ and ‘Excess’?

If you are hiring a car in the UK, Europe, South Africa, New Zealand or Australia your car rental agreement should already include cover for (1) damage to the rental vehicle – known as CDW (collision damage waiver) or LDW (loss damage waiver); (2) third party liability; and (3) theft. However, even though this cover is included, the hire company will in most cases set an ‘excess’. If there is a claim, the excess amount would need to be paid by you, and then the car hire company would claim the remainder from its insurer.

Car hire companies set excess amounts as they can have cheaper insurance that way. If they had to insure each of their cars so that they were fully covered for theft and damage, but without there being any excess payable, their insurance policies would be extremely expensive. To control their costs, they agree with their insurers that an excess will be payable for any claims. The car hire company then passes the cost of this excess on to you, the customer. Taking out car hire excess insurance covers you for this, meaning you would ultimately not have to pay anything in respect of any claim. Instead, your insurer would pay that part of the claim, and the car hire company’s insurer would pay the rest.

If you are hiring a car in other countries (notably the USA and Canada) insurance for damage and theft may not automatically be included, so you need to check the car hire policy very carefully, and make sure that you take extra cover if it is not automatically included. Otherwise you could be responsible for the cost of replacing the car if it is stolen or badly damaged. If you do take the extra theft/damage cover it will often reduce your excess to zero straight away, so in those cases you would not need car hire excess insurance on top.

Providers: Detailed policy reviews