What Are The Best Car Hire Excess Insurances In The UK?

When you hire a car, whether it's for work or a holiday car rental, you'll want to know that you're covered in the case of an accident.

But some hire firms don't provide good car rental insurance. That could leave you high and dry, facing a big repair bill before their insurance starts to pay out.

That's where car hire excess insurance comes in. It's an extra insurance that covers you for the gap between the cost of repairs and what the hire firm's policy covers - the excess in their insurance policy.

This all-you-need-to-know guide explains how car hire excess insurance works, when you might want to get some, and how to make sure you don't pay over the odds

What is car hire excess insurance?

All car insurance policies come with an excess - the amount you have to pay out of your own pocket before the insurer starts to pay out after a claim.

Car hire excess insurance pays the excess if you need to claim on any vehicle that you've hired.

Car hire excess cover is important because the excess on hire car insurance policies can be very high. On your own car insurance policy the compulsory excess average is around £200. On hire cars it could be £2,000.

If you've hired a flash sports car, the excess could be even bigger. So the amount of money you'll have to pay before the hire firm's insurer pays out anything could be much more than £2,000 - that's big money for most people.

This insurance is also sometimes called car hire excess waiver insurance.

How can I get cheap car hire excess insurance?

First of all, don't buy it from the car hire firm - shop around and find your own insurance.

Car hire firms make a tidy profit on rental car insurance. It can cost you more than twice as much as buying from the insurer, because they put a high mark-up on the policy.

Compare your options. If you might want car rental excess insurance more than two or three times this year, you might also consider taking out an annual policy - it can often prove very cost-effective compared to shorter term insurance.

You can also compare annual car insurance policies to get the best deal.

Do I need car hire excess insurance?

You aren't legally required to have car hire excess insurance, but it can be a really good idea and give you peace of mind when you're renting a vehicle.

That might include holiday car rental, car sharing insurance when you use a car club, or vehicle hire excess insurance for renting a van or pickup when you need to carry a big or heavy load, or move house.

You might decide you don't need extra insurance. For instance, If you rent a car from a firm which only has a £500 excess on the policy and if you could easily cover it out of your own resources. Besides, if you're a driver with a good record, you might feel quite relaxed about hiring a car for a few days without taking out extra holiday car insurance to cover the excess.

But most of the big firms - Avis, Hertz, Sixt, Budget and Europcar for instance - have a car hire insurance excess of over £750 even for the smallest car available. If there's a £1,000 or more excess, you might think car hire excess insurance is worth paying for. For an extra £10-20 you're guarding against a big hit to your finances.

What does car hire excess insurance covers?

Most car hire insurance policies only cover you for accidents ('Collision Damage Waver') and some (outside Europe) might even just provide Third Party cover. Excess car hire insurance will cover you for damage like:

• a chipped windscreen
• a punctured tyre
• vandalism, like 'keying'
• scratches from loose gravel on the road.

But most of the big firms - Avis, Hertz, Sixt, Budget and Europcar for instance - have a car hire insurance excess of over £750 even for the smallest car available. If there's a £1,000 or more excess, you might think car hire excess insurance is worth paying for. For an extra £10-20 you're guarding against a big hit to your finances.

Most car hire insurance policies only cover you for accidents ('Collision Damage Waver') and some (outside Europe) might even just provide Third Party cover. Excess car hire insurance will cover you for damage like:

• a chipped windscreen
• a punctured tyre
• vandalism, like 'keying'
• scratches from loose gravel on the road.

It might also cover you for personal possessions left in the car (eg when parking up at your hotel), which rental car insurance nearly always excludes.

Most good car excess insurance policies will cover a number of drivers, which is useful if you're going on a family holiday and sharing the driving.

What are the pros and cons of car hire excess insurance?

Let's be honest, there are some good reasons for buying hire car excess insurance, but there are also some reasons you might not want to buy it. We've summarised these here:

The big lesson is to do your research properly and always, always read the small print. There's only one thing worse than buying insurance you don't need - and that's not buying insurance you do need.

