Taking out car hire excess cover can help you to avoid huge bills if you are involved in an accident in a rented vehicle.
Prices start from as little as £2 a day, although premiums for car hire excess policies vary widely, with some policies costing more than 10 times that amount.
What is car hire excess insurance?
All motor insurance polices come with an excess, which is the amount you have to pay towards any claim you make.
For example, if the excess is set at £300, you would have to pay that amount towards the total cost of the claim.
So, in this instance, if you claimed for £1,000, you would receive £700. And there would be no point in claiming for anything less than £300, as you would get nothing from your insurer.
Indeed, you might choose not to claim even if the amount involved were, say, £500 as you could jeopardise your no claims discount and end up paying substantially more when renewing your policy.
On standard insurance policies, the point of the excess is clearly to ensure drivers do not make a claim for every little dent or scratch. This reduces the overall number of claims and helps keep insurers’ costs down.
However, car hire insurance policies work differently. They are usually set at much higher amounts to protect the financial interests of the hire company in the event of an accident.
In some cases, the excess you must pay towards any claim can be as high as £2,570, making smaller claims completely pointless.
That's why many savvy motorists choose to protect themselves by using car hire excess insurance, which is sometimes called excess waiver cover.
How does it work?
In simple terms, excess insurance allows you to claim back some or all of the cost of any claim you make.
But some policies only partially cover the excess charged, while others exclude common issues such as cracked windscreens and broken headlights.
So it’s therefore important to check the excess cover policy wording carefully before buying, so you know what you are getting.
Where can I buy car hire excess cover?
Car hire companies often offer their own excess waiver or collision-loss-damage waiver insurance.
In fact, they are likely to actively encourage you to take out cover of this kind when you go to pick up your car.
But taking out car hire excess insurance this way can add hundreds of pounds to your bill. Many firms charge up to £25 a day, so you could easily end up shelling out an extra £350 on a two-week trip.
However, not having the excess insurance could clearly prove even more expensive should you be involved in an accident. So what’s the solution?
We recommend buying standalone excess insurance policy from a specialist insurer before you hire your car.
You can choose between good-value annual policies that cover you whenever and wherever you hire a car, and single trip cover costing from just £2 a day.
As well as competitively-priced premiums, standalone cover of this kind generally has fewer exclusions and offers more comprehensive cover than a policy bought from a car rental firm.
What should I look for when taking out car hire excess insurance?
Car hire excess insurance is not compulsory, and you should not be pressured into buying from the car hire company if it deploys hard-sell tactics while you are at the counter.
Telling the clerk you have your own cover should bring the sales pitch to a swift end.
When buying your standalone cover, look for a policy that covers damage to headlights, windscreens and tyres, as well as bodywork and engine parts.
You should also choose one that protects your entire excess, rather than just a portion of it.
And if you’re taking out standalone car hire excess insurance for an overseas trip, check that the places you are planning to visit are included on the list of destinations covered by the policy – especially if they are off the beaten track.
You’ll have a choice of European or Worldwide cover – check for any restrictions.
Should I buy annual or single-trip cover?
If you plan to hire a car more than once during the year, it usually works out cheaper to buy an annual policy, instead of arranging cover for each trip.
Prices for both will depend where in the world you are travelling, while the cost of single-trip insurance will also depend on how long you are away.
For example, a European annual policy is generally around £35 to £45, while a worldwide annual policy is likely to set you back between £50 and £80.
If you are going for an annual policy, try to find one that also covers car rental in the UK, just in case you ever need to rent a vehicle in this country.