Excess: (n) An amount that is more than desirable, permitted or necessary. In insurance terms, the excess is the amount of any claim that you fund yourself before the policy pays out. Worryingly, this can be up to £10,000 and the main reason why you should take out car hire excess insurance. While this is permitted, it’s seldom desirable and when hiring a car on holiday it can come as a shock. Fortunately, it isn’t necessary to risk having to pay the excess for damage as you can insure against it.
Hold on, you’re insuring the insurance? Essentially yes; excess insurance means that you pay a bit extra up-front to ensure that you aren’t faced with a bill in the event of any damage to the vehicle.
How it works
When booking a hire car, the chances are you’ll spend time shopping around for the best deal. But having found a competitive daily rate, you then arrive at the airport or depot and they ask if you’d like to take out excess insurance – and if outside of Europe ‘collision damage waiver’.
Then you have to decide whether to pay the extra, often a significant increase on the cost of your rental. Alternatively, you can run the risk of being faced with a much larger bill, should you damage the vehicle. Remember that if you are renting abroad, you’ll be driving an unfamiliar vehicle, perhaps with the steering wheel on the wrong side, so your chances of having a mishap are generally higher.
Tricky decision, isn’t it? It’s little wonder so many people hand over their credit card and pay for the extra peace of mind. Of course, the car hire companies are keen for you to take out their excess insurance, with considerable adverse press coverage highlighting that they make extra profit by selling it to you.
A better way
There is, however, an alternative. You don’t have to take the rental firm’s insurance but you can still be protected against having to pay the excess by taking out car hire excess insurance separately.
Buying your excess insurance in advance in this way can not only save you money (independent companies can usually cover you for around a third of the cost the hire companies charge) it can also get you better cover. A separate excess policy will usually give you more cover and have a higher limit. It also means when you arrive at the rental desk, you don’t have to worry about the small print of the insurance you are signing up to.
There is more choice and flexibility as to the type of policy you take out. You can opt for UK, European or global coverage, for example. You can also choose to take out a single trip policy, or cover for a full year – which may work out cheaper if you hire cars on a regular basis, perhaps for business trips.