Avoid Costly Mistakes on Your Next Car Rental with These Insurance Tips

If you’re planning to hit the road on your next trip abroad, it’s important to get up to speed on how car rental insurance works.

Understanding what’s covered, what’s not, and where you might be overpaying is key to avoiding unexpected costs at the rental desk or after you return the keys.

With this in mind, Ed Sharp, Head of Car Hire at TravelSupermarket, shares his essential guide to navigating car hire insurance, so you can enjoy your summer holiday without worrying about the fine print. 

Do you get any car insurance included with rental cars?

The rules vary depending on your destination; Europe, the US, Canada, and other countries all have different regulations, so it’s important to check the specific requirements for wherever you’re going:

Europe
As a standard, all car rental companies in Europe should provide you with basic car insurance. This typically covers damage, theft, and third-party liability. Although this may vary from country to country, generally, there is some level of insurance included in the price of your hire car.

These are typically referred to as CDW (Collision Damage Waiver) and LDW (Loss Damage Waiver). Both offer various levels of cover in the event of a collision, theft, or damage. Essentially, they mean the same thing; they cover you for damage to certain parts of the car. However, make sure you always check what is included in your policy, as often parts such as the car’s roof, windscreen, and tyres are not covered by basic insurance packages.

If you’re unsure what your insurance covers as part of your hire car, you can usually find it on the website of the company you are hiring from. If it’s not easy to find, make sure to contact the customer care team and ask.

US / Canada 

In the US and Canada, car rental insurance differs slightly. You’ll usually find that you have a choice of hiring a car that is either inclusive or exclusive of insurance.

If you go for a car rental exclusive of car insurance, then as a non-US citizen you must buy CDW and LDW separately. This is typically available from the car rental counter. Alternatively, you can buy a policy through independent insurers, which tend to be a fraction of the cost.   

So what’s the problem? You’ve got insurance included.

Not exactly. While you get basic cover provided by most car rental companies, you are still liable to pay for damage to parts of the vehicle that aren’t covered, as well as the excess.

What is car hire excess insurance and how does it work?

Car hire excess insurance is an optional policy that covers the excess fee you’d have to pay if your rental car is damaged or stolen. Most car hire companies include basic insurance, but this often leaves you liable for an excess amount, usually between £500 and £2,000, or more for luxury vehicles.

When you hire a car, this excess amount is usually held on your credit card as a deposit. If you return the car without any damage, the hold is removed. But if there’s damage, the rental company will charge you the excess.

Car hire excess insurance protects you by reimbursing this charge. You still have to pay the excess upfront if there’s damage, but you can claim it back through your policy.

To save money, consider buying a third-party excess policy in advance. These can cost just a few pounds per day, much cheaper than the £20+ daily rate often charged at the rental desk.

Do you need to get excess insurance cover?

Although it’s not a legal requirement to have excess insurance cover when you hire a car, it’s worth investing in. Excess insurance can cover parts of the vehicle often excluded from basic insurance, such as damage to the car’s roof, windscreen, undercarriage and tyres, potentially saving you money in the long run.

Some of the benefits include, but are not limited to:

• Financial protection – If you end up damaging your rental car or get into an accident, excess insurance will protect you financially by covering the cost of fees charged by the rental company.
  
• Peace of mind – Having excess car insurance also gives you peace of mind and reassurance that you are protected against unexpected costs or financial losses during your rental period.
  
• Coverage for vulnerable parts – Standard CDW and LDW insurance policies don’t protect vulnerable parts of your car that often get damaged in accidents or theft; however, excess insurance policies often include protection for these.
  
• Coverage for additional problems – Some excess policies may also include cover for misfuelling, towing, breakdowns, replacement keys, and more.
  

Anything else I need to know?

Be aware that most standard car insurance doesn’t cover rentals
Many people assume that their personal car insurance will automatically extend to rental vehicles, but this often isn’t the case. Most standard policies exclude hire cars, or offer only very limited protection. It’s a good idea to check with your insurer before you travel so you know exactly what’s covered.

Consider using a credit card for payment
When it comes to paying for your rental and placing the deposit, using a credit card can make things easier. Car hire companies typically prefer credit cards because they can hold a deposit in case of any damage not covered by basic insurance (like CDW or LDW). Some providers may not accept debit cards, or they might require additional insurance if you pay that way. Using a credit card could help avoid any last-minute issues at the desk.

Report any incidents as soon as possible
If your rental car is damaged or you’re involved in an accident, it’s best to let the rental company know straight away. Some companies have specific time frames for reporting issues, and waiting too long could affect any insurance claim you might need to make. If the police are involved, be sure to ask for a report, as this may be needed later.

Double-check what’s included in terms of roadside assistance
Breakdown cover isn’t always part of the rental package, so it’s worth taking a few minutes to review what’s included in your agreement. Some rentals bundle it in automatically, while others might offer it as an optional extra. Knowing what you’re covered for in advance can save you stress in the event of a breakdown.