Car Rental Insurance

By Simon Vella
Wherever in the world you are planning to hire a car, you can be certain that the cost of car rental insurance will be at least as much as the hire of the vehicle itself. The insurance is vital, of course, to indemnify the hirer not only against third party liabilities but other damage to the vehicle or its theft, resulting in the loss of its use. With the car rental insurance bill absorbing such a high proportion of the cost, therefore, it is good news to discover that those costs can be considerably reduced - by as much as a half - by arranging all the necessary insurance separately, in advance, whether the proposed rental will be in the UK or elsewhere in the world.

Taking advantage of such cost reductions is simply a question of buying all the necessary insurance cover in advance from a company specialising in this area. Separating the two forms of business in this way allows the customer to concentrate on the car rental firm for doing what it does best - renting cars - and leaving the car rental insurance to the experts in the field of motor insurance.

For example, whether the car hire is being arranged in the UK, Europe or North America, the quoted rate is likely to include a relatively large proportion to cover third party liabilities and accidental damage to the vehicle (generally termed a Collision Damage Waiver) and theft. In most parts of the world (with the exception of the United States), the Collision Damage Waiver will include an excess, which is the uninsured element of any accidental damage to the vehicle and which therefore remains the responsibility of the hirer him or herself.

If an excess is to be applied, this should be made clear by the rental company, together with the level of risk to be borne by the hirer. This is important, since it represents the first part to be paid against any damage incurred and is typically as much as £600 - and in some instances can be as high as £1,000. In order to mitigate such personal risk on the part of the hirer, the rental company will generally offer an optional excess insurance policy to cover the whole or part of the excess. In this way, it would be possible to reduce the hirer's personal liability from the standard £600, for example, to £100 or even to nil.

A more cost-effective way of insuring this excess - and indeed the whole of the car rental insurance - however, can be secured by buying the cover entirely separately from the rental agreement. Specialist, independent insurance providers can arrange the whole of the cover required, either on a single-hire basis or on an annual basis, to cover multiple rental agreements throughout the year. Such cover tends to be considerably cheaper - up to 50% less - than that arranged by the rental company, yet can provide even more extensive protection than the rental company's insurance.

Typical areas of car rental insurance cover, for example, include full Collision Damage Waiver (providing protection against loss, damage, theft or loss of use of the hire car); Supplemental Liability Insurance (extending third party liability limits up to a typical US$1 million - and certainly to be recommended if the rental agreement is for a car in the United States or Canada; cover for damage to the rental vehicle's roof, underside, types and windows (usually excluded from the Collision Damage Waiver); compensation for accidents involving uninsured or hit-and-run third parties; cover for lost keys; and cover for any further excess on the hire car.

Simon Vella is Chief Executive of Insurance4Carhire an independent specialist broker dedicated to providing their clients with the best deal on their car hire excess insurance and car hire insurance.


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