Do I need my own auto insurance to rent a car?

You don't need your own insurance just to rent a car. You'll automatically be covered by the hire company's insurance. Insurance for van hire or car hire will always include third party cover (the legal minimum you need).

In the UK and Europe it usually comes with Collision Damage Waiver (CDW) as standard, as well as cover against theft.

However, some car hire contracts have a very high excess. Insurers are careful when they write insurance for car hire because they don't know who will be driving the vehicle. They'll only pay up for very serious claims. You could end up paying over £2,000 before their insurance policy kicks in, even for quite small bumps and scratches.

There may also be significant exclusions, for instance, no windscreen cover, and no cover for misfuelling.

You should also remember when you look at rental cover that while for your own car, you might decide a small dent or a couple of scratches aren't worth bothering about, car hire firms aren't so tolerant. They'll want a car or van restored to 'as new' condition - and you could end up paying for that.

While most hire car insurance in the UK and EU is fully comprehensive, in some countries you'll just get Third Party cover with your holiday car insurance. It may not even offer a very large sum insured. If you're travelling elsewhere, car hire excess cover might be very valuable and you might also consider Supplemental Liability Insurance as an extra cover. This 'tops up' the amount you're insured for third party liabilities if you injure someone or damage their car.

Take a close look at the small print of the hire contract before you decide. You'll want to look at the type of insurance the hire firm's offering, the excess, and any exclusions.

How does car hire excess insurance work?

When you rent a vehicle, your car hire company will give you third party insurance and CDW (collision damage waiver) or LDW (loss damage waiver) insurance - usually with exclusions (such as windscreen, undercarriage, and tyres) and with a high excess.

The high excess means you'll have to cover a lot of the cost of any damage yourself before the insurance pays out.

Car or van hire excess insurance insures the gap between the cost of damage and what the hire company will cover.

Let's use a couple of examples to show how it works and how you could benefit from it. We've shown those in the table below. If you're renting a holiday car, hire excess insurance added to the rental firm's standard insurance gives you complete cover.

How much will car hire excess insurance cost?

Car hire excess insurance can cost just a few pounds a day.

Obviously, that will depend on the type of car you're hiring and the length of trip you want to cover. But a one day policy might cost you around £10, while a week could cost about £25, for driving in Europe. Prices are higher if you want excess insurance for the US.

Annual policies for driving in Europe tend to start around the £40-50 mark. That will cover you for any number of hires, as long as no single trip is longer than (usually) 60 days.

Many hire firms will offer their own vehicle hire excess insurance. But it's often at double the price you'll be quoted if you buy via a comparison website or go direct to an insurer. So when you're buying car hire excess insurance, compare costs carefully to make sure you don't pay over the odds.

How can I claim on car hire excess insurance?

There is one small issue with car hire excess insurance, and that's cash flow. Whereas the car hire firm won't charge you for anything that its own insurance will cover, with car hire excess insurance you'll need to pay the hire firm the excess, then claim it back from your own insurer.

Because the car isn't yours and you'll probably not be in the same country when you claim, it's important to keep as much evidence as possible of the damage. Take photos on your mobile of the car and the environment in which the damage occurred, and remember to keep all your paperwork from the hire company.

Fortunately, most firms offering this kind of insurance understand that having to pay a high excess charge can put your finances under stress, so they try hard to pay out as quickly as possible. You may get the money back in a week or so if all goes well.

Can I get car hire excess insurance for the whole year?

If you regularly need to hire a vehicle, getting a new car hire excess policy every time you rent a car would be time-consuming and cost you a lot of money (for example, if you always travel for your work).

Fortunately, you can also get this insurance on an annual basis. That means whenever you rent a car, you'll be covered. However such policies have a limit on the length of time you are covered for any single rental, usually 60 days at a time.

As with most insurance, you may be able to pay for annual car hire excess in instalments. However, it will be more expensive that way. Most insurers charge an interest rate because, effectively, you're borrowing part of the cost of the premium. If you can pay up front, you'll usually get a better rate.