Here’s our guide to car hire insurance. We take you through the basics including what your car hire is covered for and what it isn’t covered for.
When booking a car hire, do you know what it’s covered for in terms of car hire insurance? You should do! Taking into consideration what’s covered and what you, as the renter, are liable for is just as important as the rate and type of car. If you don’t know what is and isn’t covered, you could end up out-of-pocket for far more than you expect or without a car hire at all!
In this post, we cover the basics so you know exactly what you’re looking at when comparing car hire rates.
Guide to car hire insurance: What’s your car hire covered for?
In the vast majority of countries around the world (including countries in Europe, the USA and Australia), car hires are legally required to be covered with basic car hire insurance. This comprises: Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW), Theft Protection (TP) and Third-Party Liability.
However, many car hire deals include an excess, which the renter is liable for. The excess amount can vary between suppliers and depend on the car type. It’s not uncommon for the excess on many Spain car hires to be upwards of 1000 EUR! We have more on car hires with an excess as well as car hires with no excess further down in this post.
In the meantime, here’s a little more about what basic car hire insurance covers…
Collision Damage Waiver (CDW)
CDW covers damage to the car’s bodywork beyond the excess amount if there is one. However, it doesn’t cover all the car’s parts. Items typically excluded from the CDW include: the windows, glass, tyres, roof, undercarriage, locks and the interior. The renter is fully liable for these exclusions.
Theft Protection (TP)
TP is cover for the car if it’s stolen or there’s damage to the car from someone trying to steal it. Again, the renter is liable for the excess as determined by the policy.
Loss Damage Waiver (LDW)
Some policies refer to a Loss Damage Waiver. This is just a combination of Collision Damage Waiver and Theft Protection.
Third-Party Liability
This covers any damage you might cause to another person, another car or property. It doesn’t cover your rental car or anyone inside it.
Included in the rental rate
Because it’s a legal requirement to have these, they are very often already included in the rental rate. So when searching for a car hire, check the Terms and Conditions and you’ll likely see these items listed as being included.
Exceptions to this…
There are a few exceptions to this… In a few countries such as the USA and Canada, nationals of those countries may be covered through their normal car insurance or their credit card. So, if you’re booking a car from an American website, for instance, you might have the option to book a car with or without this basic coverage. Just bear in mind that if you’re offered this option and you opt to book it without, you will still need to be covered for CDW, Theft Protection and Third-Party Liability. And buying it when you get to the rental desk can be expensive!
Our advice: If you’re not from North America, don’t use an American website to book your car hire. That way, you’ll know that you’re definitely covered with the legally required insurance.
Coverage only applies if you stick to the rules and aren’t negligent
The above coverage only applies if you comply with the rules of the rental agreement and aren’t negligent. Examples of negligence include putting the wrong fuel in the car or leaving the car keys in the car and it gets stolen.
What YOU are liable for
Is there an excess?
When searching for a car hire, there are two types of deals you’ll find in terms of insurance coverage. Click on the links below for more detailed information about each.
- booking a car hire with an excess
- booking a car hire with no excess
Offers ‘with no excess’ are lots more expensive than offers ‘with an excess’. This is because they build the excess into the daily rate. As a result, ‘no excess deals’ are sometimes sold as ‘all-inclusive’ or with ‘comprehensive insurance’.
Of course, there is a risk with booking a car hire with an excess. If it’s damaged whilst you’re renting it, you could be liable for a hefty amount. There are, however, different options for reducing this. We explain how in more detail each of the above posts. We also cover the basics further down.
Are there exclusions?
As we’ve already noted, there are exclusions to the coverage offered. They typically include: the windows, glass (e.g. lights and mirrors), tyres, roof, undercarriage and the interior. These exclusions may still apply for comprehensive and all-inclusive deals too. Remember to check the Terms and Conditions before booking to find out. And if you’re still not sure, do check with the broker or supplier in advance.
Buying excess insurance & reducing your liability to zero
You can buy additional insurance (basically, an ‘excess insurance‘) that reduces the excess to zero. The two main ways you can buy this are below:
Daily buyout from the supplier (e.g. SuperCover or Super Relax Cover)
This is the supplier’s in-house excess insurance. It can either be bought in advance directly with the supplier or at the rental desk. And suppliers will do their best to get customers to buy it. Indeed, they can be very insistent and employ hard-sell tactics such as tell you that any other insurance you have doesn’t apply. This additional insurance may also have exclusions so do check in advance.
The advantage of buying it is that you normally won’t need to leave a deposit on your credit card. However, there are some cases where you book a car hire ‘with no excess’ and still need to put a deposit down. This is to cover any damage to excluded items and also in the case of negligence. If this is the case, the deposit amount is usually a lot less (for example, it could be 300 EUR rather than 1000 EUR).
Excess insurance from a car hire or insurance broker (e.g. Top-up insurance)
You can buy this either from a car hire or insurance broker. The advantage is that it’s usually a lot cheaper than the supplier’s own and generally includes excluded items such as tyres, windows etc. However, you will still need to put a full deposit down to cover the excess amount when you pick up the car.
If the car is damaged when you return it, the renter will be able to make a claim for the relevant amount.
Collecting a car hire: Putting down a deposit
If you’re picking up a rental ‘with an excess’, the renter will need to put down a deposit when collecting the car. This is often the same amount as the excess. Suppliers are very strict about the deposit. It has to be held on a credit card and the credit card has to belong to the driver. If there’s more than one driver, the credit card needs to be the main driver on the agreement. So, before booking a car, make sure the driver’s credit card has enough to cover the excess amount. Otherwise, you risk not being able to hire the car at all!