What is Car Hire Excess?

Car hire excess is one of those things relating to rental car insurance conditions that can sound complicated and frightening.

In fact, it is very easily explained. As it could make a very large difference to your financial health, it is also something that it may be worthwhile thinking about.

When a car is rented, the car hire company may include some forms of basic insurance cover in the rental price. This would typically include third-party liability (for damage and injury you may cause others) and Collision Damage Waiver (CDW) covering any damage you may do to the rented car itself.

This isn't always the case though. They may at times include very little if any insurance 'in the price' and may offer it subsequently as chargeable extras. What is or is not included in the rental price will depend upon the country you're renting in and the rental company concerned. It is usually advisable to check this thoroughly in advance and before committing to any rental.

In one sense it doesn't matter whether the rental company's insurance is included in the basic price or purchased as an extra separately because in both cases their insurance policy is very likely to contain what's called car hire excess.

The excess is an amount of money, usually between 500 and 1500 pounds, that the car rental company will expect you to pay towards the cost of an accident even if you have their basic insurance in place.

It works as follows. If you have excess on the car rental company's policy of say 1000 pounds and you have an accident that results in 1500 pounds' worth of damage, the car rental company will charge the 1000 pounds excess to your credit card and their insurance company will pay the other 500 pounds. If the damage were valued at say 750 pounds, you would have to pay it in total.

If you don't like the idea of having to pay the car hire excess, you can cover it through insurance in one of two ways.

It is usually possible to pay the rental company extra for what they may call 'top-up' insurance. This could reduce or remove altogether the excess but this form of insurance is usually several times more expensive that similar insurance purchased through the Internet from a direct specialist insurance provider.

The specialist car hire insurance providers often offer not only far cheaper car hire excess insurance but also other advantages. If you have to pay the excess following an accident, your direct policy would simply reimburse you. In addition, as the policy is sold to you on a daily or annual basis, it would also cover any vehicles rented by you during the lifetime of the policy (subject to terms and conditions). This could offer further financial advantages as well as saving time as it would no longer be necessary to have to think about and organise this sort of insurance on a rental by rental basis.

So if you are uneasy about the risks and exposures that come with the car hire excess on your car rental policy, why not investigate the direct insurance providers further? It could be well worth the effort invested.

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 daily car hire insurance

By Simon Vella