Your Guide to Rental Car Insurance

By Mona Lavare posted May 15, 2021 03:15 AM


Car renting while traveling has many benefits. You are not tied to the transportation schedule. You are going in a relaxed mode and can follow independently produced routes and see more interesting places. With the right approach, this travel choice can significantly reduce travel expenses.

Now, it is pretty simple to organize it – a car can be reserved in any country in the world via phone in just a few clicks. You will get the car right at the terminal upon arrival. But do not neglect to buy rental car insurance.

What is car hire excess insurance?

When you rent a car in Europe, cover named Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW) insurance is regularly included (in America, you are expected to have this cover but it won’t be added in the price of the rental). These policies may give a false sense of protection, as if you had to claim due to an event or damage to your vehicle, you would still be responsible to pay the first part of the amount you are claiming for, known as the “excess”.

With car rental deals, this excess amount changes. In Europe, it is generally from around €500 up to €2,000 (£430 to £1,750), and sometimes even more – apparently a lot more than you paid to hire your car in the first position.

This is where car hire excess insurance appears as it is there to prevent you from having to pay these hefty excess costs and will give you peace of mind should something go wrong.

How does car rental excess waiver insurance work?

Damage waiver or, as it is often related to, collision damage waiver (CDW) or loss damage waiver (LDW), is optional damage coverage that is possible to you when you rent a car.

The only point your Collision Damage Waiver protects is the bodywork: the bonnet, doors, side panels and back of the automobile. It doesn't cover anything extra, such as the engine, wheels, mirrors, windows or interior.

And it won't cover you if the car gets destroyed while you're breaking the terms of the rental contract. So if you're off-roading, driving drunk, or letting someone else drive the car without the rental company's license, for example, you'll be responsible for the total cost of any renovations.

What does car hire excess insurance cover? 

Car hire excess cover is a policy that shares connections with travel insurance, in that you either get it as a single or annual policy (you may wish to hold an annual policy if you hire cars typically or are hiring for more than 14 continuous days). 

The policy is intended to cover excesses:

  • While car hire deals typically offer some level of protection for your rental, excess cover could provide you better peace of mind.
  • Automobile hire excess insurance will also cover you for some of the 'extras' priced by the rental firm such as damage to tyres, underbody harm and damage to any auto-glass.

Car hire excess insurance exclusions

Limitations sometimes seen on car hire excess insurance plans include:

  • Losses from accidental damage to the inside or contents of the rental vehicle, caused by wear and tear or carriage of pets, will not be included
  • Ages for drivers (21-85 inclusive)
  • Vehicles more than ten years old or vehicles with more than 9 seats

How Much Will Rental Car Insurance Cost?

Rental car insurance costs vary by firm and coverage. You may pay $10 to $30 a day for a loss damage waiver only. If you opt for supplemental liability, you may add another $10. Individual accident insurance and personal effects coverage could add extra $5 each.

Think about these prices. Even if you have an annual car hire insurance with high limits, you pay much less than $60 per day (which is $1,800 per month) for your auto insurance. In many cases, it would be cheaper to develop your own insurance limits for a year than to buy rental car protection for a two-week vacation.

Final Thoughts

For some drivers, rental car insurance is a must. For others, it's an unnecessary expense. But, how do you know which section you're in?

Before you rent a car, it's worth analyzing the coverage on your car insurance plan. In some situations, the coverage you have on your car spreads to a rental car. In other terms, buying rental car coverage may duplicate what you already pay for. 

The extra expense of the rental company's coverage might make sense in a few cases, though. For that purpose, it's essential to understand what your own auto insurance covers, and what the rental company is offering.